• Export Surrender Portions: Have led to increased operational pressures and margin compression for exporters
• Production Challenges: a 31% year-on-year decline in tea production, while other segments experienced varied performance
• Revenue Performance: 16% year-on-year decrease in revenue during Q1 FY2025, primarily due to lower volumes in key products like tea and macadamia

Harare- Ariston Holdings, a Zimbabwean agribusiness, has strategically reoriented its revenue focus from export markets to domestic sales in response to rising operational costs and restrictive export policies.

A key driver of this shift is the Reserve Bank of Zimbabwe’s (RBZ) increase in export surrender requirements.

The RBZ has revised foreign exchange surrender policy in February 2025, mandating exporters to relinquish 30% of forex proceeds (up from 25%) in exchange for the Zimbabwe Gold (ZiG).

This measure aims to bolster demand for the ZiG in a USD-dominated economy and stabilise dwindling forex reserves.

However, the policy has intensified margin compression for export-oriented sectors, including agribusiness (Ariston Holdings), manufacturing, and mining, where operational costs (equipment, inputs, debt servicing) are predominantly USD-denominated. 

The ZiG’s artificial overvaluation exacerbates liquidity constraints.

At introduction, the ZiG traded at a 36% premium to the USD on informal markets, diverging from equilibrium rates dictated by purchasing power parity.

By August 2024, this premium widened to 74%, prompting a 43% official devaluation in late September.

Despite adjustments, the ZiG remains misaligned with market fundamentals.

Suppliers and vendors transacting in ZiG apply parallel market rates rather than the official rate, creating a systemic valuation mismatch. 

For exporters, for example surrendering US$30 million under the 30% mandate, the effective loss is amplified by the parallel market premium. At a 74% premium, the RBZ exchanges US$30 million at the overvalued official rate, while suppliers demand compensation at the parallel rate.

To illustrate the magnitude of this issue, consider a scenario where Ariston surrenders $30 million USD to the RBZ. Assuming a 74% premium, the company would be deprived of approximately US$22.2 million  (74% of $30 million USD) due to the overvaluation of the ZWG. This substantial loss would undoubtedly erode Ariston's margins, undermining its competitiveness in the global market.

In response to this predicament, Ariston has judiciously opted to pivot towards domestic sales, thereby minimising its exposure to the vagaries of export surrender portions and the overvalued ZWG.

The surrender policy forces firms to allocate scarce USD reserves to meet obligations (imports, debt), while trapped ZiG liquidity limited to settling minor local obligations (taxes, partial labour costs) fails to offset operational outflows.

Suppliers’ refusal to accept ZiG at official rates further strains working capital cycles, necessitating costly parallel market engagements to bridge shortfalls.

For entities like Ariston, which rely on imported agro-inputs (fertilizers, crop chemicals), this compounds cost inflation, negating efficiency gains from automation or staff rationalisation. 

While the RBZ’s surrender policy seeks to enhance ZiG utility and forex reserves, it inadvertently entrenches dollarisation by incentivising hoarding of USD outside formal channels.

At the end, the widening premium reflects declining confidence in ZiG’s store-of-value proposition, undermining monetary policy credibility.

Exporters face a dual burden: reduced competitiveness from margin compression and operational inefficiencies from currency fragmentation.

Without structural reforms to align exchange rates with market dynamics, such measures risk perpetuating hyperinflationary pressures and stifling export-led growth. 

Corporates are recalibrating strategies to hedge against forex volatility, including pivoting to USD-denominated local sales (where feasible), and accelerating cost-optimisation initiatives.

However, sustained recovery hinges on resolving currency misalignment and improving RBZ forex allocation transparency. In the interim, a large premium remains a critical drag on profitability, liquidity, and sectoral resilience.

Q1 Production

In terms of performance, the first quarter of FY2025 (October–December 2024) was marked by extreme heat and drought, disrupting agricultural output.

Tea production plummeted 31% year-on-year to 496 tonnes, while delayed rains delayed row crop planting.

However, improved rainfall from mid-December 2024 onward has bolstered optimism for the remainder of the season, with year-to-date precipitation exceeding prior-year levels.

To counter climate risks and power shortages, Ariston commissioned a solar plant at Southdown Estate in July 2023, reducing energy costs by 40% and aligning with sustainability goals.

The company plans to expand solar infrastructure to Roscommon, Clearwater, and Kent estates reflecting efforts to hedge against Zimbabwe’s erratic electricity supply. 

To mitigate rising operational costs due to rising prices for fertilizers, crop chemicals, and labour, compounded by the RBZ’s export retention rules, the company implemented aggressive cost-cutting measures, including staff reductions and process automation.

These steps aim to stabilise margins in a hyperinflationary environment where the ZwG’s scarcity has disrupted liquidity.

On the upside, other products segment which include bananas, sugar beans, and maize recorded a 32% volume increase, driven by improved banana yields, offering a rare bright spot in an otherwise strained quarter. 

Zimbabwe’s economic struggles contrast sharply with regional peers. For instance, South Africa, while grappling with load-shedding benefits from a more stable currency (rand) and deeper access to global markets.

Similarly, Zambia and Botswana, though facing climate-related agricultural risks, have not imposed export surrender requirements as stringent as Zimbabwe’s, allowing agribusinesses greater flexibility in managing forex earnings.

Meanwhile, Mozambique and Tanzania are leveraging renewable energy investments to offset power deficits, a strategy Ariston is emulating with its solar projects. 

Business Performance and Outlook

Q1 FY2025 revenue fell 16% year-on-year, reflecting lower tea and macadamia volumes.

Macadamia sales dropped 52%, though global oversupply issues have eased, with export prices trending higher.

The poultry segment stalled due to paused out-grower placements, while tea prices stagnated.

Looking ahead, Ariston anticipates stronger macadamia demand and improved row crop yields, targeting revenue growth through enhanced production efficiencies.

The company’s 660-hectare crop planting and nut set improvements signal cautious optimism, though liquidity constraints and ZWG instability remain headwinds. 

Therefore, Ariston’s pivot to local markets highlights the broader challenges facing Zimbabwean exporters amid punitive fiscal policies and currency instability. While regional counterparts like South Africa and Zambia navigate their own economic hurdles, Zimbabwe’s unique blend of hyperinflation, forex shortages, and climate volatility demands hyper-localised strategies.

Ariston’s focus on cost discipline, renewable energy, and high-value crop diversification positions it to weather near-term turbulence. However, sustained recovery hinges on macroeconomic stability, a goal still elusive in Zimbabwe’s fractured financial landscape.

As regional agribusinesses increasingly turn to sustainability and automation, Ariston’s adaptive measures offer a template for a start.

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