CFI Holdings Limited has revealed that demand for stockfeeds has remained flat as a result of the difficult operating environment.
In a trading update for the first quarter ended December 31, 2022, the company said the sales volumes for stockfeeds at its subsidiary, Agrifoods, were depressed during the period.
“Agrifoods sales volumes performance was flat at prior period levels as demand for stockfeeds remained stagnant in the face of general economic challenges,” the company said.
Among the economic challenges the country is facing includes currency distortions, frequent power outages which last up to 18 hours a day and high inflation.
The agri-processor said during this period sales volumes for the retail division’s key revenue drivers increased by 9% except for fertiliser.
“However, fertiliser sales were constrained by the commodity's significant real price increases following the war in Ukraine which disrupted global supply chains,” the company said.
The depressed fertiliser sales were further exacerbated by the depressed producer prices for tobacco and maize coming into the current season.
However, the company’s subsidiary, Victoria Foods enjoyed stable wheat supplies during the quarter following the country's successful winter wheat season.
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“Notwithstanding, sales volumes contracted by 19,8% compared to prior year and this was a result of the flour mill operating under subdued capacity following power supply shortages, while maize supply constraints subdued the maize mill operations,” the company revealed.
CFI Holdings said compared to the same period last year, its Glenara potato harvest declined by 5% due to the shortage of seed supply as compared to the same period in the prior year.
It noted, however, that the estate increased its area planted under commercial maize and soyabean by 11% and 19%, respectively compared to prior year, adding that it should help in underpinning raw material supplies to its subsidiaries Victoria Foods and Agrifoods.
The agri-processor’s group inflation adjusted revenue for the quarter was 9,9% higher than the comparative prior year period.
Despite the challenging operating environment, CFI projects that aggregate demand will be high on the back of an anticipated good agricultural season, which ordinarily boosts consumer spending on basic foodstuffs, farming, construction and mining activities.
“The group will therefore remain focused on exploiting any opportunities to contribute to the overall business performance, while monitoring its operating costs in light of hardening costs and periods of stagnated growth,” it said.
