ZAMBIA – Cargill has announced that it will cease all operations at its soybean processing and vegetable oil refinery plant in Lusaka, Zambia effective end of October.
The American based grain and agricultural corporation made the decision in regard to increasing amount of illegal imports of vegetable oil from neighbouring countries, a Lusaka Times report reveals.
According to media reports, the closure will result in the loss of nearly 260 jobs.
Cargill indicated that it had notified the company employees and was working to minimize the impact of the job losses in line with country labour laws and regulations.
The company said it was considering mothballing the facility in a safe and responsible, a move that will see retention of approximately 45 employees in essential roles to ensure the safety, maintenance and operational integrity of the site.
Additionally, the company said it is exploring options for the future of its business in Zambia.
Cargill entered the Zambian market in 2006 with operations in grain and oilseeds, trading, and providing market access to farmer crops.
The company completed the acquisition of Zamanita Limited, the soybean crushing and oil refining subsidiary of Zambeef Products Plc in 2015.
Influx of cheap imported products
Cargill, among other players in the edible oil industry have been battling imported cheap edible products compounded by the fact that local products face 16% value added tax (VAT).
Producers say they face unfair competition from foreign products sometimes smuggled into the country given the duty they have to pay on the goods they produce.
A Zambia Daily Mail report noted that smuggled brands were selling less of the amount that local firms include on their products and these included Pan Palm, Sunsstar, Golden Valley, Pam Olein, Dona, Ajwa, Peonu, Eco Fry, Quick Fry, Eden Gold.
To compete fairly with imported brands, edible oil manufacturers last year called on the government to scrap the VAT on such products.
Zimbabwe, Tanzania, Mozambique, and South Africa are among the countries that have moved to remove VAT on edible oil.
In 2017, the Malawian Revenue Authority removed the 16.5% VAT on cooking oil to boost local capacity.
Zambia imports crude palm oil worth over US$70 million annually with an oil seed crushing capacity of over 700,000 tonnes.
In 2017, soya crop was estimated at 300,000 tonnes compared to 70,000 tonnes produced six years before.
Zambia needs to import oil as it is not self-sufficient on crude oil production but statistics show the country has adequate capacity to process and refine crude oil to meet the demands of the country and export.