HARARE – Tiger Brands’ associate unit in Zimbabwe, National Foods, has failed to pay for wheat supplies and has warned that it is closing down its flour mills, a development that may result in bread and other confectionery product shortages in that country.
Zimbabwe is battling economic hardships that have worsened the supply of basic goods and commodities. The government has blamed some of the shortages on foreign currency constraints, while economists have cautioned that the government has to drop subsidies on wheat and fuel imports.
Some South African companies operating in Zimbabwe have been hit by the foreign currency crunch, with Nampak limiting its exposure to currency woes.
Zimbabwe faced the closure of gold mines two weeks ago after bullion producers complained that inadequate access to foreign currency proceeds from gold sales was rendering operations unsustainable. The government increased the amount of forex that gold and platinum miners retain in hard currency, but this has also opened gaps in other sectors requiring foreign currency such as wheat importation.
Tiger Brands’ associate unit has also faced “difficulties” in the economy and is now shutting down its mills.
“Due to the delays in repatriating payments to our foreign wheat suppliers, our wheat suppliers have today instructed National Foods to immediately cease draw-down of wheat stocks,” said Michael Lashbrook, the chief executive at the Tiger Brands associate unit in Zimbabwe in a letter to stakeholders.
“National Foods will mill out the wheat in process, and we anticipate both our mills in Harare and Bulawayo to close on 5 December (today).”
National Foods, in which Tiger Brands has a significant stake, is controlled by Innscor Africa, which also runs a bakery and confectionery unit in that country. It said it would resume flour milling operations “once payment is made” to facilitate payment of its foreign obligations for wheat imports. “Our suppliers regret having to take this position, but have themselves reached the point where they cannot fund their businesses.”
The closure of the company's flour mills comes despite the Grain Millers Association of Zimbabwe endorsing a flour price hike from $36.50 (R499) a 50kg bag to $39.65, which translates to a hike in the price of bread of about 3 cents a loaf.
Tafadzwa Musarara, the chairperson of the grain millers grouping, said the association's technical and costing committee had new “maximum prices of our staple products” at a meeting held on November 27. This had been endorsed in a bid to “maximise consumer purchase value this festive season”.
Prices of basic foodstuff have been rising in Zimbabwe, and President Emmerson Mnangagwa has warned that his government would deal with businesses hiking prices without justification.