BY TANYARADZWA NHARI
ONE of Zimbabwe’s biggest tobacco industry dealers said on Friday it is expanding its auction floors to Mashonaland Central, as part of a sector wide decentralisation strategy.
Zimbabwe Stock Exchange listed TSL, said it would be expanding into Mvurwi during the marketing season, which kicks off on March 30.
Through Tobacco Sales Floor (TSF), the firm’s footprint had expanded from Harare to the farming towns of Karoi and Marondera in the past year.
Decentralisation was scaled up after Covid-19 induced hard lockdowns affected travel to TSF’s auction floors in Harare.
However, this strategy has been replicated across the sector.
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Operators hope that by moving closer to farmers, the industry would be able to address side marketing.
Last week, Tobacco Industry Marketing Board (TIMB) CEO Meanwell Gudu said the agency would be expanding its inspectorate department to fight illegal buyers.
“Tobacco Sales Floor is well advanced in preparation for the tobacco marketing season which will start on 30 March 2022,” TSL said in a trading update for the first quartered ended January 31, 2022.
“The business is setting up a new decentralised floor in Mvurwi to augment the Harare, Karoi and Marondera floors.
“This is expected to improve tobacco volumes to be handled in the year.”
However, the firm projected that total national tobacco output will decline by 15% due to erratic rains.
Growth prospects have also been jeopardised by a cyclone that swept through parts of the country this season.
“Indications are that national tobacco volumes are expected to range between 10% and 15% below prior year,” TSL added.
“The country experienced a late onset of the rainy season, which negatively impacted the uptake of agricultural inputs.
“Whilst a good rainy season had been forecast, the outturn was erratic, with some parts of the country being negatively impacted by the passage of the Tropical Storm Ana weather system.”
Farmers were this season also affected by a difficult operating environment, which was marked by a 19% depreciation of the Zimbabwe dollar against the United States dollar.
Distortion between the official and black markets rates have complicated business operations.
The country produced about 200 million kg of tobacco last season, earning the country over US$690 million.
The crop is one of the biggest foreign currency earners for the country, although the recently entry of multinationals into contract farming has affected inflows.
TSL said its inflation adjusted revenue during the review period increased by 72%.
It said its packaging business, Propak Hessian, commenced distributing materials during the review period.
TSL said volumes of hessian wraps are ahead of prior year whilst tobacco paper is 16% above same period last year.
“Agricura’s 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,” TSL said.
“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.”