Harare — Listed food processor, National Foods Limited will next month suspend operations at its flour milling plant in Bulawayo citing operational, logistical and capital constraints.

Group human resources and corporate affairs director Mr Dean Chikukwa said yesterday the Bulawayo flour plant would be placed under care and maintenance during the period of closure.

"Against the background of location of raw materials and limited capital to upgrade equipment as well as higher plant maintenance costs, the company believes it is prudent to suspend flour milling operations in Bulawayo," said Mr Chikukwa. He said the group found it more economical to operate one plant in Harare as it had the capacity to fulfil national demand.

"National Foods will continue to market its range of flour products in the southern region. Through improved manufacturing and capacity utilisation in Harare, we look forward to delivering even greater value to our customers."

The plant closure would also not result in any job losses as employees at the Bulawayo plant would be deployed to various divisions within the group.

"The company will continue purchasing wheat from local farmers and beyond to ensure adequate stocks to guarantee the production of quality flour products," Mr Chikukwa added.

Natfoods continues facing competition from flour imports following the scrapping of import duty on basic foodstuffs by the Government to improve availability.

Many companies, particularly producers of commodities exempted from paying duty have proposed some form of tariff to raise the cost of importing to allow fair competition in terms of pricing.

However, suspension of duty on most basic commodities, including flour would remain in place until December 31, 2010.

Government introduced duty-free on basic commodities to address shortages in light of depressed local output and to stabilise prices in the aftermath of a decade long economic downturn.

Local companies are struggling to produce enough for the local market due to a number of challenges such as power shortages, high labour costs and inadequate funding.

Capacity utilisation has remained below 50 percent. Basic commodities, such as cooking oil and milk are being imported mainly from South Africa and Botswana.

The import duty relief on most commodities was due to expire at the end of June but was extended to December this year. However Government lifted the duty relief on commodities such as margarine, bathing and washing soap and various cosmetic products.

The situation is likely to be reviewed when Finance Minister Tendai Biti announces the 2011 National Budget towards the end of the year.