CAIRNS Foods, a unit of suspended Zimbabwe Stock Exchange (ZSE)-listed food manufacturing firm, Cairns Holdings Limited, is set to double output for baked beans products from its Mutare plant to meet increasing local demand, an official indicated recently. This comes as it emerged that competition from cheap imports, which had exacerbated its woes, had waned, with speculation suggesting cumulative measures by government imposing tax on imported food products may have hurt the group’s competitors.
Cairns Holdings is currently subject of a takeover bid by South Africa-based Vasari Global Holdings, an international private wealth, multi-asset investment firm. Cairns Holdings’ shareholders and creditors last year approved the judicial manager Reggie Saruchera’s proposal for a scheme of arrangement that would bring in the new investor.
The move to ramp up output will mark the resurgence of Cairns business, which crumbled after the group ran into a going concern crisis, precipitating the closure of several of its branches before eventually going into receivership after current liabilities overtook current assets by a huge margin. The Mutare branch was one of the first casualties of the crisis, with the group closing the unit after management said the rapid inflow of cheap imports landing at zero percent duty from the region had resulted in a loss of competitiveness for its products.
Capacity utilisation at group levels had failed to rise beyond 30 percent, and constant machine breakdowns compromised production. Cairns Holdings’ acting chief executive officer, Jeremiah Kwenda, said they would increase output from the current 15 000 cases to 30 000 cases per month in response to demand.
“The market is now reverting to our products with reduction in volumes of imported beans,” said Kwenda, indicating that one notable import product, Jasos Beans, which had become a very big competitor, was no longer visible on the market.
“We don’t know whether it’s the heat of competition or some other strategic decisions they have taken,” he said about dwindling imports.
“We will have to increase output in Mutare. Currently we are producing about 15 000 cases and we think in order to fully supply the market we would need to double that to about 30 000 cases,” Kwenda added. One case of backed-beans has 12 cans. Cairns currently requires 30 tonnes of Michigan Beans per month and between 300 tonnes to 400 tonnes per annum to meet local demand, with reserves for export. The baked beans plant is producing 90 tonnes against installed capacity of 400 tonnes per annum while the jam plant can produce 900 tonnes but manages 210 tonnes.
Cairns, which used to employ 600 workers, now has a mere 80 workers. The company has of late been importing Michigan Beans from Malawi. Before the economic meltdown, Cairns used to buy Haricot Beans (Michigan P Beans) from 10 000 smalholder farmers in Cashel Valley, Nyanyadzi as well as Gudyanga, Mutema and Tanganda Irrigation Schemes in Chipinge. The input support scheme was discontinued from November 2010 up to November 2011 after Cairns mothballed its backed-beans and jam plant.
Kwenda said they are re-engaging with various smallholder farmers across the country to resuscitate the scheme. He said Cairns has since engaged Industry Minister Mike Bimha in Chivhu area, Mutoko South MP David Chapfika in Nyadzire area and irrigation schemes in Manicaland for an outgrower programme.
Kwenda said Vasari was very interested in revising the input support scheme. “Our potential investor is very much interested in revising the input support scheme. The whole point is to have security of raw materials,” he said.
Kwenda said the resuscitation of the input support scheme would take into account all their key raw materials, namely Michigan P Beans, apples, beaches mangoes, garden peas, maize, ground nuts, grapes for winery, wheat for biscuits and potatoes. “These will be the sort of crops that we will be able to support. All crops that we process will be converted into value added products,” he said.
Below are some of the measures that had been taken when the group first hit a bad patch.
-The Mutare canning operations, which manufactured well known brands like Sun Jam, Cashel Valley, Border Streams, was shut down;
-The Bulawayo plant, which produced Ilva, was also closed;
-ME Charhons, a 100 percent subsidiary after the purchase of minority interests held by Dairibord Zimbabwe Limited, changed the product mix by getting out of sweets and focusing on chocolates and biscuits. The unit is also now inactive;
-The Msasa operation, which specialised in spices, was moved to the Ardbennie factory;
-The agronomy division, which had been set up to procure produce during the hyperinflationary period, was shut down; and
-An international division was set up to boost exports.
by Kenneth Matimaire
newsdesk@fingaz.co.zw