Beefing Up

What were Zambeef’s priorities in 2016?

In 2016, we focused on building on our core strengths and growing areas that we believe we are best in class. These include our retail and distribution activities, and the cold-chain food production that feeds into our retailing network. We also saw our wheat farming operation flourishing with yields as good as anywhere else on the continent. 2016 also saw a restructuring for Zambeef. We ended our relationship with Rainbow, taking full control of all our chicken operations, including our hatchery business and second stockfeed operation. We also took steps to de-risk the business and strengthen the balance sheet, by bringing a new partner into the business, the CDC Group Plc, which has a long and rich history in Zambia in terms of developmental projects. Many companies developed by CDC remain pillars of the Zambian economy. These include Kariba Dam, Chilanga Cement (now Lafarge), and Zambia Sugar. We ended 2016 with a strong balance sheet and in a strong financial position.

Where will the funding from this partnership with CDC be channeled?

The CDC funding allowed Zambeef to take full control over its chicken operations again, including our hatchery, broiler operation, and the new stockfeed plant. Careful planning has gone into the capital expenditure budget for 2017. The first area is our retail operations, in which we have budgeted to invest USD3.2 million this year in the continued aggressive expansion of our retail network, which is the engine room that drives Zambeef. In order to ensure the increased business from this retail expansion results in incremental business, investment will be made into the supply side of the business. The dairy division will have USD1.5 million investment, which includes the expansion of the milk processing plant as well as a new rotary parlor at the Zambeef Kalundu Dairy farm, which will enable our dairy operation to expand from milking 1,000 cows a day to 3,000 over the next few years. In 2016, we hit capacity at the Novatek stockfeed plant, producing around 15,000 tons of stockfeed per month. In total in 2016 we produced a total of 150,000 tons of stockfeed and we are the market leaders in this area. We are looking to expand within Zambia and the wider SADC/COMESA region. We will be bringing a second stockfeed plant on line in April 2017, which will require USD2.8 million of capital expenditure in the current financial year to complete. The new plant will have capacity for another 12,000 tons per month, and will almost double our stockfeed capacity. The next large capital expenditure will be USD1.7 million in expanding our chicken hatchery business. By 2Q2017, we will see increases from 250,000 day-old chicks a week to 350,000. Additional capital will be spent on expanding our pork and chicken processing operations as well.

What advice would you give to other companies about creating a viable agribusiness model for the Zambian market?

Long term it is important to think about being competitive in the wider SADC/COMESA region. A company needs to be efficient; it needs to know where it will sell its goods and secure its market and its supply. For Zambeef, it is the strength of our retail network in Zambia that has given us a platform to widen our market into the SADC/COMESA region. Zambia is largely self-sufficient in food, so if we are to grow the agricultural sector we need champions of the sector to be taking products into the wider region. Moving from our 15 million population base to serve the region’s 450 million people will be the next driver of the sector. We are fortunate to have a pro-agriculture government. For example, the tax rate for agribusiness is 10% instead of the usual 35%, which is a huge incentive to invest in agriculture in Zambia. The government is also enthusiastic about encouraging agri-processing and is very supportive of the agriculture sector as a whole.