africa Agriculture Economy Tanzania tobacco Trade

Tobacco: Tanzania’s second biggest export earner falls in production

Approximate reading time: 3 minutes

Tobacco production has dropped considerably in Tanzania, the second largest tobacco producer in Africa after its neighbor, Malawi.

 

When it comes to large export earners in Tanzania, Africa’s tobacco only falls second to cashew nuts. In fact in 2017, tobacco brought in more foreign exchange to the country than coffee, cotton, tea, cloves and sisal combined.

However, tobacco production fell considerably over the third quarter of 2018 dropping by a third of the previous quarter’s performance.

Worse still, reports have it that production of tobacco in Tanzania has been going downhill over the course of the last few years.

Reports of the huge fall in production were revealed by the Bank of Tanzania (BoT) in its recently released quarterly economic bulletin.

The low production has been accompanied by the expected fall in export earning which the BoT places in a fluctuating annual drop and slight rise. 2014 had the most recent high output racking the country some $315 million. Production fell in the following year hitting the low of USD 287.6 million in 2015 and picked up slightly to USD312.7 million in 2016.

What caused this huge drop? Not global prices which have remained reasonably stable over the course of the last year.

So, if it is not demand, then what caused the slump in production? According to the BoT report, it is a lack of farming inputs that caused the drop in production. The report says, farmers got the need agro-inputs just too late to keep up with production.

This coupled with low rainfall across most of the country’s tobacco producing regions, crippled the subsector.

Growing Demand, Low Output

There has been growing interest in Tanzania’s tobacco as recent as mid 2018 when parliament was in session, with investors and importers like Vietnam pledging to purchase Tanzania’s tobacco. However the BoT report reveals wary figures that indicate that tobacco production in Tanzania has been facing a downward trend over the last few years.

According to the report, production of tobacco has been falling as far back as the 2014/15 period. In that period production was in the highs of 105,900 tonnes but that figure dropped drastically to a mere 60,000 tonnes in the subsequent 2016/17 production period.

In the third quarter of last year (2017) production fell to 53,849.7 tonnes and the downward trend continued in the corresponding month this year, where only 38,301.4 tonnes were produced during the third quarter of 2018.

While production has been falling, demand and price for tobacco has been growing. According to the Tanzania Revenue Authority (TRA), price per unit tonne for tobacco across most all of the world market clocked the highs of Sh10.26 million per tonne in 2016 and has been growing since but production is not only failing to keep up, rather it is decreasing.

In terms of production output per region,Tabora takes the lead as the country’s top tobacco producer and it is followed by Mara, Kigoma, Shinyanga, Arusha, Ruvuma and finally Geita region.

Source: The Exchange

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