Zimbabwe Tobacco sales up by 58%

Tobacco

Despite the biting cash crisis that has resulted in tobacco payments being delayed, the golden leaf sales swelled by 58% in the first 27 days of the current marketing season compared to the same period last year, official statistics show.

Tobacco Industry Marketing Board (TIMB) figures for day 27 show that tobacco worth US$144 million has been sold so far, compared to US$91 million in the same period last year.

According to the figures, the volume of tobacco has also ballooned by 52% to 51,6 million kg from 33,7 million kg delivered during the same period last year, while the average tobacco price of US$2,79 this season is US$0,10 cents up compared to the US$2,69 obtaining during the same period last year.

This marketing season, monetary authorities moved to compel all tobacco farmers to open bank accounts in a bid to promote financial inclusion, but delays in processing the transactions triggered problems.

Compounded by the cash crisis, farmers are going for days before receiving their money upon delivering their crop.

Last Thursday, tempers flared at the auction floors as farmers protested against the Reserve Bank of Zimbabwe’s decision to cap the maximum withdrawal at US$1 000 per day.

However, on Friday, the apex bank elevated tobacco farmers to corporate clients and allowed them to withdraw a maximum of US$10 000 per day.

So far, the three licenced auction floors have bought 10,3 million kg of tobacco valued at US$24,8 million.

Contract floors have bought a huge chunk of the golden leaf amounting to 41,2 million kg worth US$119,2 million.

The highest price offered by auction floors as of day 27, has not exceeded the US$4,99 ceiling which courted criticism last year from TIMB Chairperson Monica Chinamasa.

However contract floors recorded a maximum price of US$6,25.

This year, the number of tobacco growers plunged by 22% from 92 430 last season to 71 728 after farmers failed to raise money for inputs due to poor prices.

Production this year is projected to dwindle to 170 million kg from 199 million recorded last year.

In 2010, production was 58,5 million kg before surging to 123,5 million kg in 2011 and growing further to 132,5 million kg in 2012. In 2013, 144 million kg was produced. In 2014, the country’s production grew to 216 million kg before dropping to 199 million last year.

With Brazil, India and Tanzania having downsized their tobacco production this year, it is estimated that global demand for the golden leaf will increase, pushing up local prices.

In 2014, the average tobacco price dropped to US$3,17/kg before tumbling further to US$2,93/kg last season, prompting some farmers to ditch production of the crop.

Source: Zimbabwe Independent