TSL positions self to lead in tobacco sector

24 Mar, 2023 - 00:03 0 Views
TSL positions self to  lead in tobacco sector Tobacco has recuperated to become a successful agriculture sub-sector especially after reaching low levels at the turn of the millennium.

eBusiness Weekly

Michael Tome

TSL Limited says its division, Tobacco Sales Floors (TSF), has doubled up the capacity of its Mvurwi floors with an aim to accommodate higher contracted volumes under the group’s decentralisation drive.

TSF completed the enhancement of the Mvurwi sales floor, upgrading the new warehouse to 9 000 square metres, supplementing the capacity of the existing auction floors located in Harare, Karoi, and Marondera.

Sales floors mainly in Harare, have lately been overwhelmed with (tobacco) farmers during the selling season leading to innumerable fraudulent activities and health scares as the place continues to house the ever-growing number of tobacco farmers.

The golden leaf is the country’s second biggest foreign currency earner, and its output reached a peak of 261 million kilogrammes in 2019 and government aims to increase its production to 300 million kg by 2025.

Tobacco has recuperated to become a successful agriculture sub-sector especially after reaching low levels at the turn of the millennium.

The sector contributes nearly US$1 billion to the country’s export earnings every year. Tobacco Industry Marketing Board (TIMB) anticipates Zimbabwe’s tobacco output to rise this year by 8, 5 percent year-on-year to 230 million kg, a growth likely to stem from good rains received during the 2022/23 summer cropping season as more farmers ventured into tobacco production.

The establishment of auction floors in various areas across the country, will decongest the capital city’s auction floors at the same time-saving farmers transport costs as they will travel minimum distances from source farms.

“Tobacco Sales Floor undertook extensive preparations for the tobacco marketing season. The business doubled the capacity of its decentralised floor in Mvurwi to cater for increased contracted volumes, and augments the Harare, Karoi and Marondera floors.

“The expansion of the Mvurwi sales floor, brings the new warehouse space to 9 000 square metres. This development has supported TSF’s decentralisation drive,” said Fadzayi Pedzisayi, the TSL Limited company secretary in the first quarter trading update to January 2023.

Local farmers are turning to the golden leaf farming given its lucrativeness and TIMB saw an increase in the number of tobacco farmers to 148 527 this year from 123 000 in 2022.

Zimbabwe exports flue-cured tobacco to different parts of the world with China being the largest tobacco consumer.

Hectarage under tobacco this year grew to 117 000 this year from 110 000 hectares in 2022, according to the TIMB as stakeholders seek to increase tobacco production.

In terms of performance, TSL revenue grew by 106 percent in inflation-adjusted terms in the quarter under review attributable to strong volumes uptake in the agri-inputs business coupled with an impressive performance in the logistics business.

The logistics division also recorded significant volumes growth ahead of the same period in 2022, as the unit incorporated additional business from old and new customers.

Still on the logistics front, international services segment volumes grew by 46 percent ahead of 2022 performance driven by the commencement of an additional
rail service from Beira and Maputo rail service.

FMCG distribution volumes declined by nine percent compared to the same period last year showing limited aggregate demand in the market.

This was exacerbated by disruptions in the global supply chain which affected the movement of goods, especially that of fertiliser.

Propak Hessian recorded improved volumes uptake as the tobacco marketing season kicked off early, propping up the packaging segment of the business driven by massive uptake of hessian wraps and tobacco paper being significantly ahead of 2022 performance.

“The market has welcomed the locally produced tobacco paper and there has been a marked increase in volumes. The business is adequately stocked for the season on all packaging materials,” said Pedzisayi.

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