South Africa comes to Kamfinsa

By Andrew Field – Follow on Twitter
A little visit to South Africa at Kamfinsa was with high expectations for a shopping experience most Zimbabweans have enjoyed in the big Pick n Pay supermarkets down south.
Alas, one comes away from the refurbished outlet asking oneself, what has changed apart from the brand and the paint work? Sadly, Pick n Pay has not quite cracked the egg, the hype and anticipation seem to have been misplaced, the phoenix is still in its embryo.

Pick n Pay sealed a deal with Thomas Meikle (TM) Supermarkets to maximise its shareholding in the local supermarket chain in December 2011, and has ventured into Zimbabwe to rebrand some of the TM Supermarket stores. This transaction involved much chicanery around Zimbabwe’s ludicrous indigenisation (chef 1 enrichment) laws.

The TM Supermarket situated in the small suburban shopping centre of Kamfinsa was the first to re-brand. Now understand this: shopping for the writer is a pain at the best of times… nothing worse than sauntering up and down the aisles, plopping your requirements into a trolley, and then standing in a long, disorderly queue to check out. Perhaps he is not best qualified to make the comment, but for what it is worth it is apparent that Pick n Pay were never too creative utilising the old store’s floor space; they possibly fumbled with their building contractors; and perhaps opened just a touch too soon.

Pick n Pay shops in South Africa have an open, welcoming, air about them. One might assume a critical success factor in the business may be to ensure customer flow. Roll them in; pack their trolleys; and check them out… far from this at suffering Kamfinsa. Clearly the layout of the new store is not too dissimilar from the old TM Supermarket branch. The store entrance is cluttered, the aisles are narrow and the till point experience is over-crowded, irritating and hardly different or refreshing. It seems like much wasted opportunity has befallen the chain – a little like Boffs 2 revisited.

There is much building work unfinished about the refurbished site. That will be completed, no doubt. The floor tiling about the shop and outside is a poor reflection on their building contractors, to say the least… a rush job, tiles unevenly placed, cracked, chipped and broken. On the perimeter all the usual signs of a building site… bricks stacks and a bit of rubble to boot. The parking area could do with better surfacing too, yet it seems to have just been done, clearly a cheap job.

The store is stocked well, in fact pumping with variety and with all the brands those Zimbabweans who venture south may be familiar with. In fairness to Pick n Pay, their handling and display of cold chain products is tops, in line with the best in the business. Regrettably, brand variety is not unique. Both the Spar and OK Zimbabwe groups are faring just as well. Two side stores, one which stocks clothing, and the other liquor, have been branded with the Pick n Pay trademark; one might guess victims of space constraints in the main complex. Both are well presented.

Of course, its early days yet, and one may assume the Pick n Pay brand will get into top gear soon, but frankly this visit was not quite as refreshing as the author had hoped for. Sure he got that ‘holiday feeling’ for a few minutes, but one hopes that when Pick n Pay venture onto the next rebranding project, supposedly TM Borrowdale, they will have put a little more thought into the process. They have few choices here: Pick n Pay has to come up to the expectation of the brand. Frankly, Kamfinsa does not quite achieve that.

1 Colloquial term referring to greedy politicians and people of influence on the gravy-train;
2 Boffs was a tiny and cramped supermarket bazaar opened in Borrowdale by late business mogul, Sam Levy back in the late 1970s.

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Poultry By-product Dumping into Zimbabwe an Issue

By Andrew Field – Follow on Twitter
Flickr_Andrew_XIZimbabwe’s well established poultry industry has excelled during the last year despite many challenges facing producers within the sector. More recently the Zimbabwean government imposed duty surcharges on foreign produced dressed poultry products, amongst other food imports. This is an attempt to further protect local industries against competitive imports, a lead issue for egg and broiler meat producers. Local production has been frustrated by several factors, the more significant being production costs versus those of other regional players, giving rise to import demand. The principal reason for higher costs has been the price of non-GMO grain and soya imports to sustain the industry, higher power costs and the non-implementation of brining techniques on a larger scale.

Poultry meat production is the top protein in output, followed by beef and then pork in Zimbabwe, a significant change from the days when the beef industry ruled supreme, before year 2000. Industry estimates for broiler meat production through recognised abattoirs in 2011 are in the region of 25 thousand tonnes (20,000 tonnes 2010). There is a huge informal production sector, gauging from broiler chick sales, which is estimated to deliver a further 44 thousand tonnes in locally produced meat. Presently broiler meat production stands at 590 tonnes a week; about 2,540 tonnes a month, yet importers are still finding markets for their cheaper cuts and offal imports.

