Tanganda lines up value addition projects
AGRO manufacturing concern, Tanganda Tea Company Limited, has several value addition projects in the pipeline to increase profitability and manage costs. This comes as the firm experienced a loss of ZWL$17,05 billion for its financial year ended September 30, 2023, from a profit after tax of ZWL$4,32 billion in the prior comparable year.
The loss was due to an increase in the cost of sales and expenses by nearly 56% and 65% to ZWL$94,25 billion and ZWL$47,25 billion, respectively. The increase in expenses was around selling and distribution as well as other expenses.
In a statement accompanying the firm’s 2023 annual report released last Friday, Tanganda chairperson Herbert Nkala said the firm was focusing on efficiency to manage costs and grow its regional footprint.
“The predicted El Niño is not expected to significantly impact avocado and macadamia yields as the company is invested in dams, reservoirs and high-technology precision irrigation to mitigate the impact of a drought. Yields of avocado and macadamia are expected to increase with enhanced maturity profiling of plantations over the next three to five years,” he said.
“The demand for our products remains relatively strong despite the impact of complex macro-economic factors on the local and regional markets. The growth strategy is to diversify the regional market further.”
In the week prior to the annual report, Tanganda revealed that it was looking at expanding its sustainable market diversification efforts into the region after successfully seizing an opportunity to enter the Democratic Republic of Congo.
“The confidence from our customers and their support, including the value addition projects in the pipeline for our plantation crops, will increase profitability mainly as management focuses on efficiency in managing costs,” Nkala said.
The company comprises main operating divisions, namely, agriculture, beverage, corporate and administration.
Under its agriculture business, Tanganda generates considerable export revenue from its tea, coffee, macadamia nuts and avocado production, especially from the last two.
The projects in the pipelins are in the macadamia and avocado business.
“Global prices of nuts declined from an average of US$5,12 per kilogramme achieved in 2021 to US$3,26 per kilogramme in 2022 and US$1,92 per kilogramme in the current year,” Tanganda said.
“To mitigate these developments, the company’s strategy is to invest in value addition which will facilitate market diversification.”
In terms of avocados, the crop’s certification to several accreditations (Rainforest Alliance, HACCP, SMETA, GlobalGAP, Albert Heijn, Tesco Nurtures) and the Linking Environment and Farming continues to give assurance of a production cycle that is ethical, safe and sustainable.
“The company strategy is to invest in value addition on the 25-30% non-European Union/ United Kingdom exportable fruit through the local affiliate associations (the Zimbabwe Avocado Growers Association and the Horticultural Development Council) and also in partnership with the exporting agent, the company is exploring market diversification into Asian markets, ”Tanganda said.
“This will allow maximisation of exports in the early parts of the harvesting season.”
Tanganda had ZWL$1,87 to every dollar of debt showing that the company had more than enough liquidity for its value-addition projects.