Schweppes unable to crush local oranges as Zim withholds free import facility

Harare-Citrus farmers are withholding supplies of oranges to manufacturers of cordial and dilutable drinks, plunging local industry into further turmoil after the government withdrew a duty free importation facility for raw materials for Schweppes Zimbabwe which is accused of selling its juice products exclusively in US Dollars, Express Mail Zim has learnt.

Desperate to contain an increasingly plunging Zimdollar, the government is insisting on the auction market exchange rate as a source of forex for local manufacturers. However, a backlog – which ran up to $300 million recently – of supplies of US Dollar for importation of key raw materials has constrained industry.

This has forced manufacturers such as Schweppes, Dairiboard, Tongaat and others to sell their produce only in Zimdollar. However, the government is cracking down on them, with permanent secretary to Finance Ministry, George Guvamatanga cancelling Schweppes’ duty free import facility for oranges and grape fruits.

This has left Schweppes in a bind as it is also unable to source orange fruit from local producers who have reportedly been withholding their supplies unless paid in foreign currency. Schweppes is now also set to face higher costs owing to the re-imposition of import duties for fruits that are integral to the production of its juice products.

This publication understands that Matabeleland based citrus farmers have “refused to sell their produce to Schweppes” in the past few weeks. Economists say the operational woes afflicting Schweppes and other local manufacturers could result in shortages of locally produced commodities while price hikes are inevitable.

“The implications are that we going to see massive price hikes and shortage of products. The directive is retrogressive of progress,” said a local economist.

Other economic players questioned whether Schweppes was having access to money on the auction against the backdrop of delays in disbursing the hard currency by the central bank.

“Is Schweppes getting forex from the auction on time, is it enough? Why are they selling in forex and why did the governor not address that issue on Monday. Will Schweppes manage to sustain operations at current prices when they start paying USD duty for oranges,” said one of the economists who spoke to Express Mail Zim.

Beneficiaries of the land reform in citrus farming like Bright Matonga have run down citrus farmers around Zimbabwe, leaving the industry constrained and forcing local manufacturers to import the crucial raw material.

In his letter to Schweppes, Guvamatanga categorically stated that Schweppes’ pricing was exclusively in foreign currency yet Treasury had provided a one-off suspension of duty facility to same.

Read part of the communique: “As you would be aware Treasury on July 2022, provided a once-off suspension of duty facility for your company to import 10 000 MT of oranges and 5 000 MT of grape true. This measure was expected to augment local supplies, thereby minimising supply dienpions, as well as guaranteeing affordable prices to the general public.”

It further reads: “Treasury, however notes that the pricing of your products is now exclusively in foreign currency. Notwithstanding Government’s initiatives to promote the use of local currency. You will be aware that beneficiaries of tax incentives are expected to complement Government’s interventions with responsible pricing models with a view to ensuring affordability of goods, which is key in achieving Governments developmental objectives.”

Guvamatanga said all new imported consignments will, with immediate effect, be able to pay duty at prescribed rates.

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