Annual Report - Oilseeds

An Expert's View about Agriculture and Animal Husbandry in Zimbabwe

Posted on: 12 Oct 2011

Zimbabwe planted 692,000 hectares of oilseeds in the 2011/12 MY, seven percent more than the 644,000 hectares planted in the previous marketing season. Estimates are that production of oilseeds will increase by almost 10 percent from 242,000MT in the 2010/11 MY to 265,000MT in the 2011/12 MY.

THIS REPORT CONTAINS ASSESSMENTS OF COMMODITY AND TRADE ISSUES MADE BY USDA STAFF AND NOT NECESSARILY STATEMENTS OF OFFICIAL U.S. GOVERNMENT POLICY Voluntary Public - Date: 9/15/2011 GAIN Report Number: Zimbabwe Post: Pretoria ANNUAL REPORT Report Categories: Oilseeds and Products Approved By: Corey Pickelsimer Prepared By: Dirk Esterhuizen Report Highlights: Zimbabwe planted 692,000 hectares of oilseeds in the 2011/12 MY, seven percent more than the 644,000 hectares planted in the previous marketing season. Estimates are that production of oilseeds will increase by almost 10 percent from 242,000MT in the 2010/11 MY to 265,000MT in the 2011/12 MY. However, Zimbabwe will remain a net importer of soybeans, soybean meals and vegetable oil as domestic demand is growing faster that local production. Post forecasts that this positive trend in oilseed production will continue to reach 325,000MT on 735,000 hectares in the 2012/13 MY. Executive Summary: Area planted under cotton in the 2011/12 MY is estimated at 395,000 hectares, an increase of almost 13 percent from 350,000 hectares planted in the 2010/11 MY. However, due to a prolonged drought, cottonseed production only increased by about four percent to 160,000 tons in the 2011/12 MY. Soybean production increased by 35 percent to 50,000MT in the 2011/12 MY. As a result Zimbabwe will crush 206,000 tons of oilseeds in the 2011/12 MY, almost nine percent more than the previous year. However, only 40 percent of the Zimbabwe?s oilseed crushing capacity, estimated at 500,000MT, will be utilized. Despite the increase in soybean production, it will still be inadequate to meet the rising local demand for soybean meal, mainly from the expansion in the poultry and pig industries. In addition, soybean meal imports will be limited by government policy that prohibits importation of Genetically Modified (GM) grain or meal. However, domestic cottonseed meal production will exceed local demand due to the decline in the dairy and beef sectors. The surplus cottonseed meal will be exported mainly to South Africa. As of August 1, 2011, a 15 percent duty on cooking oil was reintroduced in an effort to stimulate domestic oilseed production and oil processing. Locally manufactured oilseed cooking oil has not been price competitive and vegetable cooking oil from South Africa is dominating the market. OILSEEDS Production Soybean, cottonseed and peanuts are the main oilseeds produced in Zimbabwe. Soybean and cottonseed are grown for processing into edible oil and the residue from oil extraction is high protein meal, a critical ingredient for stock feed. Peanuts are not crushed into cooking oil but are grown for direct consumption and for processing into peanut butter. Approximately 692,000 hectares of oilseeds were planted in the 2011/12 MY (April 2011 to March 2012 and split year 2010/11 in the PS&D table), seven percent more than the 644,000 hectares planted in the previous marketing season. Estimates are that production of oilseeds will increase by almost 10 percent from 242,000MT in the 2010/11 MY to 265,000MT in the 2011/12 MY. Post forecast that this positive trend in oilseed production will continue to reach 325,000MT on 735,000 hectares in the 2012/13 MY. This increase in production is due to higher domestic demand and better producer prices. Table 1 below shows the area planted and production of the oilseeds in Zimbabwe for the 2010/11 MY (actual), 2011/12 MY (estimate) and 2012/13 MY (forecast). Table 1: The area planted and production of oilseeds in Zimbabwe Oilseeds 2010/11 MY 2011/12 MY 2012/13 MY Area Production Area Production Area Production (ha) (MT) (ha) (MT) (ha) (MT) Cottonseed* 350,000 154,000 395,000 160,000 420,000 195,000 Soybeans 43,000 37,000 45,000 50,000 55,000 65,000 Peanuts ** 251,000 51,000 252,000 55,000 260,000 65,000 Total 644,000 242,000 692,000 265,000 735,000 325,000 *cottonseed is 58 percent of seed cotton production figure i.e. after removal of 41 percent lint and allowing for a 1 percent loss factor **unshelled