Zambia - Parmalat Pumps $6m in Zambia's Dairy Industry

Parmalat Zambia has invested US $6 million in Zambia since buying the Zambia Dairy Processing Board (ZDPB) in 1996. And Parmalat Zambia managing director Piet Theron has urged the Common Market for Eastern and Southern Africa to institute a mechanism that would boost intra-COMESA trade in dairy products. In an interview, Theron said the investment underscored the confidence that Parmalat Africa had in the Zambian market. "Back then, US $6 million was a steep investment considering the extent of re-capitalisation that was needed to keep the undertaking operating," Theron noted. "But I should say that the investment has been justified by the returns from the operation and more will be coming in once we clear the loan." He was enthusiastic that despite escalating fuel prices, the future of the Zambian dairy industry was bright. Theron said due to escalating fuel prices, Parmalat Zambia had been forced to hike the price of its products by between five and six per cent with effect from October 3. He described the increment as modest, considering that rising fuel costs and relatively higher than anticipated inflation had eroded clients' purchasing power. "We had actually planned to increase the prices by eight per cent but then we considered our clients' plight and softened it. Because the adjustment has been modest, sales volumes have not fallen, meaning our clients understand our situation," he said. On market enhancement, Theron prodded COMESA to explore ways of encouraging intra-regional trade in dairy products. He said there was no justification for 95 per cent of all dairy products traded in the bloc to come from outside the grouping when its potential to meet local demand was sufficient. "Besides 95 per cent of dairy products traded in the region coming from outside, statistics indicate that the major export destinations for dairy products from COMESA are South Africa and New Zealand, which is not very good," Theron said. "We need a mechanism that will encourage COMESA countries to trade with each other more so that the benefits of that trade can help enhance the quality of life in the region. As such, we need to move fast in addressing issues of tariff and non-tariff barriers to intra-COMESA trade." On developments concerning Parmalat International, he said the picture has brightened although the irregularities that rocked the Italian food giant had not affected operations in Africa. Theron said the new Parmalat's operations have been rationalised and that the government-appointed turn around expert has presented a five year business plan that creditors can scrutinise and endorse within two months. He said following this, the company would be re-listed on the Milan Stock Exchange soon, thereby enhancing confidence in its prospects. Early this year, financial irregularities at Parmalat International surfaced, which have led to some of the former directors including the founder to face court charges.