LOCAL research firm, IH Securities, says National Foods (NatFoods) aggregate volumes for the year will stay on a positive trajectory anchored by its defensive staple offering.
In its Zimbabwe Agriculture Sector Report, IH Securities projected a 1% growth on NatFoods topline year-on-year (y/y) to US$348 million in FY24.
This comes as local companies have been affected by the impacts of the El Niño phenomenon during the 2023/24 farming season.
“National Foods has continued with its ongoing capacity expansion initiatives, thereby providing further volume potential for the group. We estimate that National Foods’s topline will grow 1% y/y to US$34 million in FY24,” IH Securities said.
“Changes to value-added tax that went into effect in January 2024 harmed the cost of production. However, the first half of FY24 also saw a downward correction in global wheat prices allowing for price reductions, especially in the bread value chain.”
According to the report, aggregate volumes saw a 3,4% uplift versus the comparative period last year to 285 000 tonnes.
The stockfeed division led in performance with a 14% increase in volumes on the back of performances in the poultry and beef categories.
IH noted that despite the low yields due to the drought, a modest recovery for NatFoods in the maize segment was expected as the government has allowed the imports of grain to come in duty-free.
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“The government has allowed millers to privately import grain to supplement the local harvest in light of current El Niño conditions. National Foods has announced it will be leveraging its balance sheet for an import programme, ensuring consistent raw material supply in its pipeline. We, therefore, expect a modest recovery in the maize segment,” itsaid.
IH Securities noted that the impact of El Niño were going to persist in Zimbabwe, despite the 2024/25 La Niña predictions.
“According to climatologists, the second half of 2024 is expected to bring forth a change in weather conditions in La Nina. Regions such as southern Africa, southeast Asia, and Australia are expected to receive heavy rains from December 2024 to August 2025,” it said
“However, as per the August update by ReliefWeb, the long-term impacts of El Niño in southern Africa on food security will persist into March 2025. The government has begun preparations for the 2024/25 summer cropping season at a cost of ZWG22 billion, which is expected to be 40% funded by the Presidential Inputs programme.”
The research firm said total cereal production for the country was targeted at 3,2 million tonnes with area under hectarage forecast to increase to 2,5 million hectares.
Small grains are projected to increase yields from 180kg/hector to 800kg/ha post the drought period.
“As per the Ministry of Lands, Agriculture, Fisheries, Water and Rural Development, maize production in the coming season is anticipated to increase to 2,7 million tonnes with yields improving from 0,8t/ha to 1,5t/ha,” it said“Total cereal production is targeted at 3,2milliontonnes with area under hectarage expected to increase to 2,5million hectares with small grains expected to increase yields from 180kg/ha to 800kg/ha post the drought period. Authorities have however noted the vulnerabilities linked with rain-dependent farming following the catastrophe in the just-ended farming season.”
In respect of livestock value-chain development, IH Securities said the target for the 2024/25 summer plan was to increase the beef cattle herd to 5,80 million from 5,72 million in 2023/24. Goat numbers will increase to 5,24 million from 5,09 million in 2023/24. Milk production is also expected to increase to 115 million litres from 99,82 million litres in 2023/24. The research firm applauded government’s move to cushion consumers and manufacturers by allowing maize imports in the country duty-free to plug the current deficit.