peanuts Cotton is predominantly grown by small holder farmers through contract arrangements with seed cotton contractors who provide the necessary production inputs on credit as well as extension services to the growers. Area planted under cotton in the 2011/12 MY is estimated at 395,000 hectares, an increase of almost 13 percent from 350,000 hectares planted in the 2010/11 MY. The increase in area planted is largely attributed to improved investor confidence following the introduction of Statutory Instrument 142 of 2009 (SI 142/2009) that regulates cotton production and marketing and prohibits ?side marketing? where, previously, contracted farmers would sell their cotton at higher prices to non- contracted buyers at the time of delivery. The national average cotton yield in 2011/12 MY at 0.68 tons/hectares decreased from the 2010/11 MY yield of 0.77 tons/hectares, due to a prolonged drought (of up to six weeks) that affected most cotton producing areas. As a result, and despite an 13 percent increase in area planted, cottonseed production only increased by about four percent to 160,000 tons in the 2011/12 MY. Firm international lint prices will encourage producers to plant more cotton next season. The seasonal average price for the 2010/11 MY was US$0.77 per pound and it doubled in the 2011/12 MY. As a result, post forecast that cotton planting will increase by six percent to 420,000 hectares in the 2012/13 MY. Due to a growing demand for soybean in Zimbabwe, production increased by 35 percent to 50,000MT in the 2011/12 MY. Historically, soybean production was highly mechanized and was primarily carried out by large scale commercial farmers in the high rainfall areas of the country. Commercial farmers produced about 90 percent of the crop, while small scale farmers produce the remainder. Production fell drastically with implementation of the land reform program that resulted in many commercial farms being subdivided into smaller farms given to inexperienced and under-capitalized farmers. Despite the availability of adequate seed of locally bred and high yielding soybean varieties that are disease resistant, the majority of the resettled farmers have tended to avoid growing the crop in recent years due to inexperience. However, increased demand has increased the area under soybeans in 2011/12 MY from 43,000 hectares in the 2010/11 MY to 45,000 hectares, while soybean production increased from 37,000 MT in the 2010/11 MY to 50,000MT in 2011/12 MY. Soybean production is projected to increase even further in the 2012/13 MY as local buyers are willing to pay above import parity prices for non-GM soybeans i.e. between US$500 and US$535 per ton compared to import parity price of US$495 per ton. Peanuts are predominantly grown by small scale farmers mostly for household consumption and processing. Production increased by almost eight percent from 51,000MT in the 2010/11MY season to 55,000MT in 2011/12 MY. Despite the improvement in production, peanut yields are generally poor. Low plant populations due to unavailability of certified seed as well as inadequate levels of fertilizer applied to the crop are major reasons for low peanut yields. Consumption Cottonseed and soybean are grown primarily for oil extraction to process cooking oil. Apart from about 10,000MT reserved for planting seed for 2012/13 MY, all the cottonseed is destined for processing into oil. Cottonseed meal, a by-product of the oil extraction process is a high value stock feed that is mostly exported. Similarly, the bulk of soybean production goes for oil extraction. Soybean meal, a by-product of oil extraction, is a sought after high protein source for poultry and pork feeds. The quantity reserved for seed for the 2011/12 MY is estimated at about 6,000MT. A small quantity (approximately 3,000MT) is processed locally into different high protein food products for human consumption. Table 2: The domestic utilization of cottonseed and soybean in Zimbabwe Oilseeds 2010/11 MY 2011/12 MY 2012/13 MY 000 MT Soybean Cotton Total Soybean Cotton Total Soybean Cotton Total seed seed seed Crush* 45 144 189 56 150 206 65 185 250 Food 3 0 3 3 0 3 4 0 4 Seed 4 10 14 6 10 16 6 10 16 Total 52 154 206 65 160 225 75 195 270 *Includes imports Trade Trade in oilseeds is dominated by soybean imports to augment local production. Oil expressing firms are the primary buyers of soybean and Zimbabwe?s annual oilseed crushing capacity is estimated at