Obtaining import statistics from reliable sources is difficult. There is little doubt that graft and corruption have crept into the lucrative and sometimes illicit import chain; added to which there is the embarrassment that a one-time net exporter of poultry products and its principal inputs has to admit being a net importer. Industry estimates are often based on hearsay and unofficial sources in consequence.

In 2010 some sources indicate that 17,000 tonnes of dressed meat entered the country, while other sources indicate that only 13 thousand tonnes should have entered, based on veterinary permits issued, thus giving rise to a 4,000 tonne discrepancy (then over 6% of market demand). Added to this, most of the imports were cheap cuts or offal, the latter being supposedly banned from importation (like pork bones which are still coming into the country). Guesswork suggests that upward of 20 containers a week of low quality South American chicken imports are presently coming onto the market (some say that over 2,000 tonnes of cheap meat is being imported monthly), at the same old prices, yet little intervention by responsible state agencies is apparent. It raises questions.

Day old chick production peaked in September 2011 at 5,6 million broiler birds for the month. This is an important part of the industry; servicing large scale commercial, small scale and private growers, the latter mostly for own or local community consumption. It is estimated that broiler day old chick production in 2011 was near 52 million birds (38 million 2010). Table egg production reached 23 million dozen in 2011 versus 16 million dozen in 2010. Zimbabwe has a combined hatching capacity of 76 million birds a year, apparently. Industry officials believe the broiler industry is set to show tremendous growth in 2012 as a result of these trends. One industry source indicates that rural demand for day old chicks present stands at 570,000 per week, which is being met.

While buoyancy is apparent, Zimbabwe’s producers have issues to concern themselves with. The nation’s on farm production of soya beans and maize has fallen, giving rise to import supplementation. The prohibition on using cheaper GMO varieties of maize and soya (supposedly to protect a beef quota into GMO sensitive Europe; which is not being used) has placed the industry in a quandary. The ban is blunting the industry’s competitive edge and making Zimbabwean broiler meat production 20-50% higher than the larger integrated operators in South Africa. Leading producer nations such as the United States and Brazil are landing chicken in southern Africa at nearly half the cost of local production (for whole birds, which Zimbabwe is not importing). What Zimbabwe is importing are even cheaper waste products, chicken backs, skins, discounted leg quarters and offal which are a problem in their countries of origin. Brazil’s recent dumping initiatives into Africa have even the South African industry worrying and scurrying for import controls.

The poultry industry is obviously a large user of soya in its feed mixes and it is estimated that in 2010 demand for soya for the poultry industry alone was in the region of 102,000 tonnes, versus local production estimates at just 20-30 thousand tonnes, meaning a reliance on imports to sustain the industry. In 2011, and no doubt this year, that demand will have increased significantly, yet local farm production of soya beans will have remained static, if not dropped. The availability of soya meal from local oil expressers has also declined with duty free imports of essential cooking oils too. Government announced the removal of a 5% duty on imported soya meal, but are yet to implement this.

Maize supplies to the industry follow a similar pattern. Demand from the poultry sector reached 87,000 tonnes in 2010 (based on day old broiler chick sales), 120,000 tonnes in 2011 and expectedly larger in 2012. Maize meal is the staple in Zimbabwe and total demand for maize was in the region of 1,2 million tonnes (circa 2010) versus local production of just two thirds of this, making the entire nation mostly reliant on maize imports. Local producers will need to concentrate their efforts on acquiring locally grown soya and maize at reasonable prices, since those unable to do so will have the daunting task of importing expensive GMO free maize and soya meal, which is a logistical nightmare, and then looking to other areas where they can cut costs.

There are of course other efficiencies which local producers can attend to, including feed conversion efficiencies and energy usage (bearing in mind the vagaries of supply and the need for generator supplementation); the integrated abattoirs might well look towards matching import values with a reasonable level of brining too. It would be folly for producers to take the easy route and raise their prices to consumers, in the comfort of the newly imposed 25% duty surcharge on chicken imports, although this is somewhat inevitable with higher grain prices on the international market.

The issue here is that an apparent lack of import controls or, perhaps, corruption can easily circumvent duty surcharges; as they have permit-less and illicit imports in the past. This ‘grey trade’ is potentially a threat to human health and poses a serious menace to the local livestock industry. Unless the state gets properly and ethically involved with import controls, local producers will continue to operate on the downside of an unlevel playing field.
– Zimbabwe Poultry Association statistics
– TechnoServe – Zimbabwe Poultry Sector Study, September 2011
– Dr Chrispen Sukume – Constraints Affecting Poultry Competitiveness, August 2011

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