23rd Jun 2016 08:04
LONDON (Alliance News) - Agriterra Ltd on Thursday said it has begun destocking its cattle due to political unrest in the area around its cattle ranching operations in Central Mozambique.
The agricultural company said it has taken this decision in order to "safeguard and crystallise its considerable livestock capital" following a deteriorating political and economic environment in Mozambique.
Agriterra noted that local militias operating under the Mozambican National Resistance are now entrenched in some rural areas in the Manica province, where Agriterra's three farms are located, increasing the possibility of livestock theft and increasing the risk in the movement of people and goods in the country.
Agriterra's three farms - Mavonde, Dombe and Inhazonia - currently hold around 4,000 head of cattle, with approximately 2,500 further head of cattle currently in the company's feedlot facility at Vanduzi. Over the course of the next ten months, the cattle will be delivered to the Vanduzi feedlot for fattening and subsequent slaughter.
Once the farms have been completely destocked, which is anticipated to be by April 2017, the Vanduzi feedlot will exclusively process locally reared animals.
Agriterra added that destocking the farms will ease pressure on its operating finances due to the curtailment of maintenance and development during the farms' development phase. Agriterra anticipates positive operating cash flows from the beef division subject to beef sales volumes increasing in line with management forecasts.
"The company is currently evaluating several opportunities to maximise the value of the ranches including appraising leasing opportunities in order to maintain the farm assets while also generating revenues in the short to medium term. In the longer term, the board is hopeful that the political situation in Mozambique will stabilise permitting the farms to be redeveloped as cattle ranching farms," Agriterra said in a statement.
Shares in Agriterra were trading down 1.3% at 0.237 pence on Thursday morning.
By Karolina Kaminska; [email protected] @KarolinaAllNews
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