about 500,000MT. Despite the high local demand, soybean production has remained low over the past few years. At peak production in 2001 the country produced 170,000MT of soybeans. The decline in soybean production can be attributed to the decline in commercial farming and the general lack of financing and agronomic training of the small scale famers. With the exception of soybean seed, commercial exports of soybeans is prohibited by government due to the current low level of production and the large processing capacity available in Zimbabwe. Zimbabwe is importing soybeans mainly from Zambia and Malawi. ZIMSTATS data shows that between May 2010 and April 2011 14,991MT commercial grade soybeans were imported from Zambia and Malawi. Liquidity constraints in the country curtailed soybean imports by oil pressing companies. Although soybeans were available for import from South Africa, the Zimbabwe government prohibits oil processing companies from importing GM soybeans. More than 85 percent of South Africa?s soybean crop is GM. Soybean meal from local production is inadequate to meet the demand in the poultry and pig sectors. Table 3: Soybean imports (MT) by Zimbabwe between May 2010 and April 2011 Month and year Country of import and soybean imports (MT) Total imports (MT) Malawi Zambia 2010 May 150 1691 1841 June 1642 763 2405 July 1526 1225 2751 August Nil 1516 1516 September Nil 650 650 October 120 112 232 November 1260 Nil 1260 December 2304 150 2454 2011 February 1133 89 1222 March 266 119 385 April 275 Nil 275 Total 8676 6315 14991 Source: Zimstats - Ministry of Finance Oilseed, Cottonseed 2009/2010 2010/2011 2011/2012 Zimbabwe Market Year Begin: Apr Market Year Begin: Apr Market Year Begin: Apr 2010 2011 2012 USDA New USDA New USDA New Official Post Official Post Official Post Area Planted (Cotton) 380 350 425 395 400 420 Area Harvested (Cotton) 380 350 400 395 425 420 Seed to Lint Ratio 0 0 0 0 0 0 Beginning Stocks 0 0 0 0 0 0 Production 190 154 190 160 218 195 MY Imports 0 0 0 0 0 0 MY Imp. from U.S. 0 0 0 0 0 0 MY Imp. from EU 0 0 0 0 0 0 Total Supply 190 154 190 160 218 195 MY Exports 16 0 14 0 10 0 MY Exp. to EU 0 0 0 0 0 0 Crush 165 144 166 150 193 185 Food Use Dom. Cons. 0 0 0 0 0 0 Feed Waste Dom. Cons. 9 10 10 10 15 10 Total Dom. Cons. 174 154 176 160 208 195 Ending Stocks 0 0 0 0 0 0 Total Distribution 190 154 190 160 218 195 1000 HA, RATIO, 1000 MT Oilseed, Soybean 2009/2010 2010/2011 2011/2012 Zimbabwe Market Year Begin: Apr Market Year Begin: Apr Market Year Begin: Apr 2010 2011 2012 USDA New USDA New USDA New Official Post Official Post Official Post Area Planted 50 43 45 45 45 55 Area Harvested 50 43 45 45 45 55 Beginning Stocks 0 0 0 0 0 0 Production 43 37 37 50 37 65 MY Imports 0 15 0 15 0 10 MY Imp. from U.S. 0 0 0 0 0 0 MY Imp. from EU 0 0 0 0 0 0 Total Supply 43 52 37 65 37 75 MY Exports 0 0 0 0 0 0 MY Exp. to EU 0 0 0 0 0 0 Crush 40 45 34 56 34 65 Food Use Dom. Cons. 2 3 2 3 2 4 Feed Waste Dom. Cons. 1 4 1 6 1 6 Total Dom. Cons. 43 52 37 65 37 75 Ending Stocks 0 0 0 0 0 0 Total Distribution 43 52 37 65 37 75 1000 HA, 1000 MT MEALS Production Zimbabwe?s annual oilseed crushing capacity is estimated at 500,000MT and is currently underutilized. Oilseed meal, a by-product of the oil crushing process, is a key ingredient of stock feeds. Cottonseed meal and soybean meal are the main meals produced in Zimbabwe. They are key protein sources for animal feed stock. Soybean crushing yields 80 percent meal, while cottonseed crushing yields 44 percent meal. Total production of oilseed meal in the 2011/12 MY is estimated at 111,000MT and is almost 12 percent more than the 99,000MT produced in the 2010/11 MY, mainly due to increased cottonseed output. Consumption The main users of soybean meal in Zimbabwe are the poultry, pig and dairy industries. Soybean meal is high in protein (about 45 percent) and is the main protein source in the pig and poultry feeds produced in Zimbabwe. Currently, national demand for protein exceeds supply and is driving growth of the poultry and pig sectors. The shortage, however, of stock feeds, due to the low production of soybean, is negatively impacting on the growth of the industry. Out of an estimated demand of 42,000MT chicken meat per annum, the local industry is supplying only about 23,000MT. However, stiff competition from lower priced chicken meat imports mainly from South Africa, Brazil and Argentina is a major threat to the poultry