By Alois Vinga
LISTED AGRO-focused company, CFI Holdings has blamed exorbitant fertilizer prices charged by suppliers during the 2022/2023 agricultural season for the commodity’s depressed sales volumes.
A 50kg bag of fertiliser which a farmer used to buy at US$35 rose sharply to almost US$95 causing viability challenges in crop production for Zimbabwean farmers over and above fuel and seed price increases experienced during the farming season.
Presenting a trading update for the third quarter ended December 31 2022, CFI company secretary, Panganayi Hare confirmed the impact of high prices on sales volumes.
“During the period, sales volumes for the Retail division’s key revenue drivers, other than fertilizer, increased by 9%relative to prior year. However, fertilizer sales were constrained by the commodity’s significant real price increases following the war in Ukraine which disrupted global supply chains.
“This was further exacerbated by the depressed producer prices for tobacco and maize coming into the current season,” he said.
The outcry is in sync with earlier worries expressed by farmers ahead of the farming season to the effect that there had been a significant rise in agricultural input prices especially fertilizers which in turn increased the cost of production for large-scale farming.
Considering that agricultural economics dictate that fertilizer costs comprised 50% towards the cost of crop production, it is highly likely that input costs were high for farmers.
Meanwhile, during the period, CFI’s subsidiary, Agrifoods’ sales volumes performance was flat at prior period levels as demand for stock feeds remained stagnant in the face of general economic challenges.
Victoria Foods enjoyed stable wheat supplies during the quarter following the Country’s successful winter wheat season.
Sales volumes contracted by 19,8% compared to prior year attributed the flour mill operating under subdued capacity following power supply shortages, whilst maize supply constraints subdued the maize mill operations.
Compared to the same period in prior year, Glenara potato harvest decreased by 5% as planting was constrained by seed supply shortages.
However, the Estate increased its area planted under commercial maize and soya bean by 11%and 19% respectively compared to prior year. This should assist in underpinning raw material supplies to Victoria Foods and Agrifoods.
Overall, Group inflation adjusted revenues for the quarter were 9.9% higher than the comparative prior year period.