Walter Nyamukondiwa Chinhoyi Bureau
The move by the National Social Security Authority (NSSA) to inject money to resuscitate the Cold Storage Company (CSC) has generated enthusiasm as many people anticipate the good times will roll again in areas where the company used to operate.
Coming at a time when Government has extended Command Agriculture to livestock, following success of the maize crop, optimism is not misplaced.
However, the envisaged injection of about $18 million is not the magic bullet to guarantee a return to the blue chip status of yesteryear without structural reorganisation through the value chain.
It’s not going to be an easy task considering capacity utilisation had fallen to below 10 percent in recent years. Vast expanses of land under the control of CSC across the country are largely empty with few cattle, most of them belonging to individuals and companies renting the space.
Most factories have not been used for several years which means that some of the equipment could have been overtaken by technological advances. This means that although still good enough to do the job, some components could be missing as often do underutilised or neglected things. An inventory will give a true picture of what is left of the machinery.
Part of the reason why CSC collapsed in the first place was farmers who reneged on loan facility agreements that would see farmers bringing their cattle for slaughter at CSC. Farmers instead went to the then emerging private abattoirs who offered more.
The same farmers would have been given heifers under a contract-farming agreement. Under the arrangement farmers would raise the heifers and bring cattle for slaughter after about three years. It was mostly the so called big or commercial farmers who started supporting side marketers who went on to thrive while CSC ran into financial difficulties.
Although, causing losses due to poor return on investment, the arrangement seems to offer a viable option to ensure a healthy flow of cattle for slaughter. This will keep the large abattoir running, provide impetus for growth and a return to profitability. The arrangements have to be revisited but with safeguards to ensure players stick to the agreed framework.
Prudent management will also help oversee the rising of the phoenix, so to speak. Communal and small-scale farmers proved to be reliable players as they would honour their end of the bargain. Nostalgic memories of the European Union quota that resulted in a windfall of up to $45 million annually are still fresh and market research to find out current trends need to be undertaken.
Zimbabwe had a quota of 9 100 tonnes of beef with the EU block which was however, stopped in 2001 after a foot and mouth disease outbreak. While resumption of operations is the immediate objective, a return to the export market should be the ultimate. Health concerns related to meat products coming from a major producer like Brazil provide a window of opportunity.
That can only be possible with careful planning and investment into areas that give CSC a competitive edge. With traceability of cattle becoming a major issue on the international market, systems to account for each beast from origin to the place of slaughter need to be put in place. This involves use of tags and branding which have been successfully implemented in Botswana.
Special attention needs to be placed on breeding as the average weight of cattle has dropped to around 170kgs from nearly 190kgs. Effort should be expended in providing better pastures, vaccination of animals and proper segmentation to avoid in-breeding which results in poor average weight.
Mashonaland West province for instance has about six private abattoirs and CSC needs effective strategies to attract cattle for slaughter while restocking the nearly empty cattle ranches. Darwendale ranch measures around 8 000ha but has about 100 cattle while CSC has around 600 cattle countrywide. At its peak it used to employ 1500 workers but the figure has since dropped to around 500 people.
It had the capacity to slaughter about 600 000 cattle per year with the then EU export certified Chinhoyi plant having a capacity of slaughtering 500 cattle per day. Synergies with private players can be brokered to ensure any envisaged demand from export markets can be satisfied while CSC builds capacity.
Resuscitation of CSC has the capacity to provide employment for thousands of people but adopting a lean structure to extricate the company from its collapsed state is needed initially. With increased capacity more can always be absorbed. A debt overhang of around $25 million remains an albatross on the neck of CSC and nothing short of its assumption by government or at least part of it will help.
It is laudable that NSSA is intervening in a phased approach that will see Bulawayo and Chinhoyi branches being resuscitated first while others will come on stream later. Government has shown the way by appointing a new board to lift CSC from the intensive care.
To the new board, a lot is being expected from varied interest groups who expect a jolting of this lying giant into active participation in the country’s economic sphere. The resultant dividend will make a large section of the population smile.
While applauding the injection of money into the entity, investment in stock to increase the herd in the nine farms across the country and contracting farmers should be the priority. This safeguards against abuse of funds while building a solid foundation for CSC to stand alone.
Injection of money could attract creditors including workers owed over $2 million to recover what the company owes. Out grower programmes will ensure a steady rise of the national herd which translates to more stock for slaughter. Awareness programmes targeting farmers to convert their stock into cash is also needed. This ensures people do not keep cattle for sentimental reasons beyond their optimum commercial value.
More needs to be done to improve the quality of cattle including artificial insemination outreach programmes. These will ensure an improvement in the average weight of the cattle and overall quality of the beef.
One of Zimbabwe’s selling points is the use of organic and natural means to grow cattle which gives the beef a distinct taste. Others due to technological advances have moved to genetic modified feeding and breeding.