Bulawayo, (New Ziana) – The closure of some large retail outlets has negatively impacted dairy processors in Zimbabwe, as many of their perishable products cannot be sold in the informal market, an official has said. Dairy Processors Association of Zimbabwe (DPAZ) secretary general Tendayi Marecha, said this during a meeting with stakeholders on Wednesday, adding their members previously benefited from the large retail shops, as they were better equipped to handle perishables.

Recently, the country has witnessed the closure of some major retail outlets such as OK Supermarket, Spar and N Richards, which all cited an unstable exchange rate, high taxation and unfair competition from informal traders as reasons for shutting down, although some economic commentators have alleged sabotage to force the government to allow trading solely in foreign currency, notably the greenback. The development has resulted in the proliferation of small shops, commonly known as tuck shops, in the downtown areas of the cities and towns.

“I want to emphasize that milk, being a perishable product, cannot be sold in these tuck shops. We were really benefiting from the former retail shops. With the closure of shops like OK and N Richards, we are finding no market for our goods. Visit our warehouses, and you will find that they are full. We don’t have a market for perishables,” Marecha said.

She said their members are being forced to discontinue some product lines, such as yogurts and ice creams, because they cannot deliver to the informal sector.

“So, we are just maintaining a few products. When you look at our National Development Strategy 1 (NDS1) report for 2024, it indicates we achieved up to 80 percent capacity utilization. This is not reflective of milk production. What the dairy processors have done is find alternative products that they can make using the same equipment,” she added. Marecha said they are now producing Mahewu (a popular fermented beverage drink made from sorghum or maize meal) instead of milk, due to insufficient supply and lack of market demand. “Milk is difficult to sell. For the sector to survive, we have ventured into alternative products just to keep our heads above water.

“Zimbabweans don’t consume enough milk. Our per capita consumption is only 7 litres per person annually, while the recommended intake for Africa is 37 litres, and the World Health Organization (WHO) suggests 45 litres per person annually. “We are starting from a point where we cannot even discuss nutrition security. It means we need to do a lot to achieve nutrition security,” she explained.

She also cited the high regulatory costs in the country, which she said contribute to the increased cost of production.

“I want to point out that we are paying a total of about 17 levies and licenses. We recommend that these should be reviewed and merged. As processors, we see them as cost centres. It’s money that is going out, and we don’t really benefit from all the fees we pay because some of the licenses and fees are duplicative.

“There is a need to thoroughly review our structures to identify which units have become redundant and which can be merged to reduce costs for the manufacturing sector,” she said.

Marecha further noted that they import many components for dairy processing, and high taxation is driving up manufacturing costs. “Most of the packaging we use for processing dairy products meets food quality standards, but we don’t get most of the packaging we need locally.

So, we import it. When we bring these items in, they incur significant taxes, which ultimately increases our manufacturing costs. “If you go downtown, you’ll find that a litre of UHT milk from Malawi or Zambia costs between 80 cents to a dollar, while in a supermarket like Pick n Pay, our milk is selling for $1.70 per litre,” she explained, adding that many locals have turned to substitutes like Cremora due to price sensitivity.

“We are price-sensitive. If I ask how many people are buying milk every day in their homes, most of us who work in the dairy industry have resorted to substitutes like Cremora,” Marecha said.
New Ziana