AFTER failing to acquire cattle company CC Sales two years ago, Colcom Holdings Ltd, the biggest pork-processing company in Zimbabwe, says it has finally ventured into the beef production indust
The processing company has since invested $12 billion in the procurement of 2 200 breeding cows as part of its plans to become a meat-processing company.
Colcom has ventured into the project through a partner which company officials refused to disclose, citing confidentiality.
Chairman Joe Hermann said under the venture, Colcom has been purchasing the cattle and the partners will manage the herd on an incentive basis”.
“Opportunities in the beef industry have seen the commencement of a joint venture to establish a beef-breeding herd,” Hermann said.
He said the project is still in its early stages but the intention is to retain the offspring from the base herd during the coming year and build up the herd to a target of 4 000.
“This project, which is long-term in nature, will add significant value to the group and assist in making Colcom the leading protein company in Zimbabwe.”
Hermann said the beef produced would be for the local market only, as beef exports to the EU are banned due to the outbreaks of foot-and-mouth disease.
“While continuing to focus on pigs as its core business, the beef project is part of a number of expansion and diversification programmes embarked upon by Colcom in recent years.”
The company also has an ostrich project which it established about two years ago. In the company’s results for the half-year ended June 30, Hermann said the ostrich project was contributing positively to the group’s incomes.
“The ostrich project remains on schedule and the rising euro prices for ostrich meat have seen a positive contribution to the group’s profit earlier than expected,” he said.
Hermann said the group was poised to invest in other business opportunities that may come up.
“The group is well-positioned to take advantage of the many opportunities that exist.”
He said the primary focus of the group would be to expand agricultural operations using the generous facilities offered by the central bank.
The Reserve Bank of Zimbabwe is currently disbursing $7 trillion under the Agricultural Sector Productivity Enhancement Facility. This comes after it called off the Productive Sector Facility under which troubled firms were accessing funds at 5% interest rates.
Hermann said there was need to increase efficiencies at all the group’s facilities to ensure that the volume growth that has characterised the group over the last year continues into the future. Colcom made a profit after tax of $80 billion for the year ended June 30. However, Hermann said price increases in the second quarter, necessitated by surging stockfeed prices and resurgent inflation, resulted in volumes declining during the period.
“Export margins continue to be marginal, as the movements of the exchange rate did not keep pace with the rate of inflation, although the recent exchange rate adjustment should provide relief in this regard,” he said.
The RBZ recently devalued the Zimbabwe dollar against the US dollar from about US$1:$10 000 to $17 500. However, on the foreign currency auction, the US dollar has already surpassed the US$1:$17 500 rate and currently stands at about US$1:$25 000. Innscor Africa Ltd is the majority shareholder in Colcom with 76%.