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Zimbabwean Beef Processor Close to Going Under

14 October 2015

ZIMBABWE - The Cold Storage Company (CSC), a Zimbabwean meat company that used to supply 9,100 tonnes of beef to the European Union yearly until 2001, is tottering on the brink, writes Ian Nkala.

Successive droughts, recurrent outbreaks of foot and mouth disease, loss of lucrative markets, mismanagement and the prevailing economic crisis have resulted in the CSC becoming a minor player on a market it used to dominate.

CSC chief executive officer, Ngoni Chinogaramombe told members of a parliamentary portfolio committee on agriculture that visited the parastatal’s head office in Bulawayo recently that the company is saddled with a US $25 million debt.

It also owes its 413 employees $3.5 million in salary arrears dating back to 2009 and operates at 10 per cent capacity. In July, an auctioneering firm, Hollands auctioned 399 CSC head of cattle to raise money to pay the company’s $453,110 owed to workers.

Mr Chinogaramombe told the committee that in the first five months of this year, the government company slaughtered just 5,600 animals out of the 97,000 the beef processing sector killed between January and May.

“The biggest challenge for the CSC is finance, they need money,” portfolio committee chairman, Chris Chitindi said. “We know they have applied to government to dispose of some assets and land which could earn them $11 million.

"We are going to push so that it could be expeditiously approved so that they sell the land and excess machinery that they would want to export.”

Mr Chinogaramombe said a turnaround strategy being considered by the sole shareholder - the government - involves unbundling the CSC into three regional units and selling off non-core assets like houses currently occupied by the company's employees. If approval is granted for the sale of the assets, about $11 million would be raised, he said.

“We need to break the CSC into three companies for investors to come in,” he said. “The first company being Chinhoyi and its farms, second being Bulawayo and its farms and finally Masvingo and its farms.”

The new investor would have to also invest in restocking the parastatal’s herd, now at 792, a far cry from around 10,000 head of cattle in 2000.

He said the CSC’s two operational abattoirs are now slaughtering about 600 cattle weekly for service slaughter, up from 280 between January and May. It charges $25 per beast.

“However,” he said, “these are not our beasts and that service we are offering is not our core business that we can rely on. Our duty is to slaughter for the nation.”

CSC owns four abattoirs in Bulawayo, Masvingo, Chinhoyi and Kadoma as well as ranches across the country where 8,533 animals forage. Of these, 7,741 are owned by tenants and 792 are the CSC’s.

The Bulawayo abattoir, which is still using machinery donated by the European Union in 1990, is the biggest in the country.

Discussions, said Mr Chinogaramombe, are ongoing with prospective investors to inject at least $90 million needed to revive the CSC.

Paddy Zhanda, the deputy minister of agriculture, said he is confident that CSC can be revived.

“We are waiting for Cabinet approval and I am sure you know how Cabinet works,” he told state-owned The Sunday Mail in July.

“We cannot talk of investors now when we have not even injected any capital ourselves into the company. An investor cannot come and put money into a company without any structural plan, but we will make sure it will be resuscitated and ensure it is viable.”

TheCattleSite News Desk

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