Natfoods Ploughs ZWL$160m Into Contract Farming

Listed agro-industrial firm, National Foods, has invested $156.5m towards contract farming for the 2019/2020 summer cropping season in a bid to ensure food security and productivity in the farms.

The investment was made via Paperhole Investments (PHI) Commodities, a company which runs contract farming for companies related to Innscor Africa Limited.

The Natfoods scheme comes at a time when farmers are increasingly turning to contract farming and joint ventures to beat the high costs of inputs and tillage.

Graeme Murdoch, the PHI local operations manager told Business Times that the contract scheme would be administered by his company and Pure Oils Industries. The investment will fund the production of around 9000 hectares of maize, potato, popcorns, sugar beans and soya beans.

It is estimated that the company will reap about 50,000 tonnes of maize, sugar beans, potatoes and soya beans from the contracted farmers. The scheme is expected to cover over 60 commercial farmers.

“Under maize, we have invested ZWL$84m,” Murdoch said.

“Under soyabeans, we have put in place ZWL$37m, on potatoes ZWL$29m, sugar beans ZWL$5m, and popcorns ZWL$1.5m. A total of 8,000 hectares will be contracted in the 2019/2020 summer cropping season.”

He said the funding system would not be very different from the previous years’ investments. This year, the company has added popcorn contract farming as a new product. During the winter wheat season, 15,000 hectares were contracted.

“We are working very closely with the central bank and the banking sector to manage our foreign currency requirements,” Murdoch disclosed.

“So far, National Foods and other milling companies are importing wheat under the stewardship of the Grain Millers Association of Zimbabwe. National Foods on its own can import its wheat requirements, but it is our hope that we can work with other companies in order to procure more grain imports to ease shortages.”

Murdoch said Natfoods would continue to invest in extending a pipeline of key raw materials. The company also procures grain from local farmers, and imports where there is inadequate local produce.

Natfoods uses satellite technology to determine the amount of hectares under cultivation, and the harvest the fields are likely to yield. Currently, it is monitoring the probable wheat yields.

The company is closely looking at the country’s wheat hectarage for the 2020 season. The private sector is targeting 200,000 tonnes in the next three years. Even if the country produces enough wheat, it will still have to import some wheat because locally-produced wheat is unsuitable for breadmaking.

It needs imports to make good quality bread. Zimbabwe requires between 350,000 and 450,000 tonnes of wheat per year, but production has been declining due to inadequate funding.

Natfoods’ focus will be on improving efficiencies across all areas of the value chain to ensure quality and affordable products. The Group plans to fund further growth initiatives through retained profit, moderate levels of borrowing, new products lines, and consolidation of its position in the agro-industry sector. – Business Times