Forex shortage affects cooking oil production

ZIMBABWE – Cooking oil producers say they can no longer access raw materials on credit from their foreign suppliers, following a reduction of foreign currency allocations to less than $1,5 million per week.

In a statement on Monday, the Oil Expressers Association of Zimbabwe (OEAZ) said its members required at least $5m per week to import soya beans, crude edible oils and other raw materials to satisfy the national demand for oil and related products.

For the 28 weeks ended July 31, 2017, OEAZ said they received $61m, which is $2,2m per week ($8,8m per month) which is 44% of what the sector requires to satisfy national demand.

In the last two months, OEAZ said foreign currency allocations have been further constrained to less than $1,5m per week (that is 30% of the sector’s actual foreign currency allocation requirement).

“The above foreign currency allocation levels mean that OEAZ members’ credit lines for raw materials have now reached maximum levels and members can no longer access raw materials on credit from their foreign suppliers as they normally do,” the statement read.

“Reserve Bank of Zimbabwe has advised the OEAZ that foreign currency is in short supply, but has assured the association of its commitment to support the sector based on available foreign currency resources.”

The statement by OEAZ comes after RBZ governor John Mangudya lashed at them for increasing the price of cooking oil at a time they were getting foreign currency through official channels.

OEZA said it should be noted that the shortages in certain outlets in urban centres could be averted by immediately increasing the amount allocated as foreign currency or the extending of RBZ supported Letters of Credit to OEAZ members to allow for the importation of adequate raw materials and other inputs.

This is being worked on, it said.

“The OEAZ also wishes to advise that input and raw material costs have escalated, dramatically in the last few months leading to price changes as local suppliers and service providers in particular have adjusted their costs upwards in light of the prevailing economic environment,” OEAZ said.

The association said the poor liquidity and scarcity of foreign currency has meant that fast-moving-consumer goods such as edible oils have become a substitute for cash as a store of value to the informal trade and fuelling higher demand and price inflation.

“The OEAZ is committed to ensuring that the Zimbabwean public has adequate edible oil supplies and related products for its dietary requirements at all times,” it said.

“The OEAZ acknowledges that the long term solution is to increase soya bean production from the current 30 000mt for 2016/17 season to at least 150 000mt per annum in the next three to five years and value chain reconstruction measures to achieve this through government initiatives.”

OEAZ said in spite of constrained availability of foreign currency, they have not had any notable shortage of edible oils for normal consumption in the last few years.

“. . . the public is, therefore, advised not to engage in panic buying, hoarding and speculative purchases which create the impression of acute shortages and the risk of holding a perishable commodity such as edible oil as a store of value.”

Cooking oil sector employs over 1 300 people directly and the factories of its members are located in various parts of the country.

The country requires 8 500mt of edible oils per month and 10 000mt of soya bean meal used primarily for poultry feed.

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