Mpongwe district an arable hotspot in Africa’s second largest copper producer is on the cusp of a economic turnaround as Zambia’s largest agribusiness entity seeks a $100million expansion program. The district is poised to see increased activity given Zambeef’s doubling of crop capacity to address a grain market dislocation the Russia – Ukraine war has caused.
As the world grapples with a chaotic environment fueled by war in eastern Europe triggering disruption related sanctions, Zambeef Plc (ISIN0000000201) has positioned itself for opportunity to enable it leverage off the soft commodity deficit the world is facing through greater investment in its wheat, soya and other core areas. Global food prices as inferred by the Food Agriculture Organisation (FAO) as measured by FAO Food Price Index ( FFPI) remains elevated at 157.4 (May) just below 1990 record highs of 159.7 recorded in March occasioned by supply disruptions as the Russia – Ukraine war dents the global food supply chain. Wheat and soya prices have sky rocketed and as such provide an opportunity for entities in the agribusiness space ramp production to leverage off higher commodity prices. Geopolitical tension has dislocated global grain markets through incapacitating the export out of Ukraine of food stuffs such as wheat and maize. This has resulted in spikes in prices in Sub – Saharan Africa which Zambia has scope to widen its wheat, maize and soya production.
According to the Lusaka Securities Exchange (LuSE) stock exchange news the fully integrated cold chain foods and retail business announced that the Board had agreed on a $100million expansion over 3-5 years. This will be through doubling of the exceptional asset, Mpongwe farm to double its farm area to 20,000 hectares catalyzed by the autopsy war effects causing supply bottlenecks causing price spikes. This funding is expected to come from cashflow generated from operations, subject to future financial performance over the investment period, together with new debt facilities to be agreed in due course.
The investment is expected to widen Zambeef’s value chain capabilities and deliver developmental impact. Zambeef will seek to double its Mpongwe farm row cropping capacity, and also to deliver significantly improved production efficiency and capacity through the downstream food value chains. The LuSE listed entity remains committed to driving the environmental and sustainability agenda through enhancing the entities carbon footprint.
“I am excited to be announcing an investment strategy of this magnitude, doubling the cropping capacity at a time when Zambia, Africa and the world need investments of this nature. The intended investment over the coming years entrenches our position as the number one vertically integrated cold chain food products and agribusiness company in Zambia and the region,” Board chair, Michael Mundashi commented.
“The last 20 years have seen the Zambeef Group significantly grow in the scale of our operations and I am excited at the next phase of growth. The management team is elated, and I am confident in their capacity to deliver the projects quickly and effectively,” he said.
Zambeef Plc 1H22 revealed a 19% revenue growth while after tax profitable rallied 173% supported by cropping and milling sectors. The company remains optimistic about Zambia’s economic recovery.
The Kwacha Arbitrageur
