Edible oil producers seek to charge in forex

Edible oil producers seek to charge in forex
Published: 22 November 2017
COOKING oil producers have approached the central bank asking to be allowed to sell some of their products for cash in foreign currency to be able to import raw materials.

Oil Expressers Association of Zimbabwe (OEAZ) chairman, Busisa Moyo, told NewsDay in emailed responses that dialogue between the central bank and players in the retail sector over the matter was underway.

"Dialogue is continuing with the Reserve Bank of Zimbabwe (RBZ) and colleagues in the retail sector. Charging for sales in US$ for part of the payments to manufacturers of edible oils could be an alternative to encouraging the importation of finished products as importers use cash to pay for commodities," Moyo said.

"We have also invited those with "free funds" to get into toll agreements with members and bring in raw materials like soyabeans and crude soyabean oil and other raw materials for processing through the Ministry of Industry."

Moyo said foreign currency shortage remained the biggest challenge at present and it was affecting economies of scale and pricing of edible oils on the shelves.

As a solution, Moyo said in the short term, government should allow players in the edible oils sector to incentivise for payments from the retail sector in US dollars cash as was being done from May 2016 and November 2016.

This was done when there were no shortages, through RBZ circular
Number five/2016 that allowed fuel companies and cooking oil suppliers to charge in dollars or hard currency in part, he said.

"These monies were then deposited into bank accounts and used to replenish Nostro's. This is a temporary measure to cover the festive season and until the tobacco and other inflows improve."

In the long term, Moyo said there was need to incentivise or encourage farmers to plant soyabeans locally and provide incentives for banks and financial institutions like pension funds to participate in soya infrastructure (private damming and irrigation) rehabilitation and tailor-made operational financing, sort out legislation around contract farming to prevent side marketing and allocate State land for soya growing purposes for joint venture with oil expressers.

He said producers were receiving 40%-50% of their foreign currency allocations on a weekly basis and also additional support through Letters of Credit for some members from RB and engagement of the central bank was continuing.

"Raw material supplies have marginally improved for some of our members, but more importantly the reduction of panic buying has allowed for limited re-stocking in the distribution sector of the value chain. Members have also started gazetting recommended prices," he said.
- newsday
Tags: Oil,


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