Published: 09 October 2013

OLAM International Limited, a global commodity trader is close to selling its Zimbabwean unit, Olam Cotton to a local firm ETG Parrogate, sources said yesterday.

The transaction has, however, left many contract workers uncertain after management told them their contracts would expire at the end of this month. Initially, they were due to expire on September 30, but were extended by another month "for effecting a smooth closure".

While the company had initially told workers "Olam Cotton shall strive to ensure that most of the affected individuals are employed by the new company if the deal is successful", sources said there was nothing on the ground suggesting the new company would take the current staff on board. The company employs close to 600 employees.

"The deal is very close and management has already told us that ETG is taking the operations. But the challenge now is the fate of the employees," said one source.

Olam country head Mr Aranyak Sanyal said yesterday due to the extreme volatilities in the cotton market, Olam Cotton was restructuring its cotton business.

"We will continue to be active in the Zimbabwe cotton market through our ginnery at Nembudziya which remains an asset of the Zimbabwean entity, as well as through the procurement of lint," said Mr Sanyal.

"However the restructuring exercise will materially change our participation in the cotton industry. Our relationship with ETG Parrogate is a commercial relationship whereby we have done toll processing and ginning with them for the past several years, it's nothing new really."

But in a memo to workers last month, Mr Sanyal said "the company is in the process of finalising discussion with another company in Zimbabwe which has expressed intention in engaging most of the employees if the discussions are successfully concluded."

If the discussions are successful, Olam would seek to ensure the majority of workers were employed by the new company.

Olam International is a leading global integrated supply chain manager and processor of agricultural products and food ingredients, supplying various products across 16 platforms to over 12 300 customers worldwide. From a direct presence in more than 65 countries with sourcing and processing in most major producing countries, Olam has built a global leadership position in many of its businesses, including cashew, spices and dehydrates, cocoa, coffee, rice, cotton and wood products.

The firm ranks among the top 50 largest listed companies in Singapore in terms of value. Last season, Olam supported about 26 000 local farmers through a countrywide network of 14 depots, according to the company's official website.

Olam Cotton was the third largest cotton firm after the Cotton Company of Zimbabwe and Grafax Cotton in terms of market share, according to the Cotton Ginners Association, a local grouping of cotton merchants. Olam International also has operations in South Africa, Zambia and Mozambique.
- herald