LISTED milk processor Dairibord Holdings has said its Malawi operations have been affected by the country’s economic problems which include serious foreign currency shortages although sales volumes there grew 7 percent.

“Business in Malawi continues to be affected by foreign currency shortages and restrictive retention polices. In May 2012, the Malawi kwacha (MWK) was devalued by 49% to MWK250 to the $1, exerting pressure on costs,” Dairiboard chairman, Leonard Tsumba said.

“Year-on-year inflation which was at 9,8% at the end of December 2011 closed the month of June 2012 at 20,1%, eroding the purchasing power of customers.”

Malawi has been beset with economic problems since the IMF sharply curtailed lending facilities last year while other key donors also withdrew critical support.

Meanwhile, Dairiboard said sales volumes over the six months to June increased 9 percent to 32,245 million litres helping group revenues top US$48,6 million, a 14 percent improvement on the corresponding period last year.

“Food volumes grew by 14%, beverages 14% and 3 % for milk. Growth in foods and beverages was driven by increased capacity from significant investments in the yoghurt, Nutriplus and Cascade equipment; all commissioned in 2011,” Tsumba said.

Even so, the company faced several operational challenges including the high cost and erratic supply of utilities, particularly water, perennial liquidity challenges in the market as well as the increased cost of key raw materials as factors which weighed down production.

In addition, most retail outlets continued to stock dairy products imported from South Africa.