MILK processor, Dairibord Zimbabwe says it has embarked on initiatives to supply milk at low cost, while producing high volumes.

The long-term benefits are expected to be competitive local milk prices, import substitution for milk powders and opportunities for export growth.

In a statement accompanying the firm’s financial results for the six months ended June 30, 2022, the group said the price of stockfeed continued to rise in line with food inflation pressure.

“According to the Ministry of Agriculture’s Dairy Services Department, Zimbabwe’s H1 2022 milk intake by processors rose 17% to 38,96 million litres from 33,42 million litres in the comparative period. Dairibord utilised 12,29 million litres, representing 32% of the total intake by processors. The group retains its position as the processor with the highest milk intake, albeit at lower levels,” the group said.

“The price of stock feed continued to rise in line with food inflation pressure. The group has elevated initiatives for aggressive milk supply development for low cost and high-volume milk production. The long-term benefits will be competitive local milk prices, import substitution of milk powders and opportunities for export growth.”

Demand for the group’s products remained firm across all categories while overall sales volumes for the period grew 11% ahead of the same period last year.

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Of the total sales volumes, 40%  was sold in foreign currency, with 8% going into the export market  and 32% through the domestic market. The group said liquid milk’s contribution to total volume was 28%, foods 10% and beverages 62%.

“This affirms the growing contribution of non-milk product categories and product portfolio diversification, in line with our “more than just milk” strategy. Inflation adjusted revenue grew 40% to $17,12 billion compared to the same period last year. The growth in revenue was driven by growth in volumes and moderate price adjustments to preserve margins.”

In the outlook, Dairiboard said the group’s main thrust was on volume growth to close the gap between demand and supply in most product categories as well as cost containment.

The growth is expected to be largely driven by the beverages and foods business benefitting from the commissioning of plant and equipment for additional processing capacity in the third quarter of the year.

“The group will also focus on realignment of its route to market to increase cash receipts, local US dollar sales and exports. High cost and erratic supply of utilities mainly electricity and water are expected to persist. The decrease in the price of fuel remains welcome if sustained,” it said.

“High cost of borrowing and short tenures will pose difficulty for business to bridge working capital cycle gaps and fund investments in plant and equipment for growth. Inflationary pressures are forecasted to subside as a result of Government efforts to stabilise the economy.”

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