HomeBusinessForex crunch threatens fertiliser production

Forex crunch threatens fertiliser production

By Thomas Mupfuka

One of the country’s leading fertiliser producers, Fertliser, Seed and Grain Zimbabwe (FSG), has warned that delays in the processing of letters of credit will derail the forthcoming agricultural season.

FSG is a major supplier for the government’s Presidential Inputs Scheme, which supports ordinary farmers.

The company’s MD Steve Morland told journalists during a tour of the company’s operations in Bindura last week that government needs 63 000 tonnes of compound D fertiliser and 63 000 tonnes of amonium nitrate.

Morland, however, said production was being hampered by lack of foreign currency amid delays in the issuance of letters of credit from commercial banks.

FSG needs over $15 million to meet the government’s fertiliser requirements for the Presidential Inputs Scheme.

“We recently started production for the fertilisers required for the Presidential Input Scheme,” he said.

“We have a portion of the raw materials required for production right here in Bindura. Plus we have an additional storage facility in Harare.

“The only bottleneck that we can really experience now is if banks are slow in opening the letters of credit (LCs) for the forex we need for the raw materials that we need for production.

“We have a system where we get 180-day LCs, then we also have a special arrangement with our suppliers and they give us those certain terms even though we cannot get all the forex now.

“When we get a letter of credit opened, we can at least access the raw materials.

“A lot of our raw materials here are under collateral management or under bank financing. This means as we get the forex, we get them released.”

FSG imports most of its raw materials from Morocco and Saudi Arabia, which are then blended with phosphate from Dorowa Mine in Manicaland.

Morland said they expected fertliser production to increase next week to 900 tonnes per day from the 600 tonnes due to increased demand as farmers start preparations for the 2019/2020 cropping season.

This despite power outages that are crippling most businesses in the country, he said.

“We have arranged for a dedicated power line with Zesa after we offered to pay in forex, but in the event that they are disruptions we have a 500kVa generator,” Morland added.

The government extended the Presidential Inputs Scheme to cover cotton farmers.

Over two million households are expected to benefit from the Presidential Inputs Scheme this coming cropping season.

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