eBusiness Weekly
Kudzanai Sharara
Dairibord Zimbabwe Holdings Limited says capacity utilisation at its Chipinge-based Steri Milk plant has only grown by 16 percent, almost three years after it was re-commissioned at a total cost of $4 million.
The Steri Milk plant was refurbished and re-commissioned in 2015 to double its capacity to 24 million litres, but several years down the line capacity utilisation has only grown by 16,27 percent to 50 percent.
At the commissioning of the plant, the Dairibord management believed the investment together with other initiatives to stimulate milk production would buttress and enhance product availability in both domestic and regional markets.
But according to Dairibord’s marketing executive Tracy Mutaviri, growth in capacity utilisation has been affected by raw milk supply constraints. Raw milk intake at the plant is currently averaging 800 000 litres per month supplied by 25 farmers situated in Chipinge and Mutare.
“The plant is currently operating at 50 percent capacity up from 43 percent when the plant was commissioned in June 2015.”
“The challenges facing the business in the area are mainly raw milk output which is below our requirement. The Steri Milk produced in Chipinge is currently not meeting demand due to raw milk supply constraints,” said Mutaviri.
She added that the cost of milk production, is very high at 60 cents per litre compared to regional prices ranging from 24 cents to 40 cents per litre. The cost is the same across the country.
Mutaviri said other challenges include forex shortages to procure inputs, mainly packaging materials and erratic supply of utilities.
She said similar challenges such as high cost and erratic supply of utilities, high cost of stock feed – which accounts for about 87 percent of the cost of raw milk production- foreign currency shortages to procure drugs, spares and new farm equipment to enhance efficiencies, were being faced by dairy farmers across the country.
Mutaviri said her company has been working on various initiatives to capacitate and support the farmers who supply milk to the plant.
“Dairibord is embarking on several initiatives to grow milk supply. The initiatives include providing support for feed formulation and nutrition, veterinary services, management consultancy and input procurement,” said Mutaviri adding that these support programmes are being implemented across the country.
Despite the challenges being faced in Chipinge and across the country, Dairibord still believes that the Chipinge region, as well as the country still provides growth opportunities for milk producers.
“Chipinge as a dairy farming region presents one of the best conditions for low cost milk production in the country by virtue of it being in natural farming regions one and two. There is therefore enormous opportunity to increase long life milk production at the Chipinge plant for both the domestic and export markets,” said Mutaviri.
She said the company will consider the export market once it has satisfied the local market.
“When milk supply was not a challenge, Dairibord used to export Steri Milk to regional markets such as Zambia, DRC, Mozambique and Malawi. Increased raw milk supply in Chipinge will result in increased plant capacity utilisation and consistency in Steri Milk supply for the domestic market and foreign currency generation through resumption of exports into the SADC and COMESA market,” she said.
Mutaviri said the country has the potential to improve milk production if the challenges highlighted above are addressed.
“We believe that if the challenges identified above are addressed, milk production in the country will improve significantly as dairy farming will once again become an attractive investment opportunity for existing farmers as well as new players. In addition, yield per herd will also improve as animal health improves,” said Mutaviri.
The country has been averaging between 45 million and 55 million litres of milk per year over the last three years, according to official statistics. This is against a national demand of 120 million litres of milk per annum, which has resulted in the deficit being offset by imports.
National milk production increased from 150 million litres in 1980, peaking at 256 million litres in 1990 before plummeting to an all-time low of 36 million litres in 2009. Government is targeting milk production to rise to between 97 million to 100 million litres per annum by 2019.
The country has potential to process 400 million litres of milk per year.