industry. Local poultry producers enjoyed a short term relief in the second quarter of 2010 when a ban on imports of all meats was imposed. The ban was lifted after three months (May to July) due to shortages of poultry products on the domestic market. A short term import ban on poultry and poultry products from South Africa was again imposed in April 2011 following an outbreak of Avian influenza in ostriches in the Western Cape province of South Africa. Local poultry producers are lobbying for protection of the local industry through controlled importation of quality products, imposition of tariffs on imports, permission to import GM corn for use in stock feed production and tighter border controls to avoid smuggling of sub-standard imports of chicken. According to the Zimbabwe Poultry Association, the high local cost structure is uncompetitive compared to imports. Imported chicken meat costs less (average US$2.80/kg) than local chicken meat (average US$3.50/kg), due to different costs of production. High domestic production costs are attributed to the use of more expensive GM-free corn (that attracts a premium of up to US$100/MT corn) in feed rations as per government policy, whereas the industry?s competitors in other countries use GM corn in poultry feed rations. The annual estimated requirement of soybean meal for the poultry sector is 35,000 MT. The use of soybean meal in the pig sector is increasing following the re-building of pig herds after the massive stock reduction of 2008 necessitated by the severe feed shortage. Annual soybean meal consumption by the pig sector is estimated at 15,000MT. Annual soybean meal requirements for the dairy sector are estimated at 6,000MT per annum, bringing the estimate of the total soybean meal annual requirement for the livestock sector in Zimbabwe to 56,000MT. Cottonseed meal is a major protein ingredient in the manufacture of stock feeds for beef and dairy cattle. It contains about 42 percent protein. However, in the ten year period from 2000 to present, the dairy sector has declined steeply from a dairy herd estimated at 192,000 in 2000 to about 22,000 in 2010. The dairy industry, being highly capital intensive, has been severely affected by the land reform program where some dairy farms were acquired for re-distribution often to small scale farmers with inadequate capital resources to sustain dairy production and maintenance of the dairy herd. Lack of security of tenure on farms has discouraged investment and negatively affected the industry. In the year 2000, a total of 314 dairy farmers produced 168 million liters of milk and this dropped down to 40 million liters from 250 dairy farmers. This is against national demand estimated at 96 million liters and an installed capacity of 350 million liters. The commercial beef herd that also consumes cottonseed meal is estimated at 200,000. Domestic demand for cottonseed meal has declined and is estimated now at about 20,000MT annually. Demand for soybean meal is expected to firm in 2012 marketing year due to the expansion of the poultry and pig sectors, while cottonseed meal demand is forecast to increase following government and private sector initiatives to improve dairy production. Trade Due to the decline in the dairy and beef industries, domestic consumption of cottonseed meal is low. The surplus cottonseed meal in 2011/12 MY estimated at 46,000MT, will be exported mainly to South Africa. While domestic soybean meal production falls short of requirements, Government policy requiring GM free imports of soybean meal limits imports. Domestic soybean meal production is estimated at 45,000MT out of the estimated requirement of about 56,000MT and the country will have to import the shortfall in order to sustain growth in the poultry and pig sectors. Meal, Soybean 2009/2010 2010/2011 2011/2012 Zimbabwe Market Year Begin: Apr Market Year Begin: Apr Market Year Begin: Apr 2010 2011 2012 USDA New USDA New USDA New Official Post Official Post Official Post Crush 40 45 34 56 34 65 Extr. Rate, 999.9999 1 1 1 1 1 1 Beginning Stocks 0 0 0 0 0 0 Production 32 36 27 45 27 52 MY Imports 0 14 0 11 0 13 MY Imp. from U.S. 0 0 0 0 0 0 MY Imp. from EU 0 0 0 0 0 0 Total Supply 32 50 27 56 27 65 MY Exports 0 0 0 0 0 0 MY Exp. to EU 0 0 0 0 0 0 Industrial Dom. Cons. 0 0 0 0 0 0 Food Use Dom. Cons. 0 0 0 0 0 0 Feed Waste Dom. Cons. 32 50 27 56 27 65 Total Dom. Cons. 32 50 27 56 27 65 Ending Stocks 0 0 0 0 0 