Ariston Holdings has intensified its preparations for the 2020/2021 summer cropping season as the listed agriculture concern moves to improve production across all estates.
The company is grappling to level the mismatch between export revenue and high cost of doing business in the country where inputs and other essential services are expensive.
Therefore the company whose revenue is mainly foreign currency has recorded some losses due to high costs of inputs and electricity among other crucial services.
During the third quarter trading update which ended June 30, Ariston Holdings company secretary Aquiline Chinamo said the disruptions in air travel has affected the smooth travel of export samples to the potential buyers of the company’s products.
“In the fourth quarter the group will concentrate on activities for the start of the next summer cropping season. With all factories shutting down for repairs and maintenance, land and orchards are being prepared for the new farming season,” Chinamo said.
Tea production volumes have increased by 5% to 2900 tonnes during the 2020 third quarter trading update from 2,750 tonnes during the same period in 2019.
Chinamo said tea production volumes have surpassed 2018 and 2019 comparative periods. She said though there was a decline in macadamia volumes during the 2020 third quarter, there was an improvement in quality resulting in increased sales.
Banana production volumes went down to 661 tonnes during the third quarter of 2020 from 924 tonnes during the comparative period in 2019. Chinamo said revenue for the nine months to June 30 2020, grew by 15% in inflation adjusted terms compared to the same period last year.
Chinamo bemoaned the mismatch between the export revenue exchange rate and the implied the exchange rate on local costs which continues to exert downward pressure on the business.
Pome fruit sales were initially interrupted by the lockdown, now recovering. Poultry production has gone down 7% to 1,022m this year from 1,103m last year.
Ariston said annual placements reduced as a result of lockdown. The company said uncertainties regarding ever-changing economic policies, power supplies have been consistent during the lockdown.
Over the last 18 months, the business has faced multiple disruptions but remains viable. In March 2019, operations on estates located in Chimanimani and Chipinge were affected by Cyclone Idai.
Total rehabilitation cost was estimated at US$ 1.5 m however, rehabilitation of infrastructure remains incomplete. The company is putting in place the cost of mitigating measures increasing and putting pressure on margins.
The major shareholder’s support continues to have a positive impact on the business. There was a 39% decline in the production of commercial maize from prior year to make room for seed maize and seed bean production.
Experts highlighted that average selling prices of produce sold locally still lagged behind import parity and there is need to review prices. The average US$ selling for export tea declined by 11% owing to adverse world market price trends.
Local tea prices went up 95% in the year under review driven by ever-changing commodity prices. Ariston said 88% of current year production volume was sold to export markets.
Kent 2020/2021 cropping programme is ahead of target. Going forward, the company will continue with cost containment strategy to survive the challenging environment.