The Sunday Mail
By Peter Gambara
Over the past few years, a lot of industries have been closed sending many workers home, sometimes without any terminal benefits.
The challenges faced by most of these companies that are closing include obsolete equipment, shortage of working capital and unfair competition from imported goods.
Since our economy has always been agro-based, agro-processing provides an opportunity to resuscitate our local industries and provide the much needed jobs for our people.
Agro-processing is the turning of primary agricultural products into other commodities for the market.
This can include food processing and preservation, turning some products into fibre or other useable forms and providing raw materials for industry.
Food processing can include turning groundnuts into peanut butter, milk into sour milk, cheese or yoghurt, grain into meals.
Food preservation includes canning fresh products like fine beans, or peeled tomatoes or drying leaf vegetables into dried vegetables (mufushwa). Agro-processing also includes the ginning process in cotton where the cotton is turned into yarn and eventually cloth and processing tobacco into cigarettes.
It also includes processes like turning trees into timber or furniture.
The benefits of agro-processing include increasing the value of the crop, e.g. cheese and yoghurt will have a bigger value than the original milk from which they were derived and peanut butter will have a higher value than groundnuts.
Agro-processing also reduces waste, for in the example of vegetable drying, a farmer would ordinarily throw away excess vegetable, but through drying, he/she preserves the product for future use.
This will definitely enhance food security as the dried vegetables can be used during periods of shortage, and it is also in great demand in Europe where snow prevents the growing of vegetables for long winter months.
Through processing groundnuts into peanut butter, small scale farmers can use the product in their cooking processes or some take it into urban areas where they can sell the peanut butter.
That way they will have improved their livelihoods.
Another benefit of agro-processing is it makes the product usable, for instance where as a tree might look useless whilst it is in a plantation or forest, after processing, it can be turned into timber that will be used in the construction industry or turned into a piece of furniture.
Cotton is useless whilst in the field, but through agro-processing, it is turned into useable yarn/cloth.
Our golden leaf, tobacco, looks useless when farmers are harvesting and curing it, but once that same tobacco finds its way to our traditional markets in China or Europe, it is processed into high value cigarettes that will fetch much more.
Companies that are into agro-processing can form a firm base in our manufacturing industry.
Olivine has always been known to process products into cooking oil, soap and preserving fresh vegetables, but today Olivine Industries is going through a difficult spell as it faces stiff competition from imports from South Africa.
To make matters worse, the company like many others have not been able to buy new equipment to keep up with current technological advancements. This therefore makes it uncompetitive against South African companies that have state of the art equipment.
Other companies that traditionally provided products onto our markets include Cairns Foods, who processed potatoes into chips and also processed grape into wines. With stiff competition from South African companies, Cairns today is on the verge of collapse and is seeking an outside investor to stay afloat.
David Whitehead was well known for processing our cotton into yarn, but it has also gone through a difficult period and cotton growing, which was once a very viable venture, is no longer that attractive as the producer price have remained low.
Tobacco processing companies seem to be the only companies that have managed to stay afloat as there is no real competition from imported cigarettes.
Most of the tobacco (97 percent) that we grow is exported in row form to markets in China and Europe where it is further processed into high brand cigarettes. Some of our tobacco processing companies have managed to penetrate these foreign markets with their locally processed cigarettes.
What is the way forward therefore as far as agro-processing is concerned?
Over the years most of these companies have agitated for protection from imports.
However, Government has been reluctant to provide blanket protection, arguing that this might promote inefficiency among the local industries.
Some have advocated for a time framed protection e.g. 5 years, whilst they re-establish their roots through equipment upgrading and consolidation of their markets.
It would look like some piecemeal legislation has been put together over the years as companies approached Government seeking some form of protection.
As we sit down to craft the 2015 National Budget, maybe the responsible authorities should investigate how other countries are managing to oil their industries so that they are competitive internationally.
South Africa, just next door will provide a good starting point.
Local companies have also advocated for Government to provide some funding that would enable them to recapitalise their operations so that they can compete with imports.
Government has set aside some funds, but the uptake of these funds has not been smooth.
Up to this day, some companies blame high taxation levels and ZIMRA garnish orders as some of the reasons they cannot find their feet.
Tax authorities have counter argued that they are accommodative to companies that approach their offices with payment plans for arrears.
Whilst it is not a secret that Government is struggling to raise enough capital to meet its needs, surely it can still source some funding to support local industries from some international banks or funders.
Direct investment to resuscitate struggling agricultural companies continues to be scarce locally and companies that have sought some investment only got some meaningful offers from foreign companies.
These include Cairns Foods, Blue Ribbon Foods and Seed Co-op Ltd.
Olivine Industries is also struggling to find a local investor.
This therefore points to our need to make Foreign Direct Investment (FDI) more attractive than it currently is.
Whilst Government recently climbed down on the way the Indigenisation policy should be implemented, the question is have we done enough as a country to attract that much desired FDI?
Agro-processing has and continues to be one way through which we can increase value addition to our local agricultural products.
Industries that were into agro-processing have always existed, but most of them are now facing closure due to unfair competition from imports resulting in massive retrenchments of our labour force.
Should we fold our arms whilst most of our people continue to lose jobs and our products are being exported in raw form.
It’s high time we explored ways of resuscitating agro-processing companies that are facing challenges with a view to keeping them afloat and eventually turning them into profitable companies.
Peter Gambara is an agricultural economist and local farmer.
