Dairibord decries inflation impact on raw milk output

Business Correspondent

LISTED milk processor, Dairibord Zimbabwe Limited (DZL) has bemoaned rising inflationary pressures which it says are impacting on raw milk output amid hopes that the Reserve Bank of Zimbabwe’s  current efforts to contain inflation will positively impact the markets.

Presenting a trading update for the quarter ended March 31 2022, DZL company secretary, Samuel Punzisani described the just ended quarter as being characterised by rising inflation which was largely a product of imported inflation, exacerbated by the Russia – Ukraine war.

The company also noted the impact of rising inflation on the back of lower than expected rains in the 2021/2022 agricultural season which curtailed the economic prospects and projections for industry in 2022.

“As a result, farmers were not spared from the inflationary impacts of increasing costs of fertilizer, fuel, and other inputs. Dairibord persisted in supporting farmers with regular raw milk price adjustments in line with their cost build-up to ensure they remain viable and poised for volume recovery,” he said.

However, the company’s raw milk utilised remained firm over the period and accounted for 33% of raw milk utilised by processors.

During the period, sales volumes, at 23 million litres, were 17% above the same period in 2021, with Foods and Beverages increasing by 29% and 31%, respectively.

Liquid milk sales fell by 4% due to plant unavailability on the UHT line which was under commissioning as the demand for the group’s products remained strong with the business not being able to fully satisfy the market across all product categories.

The commissioning and optimisation of several capital projects, aimed at increasing product supply, were also implemented during the period, particularly in the Liquid Milks and Beverages category.

Revenue of ZW$ 3,9 billion for the period under review represented a 129% growth over prior year, due to positive price and volume performance with export revenue growing by 149% over the same period last year while domestic US$ revenue grew by 190%.

“A combination of the continued depreciation of the ZW$ and hyperinflation pose a threat to business performance. Notwithstanding, it is anticipated that interventions put in place by government and the Reserve Bank to cushion business from external shocks and stabilise the foreign exchange markets, if successful, may go a long way to curtail inflation and local currency devaluation,” added Punzisani.

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