Working Capital Management: FCEPL Provides Short-Term Advances to Farmers – Pakistan

KARACHI: As part of the financial inclusion program, Friesland Campina Engro Pakistan Ltd (FCEPL) has paid short-term advances of over Rs 1 billion to its farmers for the management of working capital.

According to Imran Husain, CFO of Friesland Campina Engro Pakistan Ltd, as part of regular dairy development programs, the company has also trained more than 53,000 farmers in one year in animal health, nutrition and farm management.

He informed that the past few years have been difficult for many industries in Pakistan, especially given the sharp rise in commodity prices due to inflation, devaluation of the currency and challenges related to the crown.

“During this time, we took an agile approach and remained focused on our strategy of providing nutritious and safe products to our consumers, while driving business growth and improving the conversion of unsafe bulk milk to packaged milk, ”he added.

In 2019, rising raw material costs and the devaluation of the rupee, coupled with unfavorable tax policies, hit FCEPL’s business, putting pressure on the company’s gross profit. In addition, higher interest rates doubled financial costs, resulting in negative after-tax profit, he said.

CFO FCEPL said that high inflation not only impacts the cost of doing business, but also erodes the purchasing power of our consumers. This impact is all the more pronounced on the food basket as consumption is reduced.

The devaluation of the rupee is negatively impacting the cost of imported packaging materials as well as utility and logistics costs, forcing companies to raise prices or erode margins, he said. informed.

“As we foresee a difficult business environment in the future, several initiatives are being taken within FCEPL to increase efficiency, manage inflation and optimize financial performance and our priority remains to ensure a constant supply of nutritious products. and safe for millions of Pakistanis, ”he added. Imran said the recent price hike is due to global inflation hitting us like every other business, but since milk is essential nutrition, we don’t want it to become unaffordable for the wider population of Pakistan. and to ensure that the FCEPL is in ongoing engagement with government and stakeholders.

To ensure that prices do not rise, FCEPL also focuses on improving productivity and yields along the value chain. In addition, the FCEPL works continuously with our dairy farmers to improve the yields and quality of milk through the transfer of knowledge on milk production, the implementation of good dairy practices and the increase of financial inclusion for them. producers.

While the crown was shutting down, the FCEPL acted quickly and launched our direct-to-consumer website and mobile app in just three days. Today, e-commerce and digital RTM make up a significant percentage of FCEPL’s overall sales, and FCEPL continues to invest behind it, he informed.

“On the supply side, FCEPL has automated the entire end-to-end milk collection cycle, which helps both the company and the farmers,” Imran said.

CFO FCEPL informed that Pakistan is the 4th largest producer of milk and the 5th largest consumer of milk. The total market size for salable milk is 27,400 million liters, but 90 percent of it is bulk milk which is unsafe.

“If we are successful in converting consumers to unhygienic, adulterated and unsafe milk, the nation will be able to achieve multiple benefits, including improvements in the health of our future generations, increased tax revenue for the government and a positive impact on the economy. ‘whole ecosystem,’ he said. .

Copyright Business Recorder, 2021

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