Liquidity crunch hits dairy operations

THE debilitating liquidity crunch and the current wave of price increases are hampering growth in the country’s dairy sector, businessdigest has learnt.

By Kudzai Kuwaza

The development comes at a time when the liquidity crunch and acute cash shortages have severely crippled industry, which cannot import critical inputs for their operations.

Last year, the central bank came up with an import priority list for the efficient allocation of the scarce foreign currency.

Zimbabwe Association of Dairy Farmers (ZADF) chairperson Emmanuel Zimbandu said dairy farmers have not been spared the severe liquidity crunch.

“When trying to get spares for machinery we use in dairy production, we cannot get them because we cannot access foreign currency,” Zimbandu said.

He said the dairy sector in the country was concerned by the shortage of foreign currency as it could result in the flooding of imported milk products in the country.

Zimbandu also pointed out that the increase in prices of chemicals has hampered dairy production.

“The prices of chemicals have gone up by three or four times, making it difficult for dairy farmers to afford them,” he revealed.

Zimbandu said the talks between dairy farmers and banks over funding for the sector are still in progress.

On the performance of the sector in the third quarter of the year, he said although production was higher than the same period last year, it fell below their expectations.

Milk production increased by 13% to 65 million litres last year compared to 58 million litres recorded in the prior year due to import restrictions and a dairy revitalisation project.

It, however, falls far short of the annual national requirement of 120 million litres.

According to the Zimbabwe Dairy Industry Trust, the 13% increase in milk production was in line with the targeted annual growth of 12%.

Milk production levels have dramatically plummeted from the early 1990s peak of 260 million litres per year to between 50 million and 65 million litres currently, as the industry struggles to recover from the devastating impact of the chaotic land reform programme and economic turmoil.

The country’s dairy herd has plunged from a high of more than 119 000 cows to just over 26 000 in the period between 1987 and 2015, according to statistics from ZADF.

The statistics also show a drop in registered dairy farmers from 559 in 1987 to just 199 in 2013.

In 2015, the number of registered dairy farmers was 203.

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