0 Total Distribution 32 50 27 56 27 65 1000 MT, PERCENT Meal, Cottonseed 2009/2010 2010/2011 2011/2012 Zimbabwe Market Year Begin: Apr Market Year Begin: Apr Market Year Begin: Apr 2010 2011 2012 USDA New USDA New USDA New Official Post Official Post Official Post Crush 165 144 166 150 193 185 Extr. Rate, 999.9999 0 0 0 0 0 0 Beginning Stocks 0 0 0 0 0 0 Production 72 63 72 66 85 81 MY Imports 0 0 0 0 0 0 MY Imp. from U.S. 0 0 0 0 0 0 MY Imp. from EU 0 0 0 0 0 0 Total Supply 72 63 72 66 85 81 MY Exports 38 43 38 46 35 56 MY Exp. to EU 0 0 0 0 0 0 Industrial Dom. Cons. 0 0 0 0 0 0 Food Use Dom. Cons. 0 0 0 0 0 0 Feed Waste Dom. Cons. 34 20 34 20 50 25 Total Dom. Cons. 34 20 34 20 50 25 Ending Stocks 0 0 0 0 0 0 Total Distribution 72 63 72 66 85 81 1000 MT, PERCENT OILS Production A total of 206,000MT cottonseed and soybean are available for crushing from which an estimated 36,000MT of oil will be produced in 2011/12 MY. Crushing yields used are 18 percent oil for soybeans and 17 percent oil for cottonseed. Only 40 percent of the country?s oilseed crushing capacity of 500,000MT will be utilized. Four major oil crushing companies have a total of five oil crushing plants in the country, three in Harare and two in Bulawayo. Low domestic production of oilseeds in the 2010/11 MY and 2011/12 MY led to the temporary closure of the two Bulawayo crushing plants. There is no commercial crushing of peanuts for oil. In order to stimulate local oilseed production and increase industry capacity utilization, the government reinstated a 15 percent duty on imported cooking oil on 1 August 2011. This move is expected to strengthen the value chain from the farmer to industry through contract farming, improved manufacturing capacity utilization, and stimulation of the local stock feed industry. The government suspended duties on basic commodities including cooking oil in 2009 to address shortages resulting from depressed output and to stabilize prices following a decade of economic decline in the country. Consumption Zimbabwe?s oil consumption is estimated at about 100,000MT per annum. Oil consumption is mostly in the form of blended vegetable oils with a high proportion of imports from South Africa being sunflower oil. Trade Since 2009, cooking oil imports increased significantly after the government introduced a duty-free import policy to ease food shortages. Zimbabwe is now dependant on cooking oil imports and approximately 75 percent of cooking oil sold in local retail shops is imported from South Africa. Despite the re-introduction of duty, cooking oil imports from South Africa are expected to remain in the Zimbabwean market until 2012 marketing year when improved domestic oilseed production is expected to displace imports. Table 4 Cooking oil imports to Zimbabwe between May 2010 and April 2011 Import destination Import quantity (MT) South Africa 59,374 Botswana 148 United Kingdom 19 Total 59,541 Source: Zimstats ? Ministry of Finance Oil, Soybean 2009/2010 2010/2011 2011/2012 Zimbabwe Market Year Begin: Apr Market Year Begin: Apr Market Year Begin: Apr 2010 2011 2012 USDA New USDA New USDA New Official Post Official Post Official Post Crush 40 45 34 56 34 65 Extr. Rate, 999.9999 0 0 0 0 0 0 Beginning Stocks 1 1 1 0 2 0 Production 8 8 6 10 6 12 MY Imports 15 7 20 7 20 6 MY Imp. from U.S. 0 0 0 0 0 0 MY Imp. from EU 0 0 0 0 0 0 Total Supply 24 16 27 17 28 18 MY Exports 0 0 0 0 0 0 MY Exp. to EU 0 0 0 0 0 0 Industrial Dom. Cons. 0 0 0 0 0 0 Food Use Dom. Cons. 23 16 25 17 26 18 Feed Waste Dom. 0 0 0 0 0 0 Cons. Total Dom. Cons. 23 16 25 17 26 18 Ending Stocks 1 0 2 0 2 0 Total Distribution 24 16 27 17 28 18 1000 MT, PERCENT Oil, Cottonseed 2009/2010 2010/2011 2011/2012 Zimbabwe Market Year Begin: Apr Market Year Begin: Apr Market Year Begin: May 2010 2011 2011 USDA New USDA New USDA New Official Post Official Post Official Post Crush 165 144 166 150 193 185 Extr. Rate, 999.9999 0 0 0 0 0 0 Beginning Stocks 0 0 0 0 0 0 Production 25 24 26 26 30 31 MY Imports 1 2 1 1 1 0 MY Imp. from U.S. 0 0 0 0 0 0 MY Imp. from EU 0 0 0 0 0 0 Total Supply 26 26 27 27 31 31 MY Exports 0 0 0 0 0 0 MY Exp. to EU 0 0 0 0 0 0 Industrial Dom. Cons. 0 0 0 0 0 0 Food Use Dom. Cons. 26 26 27 27 31 31 Feed Waste Dom. Cons. 0 0 0 0 0 0 Total Dom. Cons. 26 26 27 27 31 31 Ending Stocks 0 0 0 0 0 0 Total Distribution 26 26 27 27 31 31 1000 MT, PERCENT
Posted: 12 October 2011

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