Tobacco deliveries in Zimbabwe are expected to drop by between 10% and 15% due to the late and erratic rainy season.
The Tobacco Marketing Board (TIMB) has announced 30 March 2020 as the start of this year’s marketing season.
However, according to agricultural business giant, TSL Limited, the late onset of the rainy season weighed heavily on the uptake of farming inputs amid expected dip in this year’s national tobacco output.
It indicated that the tobacco crop, a major component of the company’s business, delivery volumes are expected to fall by between 10 percent and 15 percent compared to 2021.
Last year, farmers had sold 188 million kg of tobacco worth US$488 million when the 2021 selling season closed mid-July. By the end of July 2021, an estimated 200 million kg had been sold.
Zimbabwe anticipated a good rainy season this year, but the rains were erratic, with some parts of the country being negatively impacted by Tropical Storm Ana.
“The country experienced a late onset of the rainy season which negatively impacted the uptake of agricultural inputs,” Fadzayi Pedzisayi, the TSL company secretary said in the company’s trading update for the first quarter of 2022.
“Indications are that national tobacco volumes are expected to range between 10 percent and 15 percent below prior year,” she said.
During the period under review, group revenues grew 72% in inflation adjusted terms mainly from supply of agro-inputs, provision of logistics services and real estate services primarily to the agriculture industry.
Gearing for the quarter remained low with satisfactory interest cover.
Meanwhile, the TSL said its agriculture operation, Tobacco Sales Floor (TSF), was well advanced in terms of preparation for the tobacco marketing season.
The business is setting up a new decentralised floor in Mvurwi to augment the Harare, Karoi and Marondera floors, a move that is also expected to improve tobacco volumes to be handled in the year.
Propak Hessian commenced distribution of tobacco packaging materials during the quarter ahead of the start of the tobacco selling season. Volumes of hessian wraps were ahead of prior year whilst tobacco paper came in at 16% above the same period last year.
At Agricura, volumes across all major product lines were depressed against prior year due to the late start of the rainy season which resulted in a shift in volume uptake.
“However, there was significant volume growth in fertilisers compared to last year due to availability of stocks and favourable pricing. In the farming operations, tobacco, maize and soya bean crops are growing well and yields are expected to be satisfactory.
“The banana plantation recovered from the prior year drought resulting in improved yields. The increasing dam water levels are expected to be adequate for the planned winter crop,” said Pedzisayi.
For the logistics operations, the rail initiative from Maputo to Harare positively impacted volumes in the General Cargo and Ports divisions although shortages of empty containers persisted. Distribution volumes came in 49% behind last year as most customers’ volumes slowed down. Avis car rental days rose 74% compared to the same period last year on relaxation of lockdown restrictions but Premier’s forklift hours went down 9% during the quarter due to slowed activity among major clients.
The real estate operation registered positive performance with space leased out at 10% above prior year due to the contribution of the new warehouse that was under construction in the prior year.
While the operating environment is expected to remain complex due to uncertainties from Covid-19 and the unrest in Eastern Europe, which will have an impact on supply chains and availability of critical raw materials, the onset of the tobacco marketing season is expected to improve volumes through the group’s tobacco related operations.
“The group continues to undertake key strategic initiatives in pursuit of its “moving Agriculture” strategy,” said Pedzisayi.
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