eBusiness Weekly
Oliver Kazunga
The Cold Storage Company (CSC) is set to re-open after the Easter Holidays for the first time in two decades with the company hoping to generate US$50 million annually through exports once operations are in full throttle.
Zimbabwe’s biggest meat processor and marketer, is being revatilised after the Government in 2019 signed a US$400 million Joint Venture Farming Concession Agreement with Boustead Beef Zimbabwe, a United Kingdom-based investor.
Under the new set up, the company has changed name to CSC-Boustead Beef Zimbabwe and the investor will take over and manage CSC ranches for an initial period of 25 years.
At its peak in the 1990s, CSC had an annual quota of 9 100 tonnes annually to the European Union earning the country US$45 million from that market.
However, as the agro-industrial processor resumes operations it is drifting from exporting to the EU because of the stringent requirements and that CSC-Boustead Beef has found lucrative markets mainly in Asia and Africa.
In an interview, CSC-Boustead Beef consultant, Reginald Shoko said: “We have not changed our re-opening deadline.
“Now that one of the major components here at the Bulawayo factory has been installed, we have moved into the replacement of some of the spares and components at the plant and the exercise is above 95 percent complete.
“We expect that after the Easter Holidays we’ll be conducting test runs of the plant and we still maintain that the factory will resume operations this month.”
Overall plant upgrade, at the Bulawayo factory involves electrical engineering works, replacement and installation of new spares.
In January, condensers and other equipment in the refrigeration and control room section had been revamped.
Revamping of the Bulawayo plant, he said, has been delayed by the Covid-19-induced national lockdowns from that Asian country.
At its peak, the company that owns four abattoirs, used to employ 1 500 permanent workers and about 700 casual employees, thereby making it one of the country’s biggest employers.
It is hoped that as capacity utilisation and throughput improve after resumption of operations, the plant will gradually increase the number of people employed.
Engineers undertaking the firm’s plant rehabilitation project that by the end of the year, CSC-Boustead Beef will be operating at full throttle.
In the short to medium-term, Shoko said they are planning to double output of the Bulawayo plant from slaughtering 900 to about 2000. This, he said was also on the back of state-of-the-art technology that has been installed in some departments at the Bulawayo.
“There are challenges that also emanate from the fact that this plant has not been working for the past 20 years. So, we hope those technical glitches would have been resolved by the end of the second half of this year after which we’ll then start exporting mainly to Europe and not the EU, to countries such as Britain.
“The EU has stringent conditions, for example, they want a quota of 9 000 tonnes of beef per year and we are not able to supply such. However, we are also taking advantage of Britain exit from the EU and we’ll be supplying that European country among others with beef from Zimbabwe.
“We also have uptake orders that have been signed with countries mostly in Asia and Africa,” said Shoko.
As part of preparations to resuming slaughtering at the Bulawayo factory, CSC-Boustead Beef was also in the process of resuscitating feedlots such as Winterblock in Umguza, Matabeleland North province.
In sync with the National Development Strategy 1 (NDS 1), he said the company has introduced a feedlot benefit scheme called Water-to-Beef (H2Beef) for the communal farmers.
“Traditionally, a communal farmer would sell a steer which has not been properly pen fattened and is underweight and in poor condition for as low as US0,70 a kilogramme up to US$1,20kg with an average live weight of approximately 180kg thereby receiving payment less than US$180kg for the beast.
“With the H2Beef option, the communal farmer delivers the steer to the feedlot at 180kg, can access a micro loan (up to the US$180 value of the delivered steer) if required,” said Shoko.
After feeding, he said CSC-Boustead Beef will pay an average US$1,60kg for a 300kg beast or US$480.
“After deductions of the micro loan and feedlot costs, the farmer typically will receive the initial US$180 micro loan plus US$130 for the feedlot gain.
“The total received by the farmer for the beast will be US$180 plus US$130, for a total of US$310, which is over 70 percent than what a farmer receives presently,” he said.
The beef processor and marketer has ranches in Maphananeni in Khezi district, Dubane in Gwanda district, Nyamandlovu in Umguza, Chivumbuni in Mwenezi district, Mushandike in Msvingo, Darwendale in Mashonaland West province and Willsgrove in Bulawayo.
Through a partnership arrangement that the investor has with various stakeholders, CSC-Boustead Beef has over 25 000 breeding stock across the country.
Before the Boustead Beef Zimbabwe deal, CSC faced some challenges, including working capital constraints and stiff competition from private abattoirs.
Since its establishment in 1937, the company enjoyed a monopoly and the Government then deregulated the industry in 1992 after the adoption of the Economic Structural Adjustment Programme (ESAP), thereby opening up competition from private players.
This sunk the company into viability crisis after a sharp decline in cattle throughput the country.
Only a year after the deregulation of the industry, the company had lost 50 percent of its market share to private players.
CSC had not been financially capacitated to withstand competition.
The company then largely survived on European Union (EU) exports since it had a US$15 million revolving payment facility with the bloc.
It also had an annual quota of 9 100 tonnes and used to earn at least US$45 million per year from the EU export quota.
However, the facility was discontinued when the EU suspended imports in 2001 following an outbreak of foot-and-mouth disease.
