Home » Industry » ’Irregular’ Tobacco Season Forces TSL to Innovate

Diversified agro-concern TSL Limited says the late start to the tobacco selling season will impact negatively on its tobacco operations leading to a flat performance on the prior year. To mitigate this, the company says it has introduced hand stripping and re-handling of tobacco at the auction floors to improve revenues.

Giving a trading update at the company’s AGM, chief executive Mr Washington Matsaire said volumes at Tobacco Sales Floor have decreased from the same period last year.

“The environment in which we are operating from is a little different and we cannot be immune to some of the things happening around us. Our year end performance as we go forward should be in line with prior year and the background to that is that the tobacco season has been impacted by weather patterns.

“What we are trying to do to ensure that our auction floors continue to perform as best possible under the circumstances is to introduce new activities, notably hand stripping and the re-handling of tobacco. These are not earth- shattering sources of revenue but they will help to offset the impact that has been felt because of factors outside our control,” he said.

The move to introduce re-handling is in line with a directive by the Tobacco Industry and Marketing Board that auction floors re-handle all rejected defective bales as a way of protecting growers from buyers who later sell the bales at a higher price.

National tobacco output is expected to be below targets due to the heavy rains that delayed the harvest and subsequent marketing season.

Mr Matsaira said contract purchases through TSL Classic will commence this week and the commercial crop will meet forecasts. He said some small-scale farmers had, however, been affected by the erratic weather although production from the outgrower scheme will be satisfactory. “Propak has also been impacted by the late start to the trading season and in order to mitigate that we are redoubling our efforts to regain merchant business that we had lost over the years. We have also increased distribution points in order to ensure that product gets out to some of these remote areas,” he said.

He said the global oversupply of tobacco in China and Brazil is also a major issue that will impact prices this season.

Under logistics, Mr Matsaira said the group continues with efforts to secure partnerships to improve efficiencies and build volumes that will complement the existing offering in that unit.

He added that the firm had realigned the organisational cost to reduce losses made in TSL’s trading last year.

The group recorded a 19 percent growth in revenue for the year ended October, 2014 to $48,2 million from $40,6 million in the prior year.

Source : The Herald