CROCODILE breeder Padenga has engaged government to negotiate on its behalf for meat export exemptions into mainland China as the group seeks to boost sagging exports in Asia, an official said on Friday.
Chief executive Gary Sharp told The Source on the sidelines of the company’s annual general meeting that while Padenga sees meat volumes into Europe increasing by 50 percent this year, a ban on meat exports into China following an outbreak of bird flu in 2013 and competition in the region has seen sales declining in that market.
Total meat volumes were up 35 percent to 282 tonnes in 2014 with export sales accounting for half.
Padenga undertook sales promotions of low value cuts in the domestic market to mitigate falling sales into Asia. As a result, a total of 145 tonnes were sold locally in FY2014, according to official data.
“What we are doing at the moment is we have an application with the Chinese Embassy here in Zimbabwe trying to get direct export status to mainland China and trying to get exemption on duty, the taxes and surcharges on meat going into China,” Sharp said in an interview.
“At this stage the (negotiations) are promising but I can’t say more than that. It has got to be done at a country to country level. We initiated contract with the ministry of agriculture and the ministry of finance and we have to leave it to them.
“We cannot go directly to the end authority. It’s a state protocol issue, but we have initiated that process.”
Sharp said entry to the Chinese market would boost the company’s performance and attributed the projections of high volumes in Europe to growing demand of low value burgers made from crocodile meat.
However, revenue margins remained low, he added.
“Demand for crocodile meat in Europe is set to increase by about 50 percent over prior year while demand in Asia continues to be weak,” said Sharp.
“We will maintain sales promotions of low value cuts into the local market to preserve our market share as an alternative to the loss of sales volumes into Asia.”
The government was ‘fully’ supportive of its Asian venture, he added.
“We have full support from the local government agencies that we have been dealing with. There is absolutely no doubt that there are 100 percent motivated to support us on that but we have to let that process run through.Advertisement
“If we can have direct export process into mainland China then I think it would change the picture quite significantly,” Sharp said.
On Padenga’s future growth strategy, he said the focus was on growing the company’s alligator business in the United States after three local crocodile farms reached full capacity and high start-up costs.
“In 2012, Padenga acquired a 50 percent stake in Texas-based Lone Star Alligator Farms in a deal that has made it one of the leading foreign currency earning firms in the country.
“Our focus in terms of expansion of the business is on the alligator operation in the United States. The reason is very simple, we have reached full capacity in the Zimbabwean operation.
“We cannot materially increase the volumes out of the existing farms without compromising quality. The only benchmark that puts us out in the international market is the level of quality we achieve, which allows to sell our skins to premier customers,” he said.
“If we are going to expand in Zimbabwe, we need to build a new farm. A new farm that cost us $6,5 million in 2005, today will cost us $20 million if its adjacent to our existing farms but if it’s a greenfield site we are probably looking at anything between $24 -26 million. Right at this point in time we can achieve the same levels of expansion with a quarter of that cost in America.”
Zimbabwe has the highest niloticus crocodile production accounting for 36 percent of the 250,000 animals bred in Southern Africa from 14 farms. About five farms account for 83 of the country’s crocodile production.
In 1992, the country had 47 crocodile farms.