Zimbabwe Stock Exchange (ZSE) listed horticulture firm, Tanganda Tea Company intends to expand its regional footprint to grow its export proceeds and dilute the impact of foreign exchange surrender requirements on forex revenue.
This comes after the company's export revenue grew despite registering a fall in volumes due to the impact of the El Nino climate phenomenon in the quarter under review.
The company said export proceeds continue to be subject to the 25 percent mandatory liquidation at official exchange rates.
This implied significant tax on the top line, Tanganda said, reduces exporters' competitiveness and ability to reinvest export proceeds into value addition and growth in exports.
Tanganda is looking to grow its export receipts to generate the foreign currency the company requires to import key raw materials and equipment.
"Packed tea exports into the region grew by 100 percent in response to the company pursuing and supplying an opportunity that arose to penetrate the Democratic Republic of Congo.
"Sustainable market diversification will continue to be pursued to expand the regional market," the company said.
However, sales volumes of packaged tea, at 475 tonnes, were 14 percent lower than the 549 tonnes attained in the comparative period.
Zimbabwe's agriculture industry is under pressure from the El Nino effects. The tea maker stressed that rain-fed agricultural productivity was impacted by the high temperatures and delayed start of the rainy season.
"The late onset of the rains has adversely impacted bulk tea production resulting in a 19 percent decline in volumes to 1 986 tonnes compared to 2 443 tonnes produced in the prior year.
"Despite the decline in production, bulk tea export volumes grew by 18 percent to 1 274 tonnes from 1 076 tonnes achieved in the previous year owing to improved logistical arrangements for more export shipments to be processed before the Christmas break," the company said.
Tanganda has, however, bemoaned a cocktail of issues for low sales and these include supply side problems among them packaging supply and power outages.
"Notwithstanding that the customer order book is full, a combination of packaging supply constraints, power outages and managing customers to reduce defaulting customers' risk are among the factors that resulted in a reduction in sales volumes.
Sign up for free AllAfrica Newsletters
Get the latest in African news delivered straight to your inbox
"Subsequently, volumes have started to increase as constraining factors have eased and the cumulative variance has begun to narrow," the company said.
The company has undergone some operational changes, which have seen it diversify from coffee and tea products to other horticultural products such as macadamia and avocados.
"Avocado and macadamia plantations which are under precision irrigation are looking healthy and the harvest of these crops will commence towards the end of the second quarter of the financial year," reads the trading update.
"The company's revenue declined 9 percent to US$5 million from US$5,5 million in the quarter to December 31 2023 compared to the same prior year.
In its outlook, the company said, "The operating environment is expected to remain volatile and complex due to continued inflationary pressures, currency instability, escalation of costs and reduced consumer disposable incomes."
