Zimbabwe: Delta Corporation looking for alternative raw materials markets

Beverage maker Delta Corporation is scouting for alternative markets to source cheaper brewing grain, as the bulk of farmers who traditionally produce for the company under a contract arrangement are shifting to Command Agriculture, which is offering a higher price, the Zimbabwe Independent reported on October 17.

This summer cropping season, government plans to spread a capital outlay of about US$334 million to support production of key crops such as maize, sorghum, and soya beans under Command Agriculture.

An attractive maize producer price being offered to farmers under Command Agriculture by the Grain Marketing Board (GMB), currently pegged at US$370 per tonne, has attracted producers previously enlisted by the brewer.

In an email sent to businessdigest, the brewer said it would not be able to offer a producer price to compete with the US$370 per tonne price offered to farmers under the government programme.

“The major challenge in the contracting arrangement for brewing cereals is the new framework under Command Agriculture that guarantees very high producer prices to farmers,” the beverage manufacturer said.

“The Company is unlikely to attract enough farmers into its schemes, as most of them have moved over to the Command scheme.

The business is unable to match the high producer prices, as these cannot be absorbed into the beverage value chain.”

Delta said it will look at the option of purchasing brewing cereals from GMB.

“We are engaging with stakeholders to explore opportunities to access the cereals through the national grain reserve,” it said.

Presently GMB is selling maize to end users such as millers for a price ranging between US$250 and US$270 per tonne.

Annually, Delta consumes an estimated 12 000 metric tonnes of sorghum to support its traditional brew and Eagle lager business units.

The bulk of the sorghum is produced by close to 5 000 local farmers financed through an input support scheme. “Our usage of the crop (sorghum) in traditional beer and Eagle lager remains stable, as we do not anticipate any significant changes in demand,” Delta said.

The company contracts 200 commercial farmers to produce barley for clear beers production.

In the past, the brewer relied on grain imports from regional markets due to shortages of the commodity on the domestic market.

Delta’s growing appetite for grain — a key ingredient in the beer brewing industry - has grown sharply over the last decade, which saw the firm injecting massive capital investment to install modern bottling lines.

Within the last five years, Delta has also introduced low priced products such as the one-litre Super Chibuku opaque beer brand to boost sales volumes. This year, the company intends to spruce up its Scud sorghum beer brand to lower production costs, as well as spur revenue growth.

16 October, 2017