GOVERNMENT-imposed price controls have posed serious threats to the success of Dairibord Zimbabwe’s plans to boost milk production and focus on milk-b
ased value-added products which increase margins.
This was said by Dairibord Holdings’ chief executive officer, Antony Mandiwanza, in an article published in the Zimbabwe Independent’s supplement on the company published last week.
Dairibord Holdings is a holding company for the dairy firm as well as Dairibord Malawi and ME Charhons among others.
Dairibord Zimbabwe, which used to produce over 256 million litres a year, had suffered a significant decline in volumes, producing 60 million litres last year.
Mandiwanza said although the government appeared to have loosened its regime of price controls, the remaining measures still posed significant challenges to the dairy firm.
“The company’s strategy to focus on value-added products that require less milk and are of higher margins should continue to benefit the group’s profitability,” Mandiwanza said.
“However, the company will be faced with challenges of price monitoring/controls on milk, though these seem to have been loosened,” said Mandiwanza.
The government introduced price controls to cushion consumers from high inflation on most basic goods including farming inputs like fertiliser. Although government claims that the controls were phased out, producers maintain that they are still in force.
Producers have blamed the controls for causing distortions on the market and massive losses as the prices imposed are not enough to cover production costs.
Mandiwanza said while the demand for raw milk was estimated at an annual 120 million litres, only 60 million litres were being produced.
He revealed that Dairibord Zimbabwe, which used to be a monopoly before privatisation, had apparently lost its market share.
Other players have since entered the dairy industry. Dairibord Zimbabwe was once a major supplier of pasteurised milk to Tanzania and Kenya where it sold 12 million litres per year, but the figures have since gone down to 2,8 million litres.