eBusiness Weekly
Golden Sibanda
The Tobacco Industry and Marketing Board (TIMB) conceded this week that the relatively low tobacco prices offered at the auction floors since the 2019 marketing season started in March have dispirited many farmers resulting in low deliveries.
While the auction price of flue-cured tobacco has averaged US$1,63 per kilogramme since the marketing season opened, the price averaged US$2,83 for similar mass over the same period last year, official industry statistics show.
Last year, tobacco sales had achieved the highest price of US$4,99 per kilogramme at this stage of the tobacco marketing season, which contrasts substantially with the top price of US$4,65 that has been realised thus far this season.
In volume terms, only about 150 000 bales have so far been sold since March compared to 19 800 that were sold at the auction floors in the same period last year.
There is a huge difference though to what is happening on contract sales where a marginal 1,66 percent positive variance has been registered this year with 55 174 bales sold.
However, contract sales have similarly registered a reduction in average price, a 32 percent retreat at US$2,03 per kg from the average price of US$2,98 per kg that was achieved in the comparative period last year.
TIMB remained adamant though that the country could still breach this year’s targeted deliveries of 240-260 million kg despite total sales from March to date trailing last season’s numbers by 36 percent for the same period.
The tobacco industry regulator also attributed the poor volumes performance of the industry since March to date to the late start of the planting season, which followed late onset of rainy season and was also effected by a brief mid-season drought.
A dip in production or deliveries of the golden leaf is a cause of concern for Zimbabwe considering that tobacco, which last year generated nearly US$1 billion, is the country’s second single largest foreign currency earner, after gold.
Tobacco has also become a major employer with hundreds of thousands of resettled, rural and black commercial farmers eking a living out of tobacco farming.
Zimbabwe remains hopeful that deliveries will reach targeted levels for the year and generate more than last year’s earnings at a time there are concerns over stuttering gold deliveries, which took a 10 percent dip to 6,3 tonnes in the first quarter of this year.
Reserve Bank of Zimbabwe Governor Dr John Mangudya, said gold deliveries during the quarter declined as small-scale miners, who account for over half of Zimbabwe’s production, protested the reduction of the forex retention threshold from 75 to 55 percent.
At least 46 million kilogrammes of flue-cured tobacco worth US$82 million has been sold since the opening of the 2018/2019 marketing compared to 72 million kg sold in the same period last year, when total deliveries topped 252 million kg.
TIMB chief executive Emmanuel Matibiri told Business Weekly in an interview recently that deliveries to the country’s tobacco floors were negatively affected by the late onset of the planting season and prevailing low prices.
However, he said while it was a fact that some farmers have withheld their crop in protest over relatively lower prices this year compared to the prior year, tobacco sales floors will remain open until around early August this year.
Dr Matibiri said farmers who may not be happy about prices being offered at the auction floors retain the freedom to deliver their crop for sale when the marketing season reopens next year, but warned poor storage could affect quality of the crop.
“Obviously, the season was late in terms of the time of planting of the crop; that is reason number and then reason number two is that the prevailing prices are discouraging farmers from bring more tobacco for sale,” Dr Matibiri said.
The TIMB boss said while some farmers may clearly be holding on to their crop, there was still time for those that may decide to sell at a later stage of the marketing season, which he said ended end of July or beginning of August this year.
Efforts to get a comment from Zimbabwe Farmers’ Union president Paul Zakaria on the prevailing situation in the tobacco industry were not successful by the time of going to print.
The highest price at the action floors this season thus far is US$4,65 per kg while contractors have offered the highest price of US$5,60 per kg while the lowest price this year has remained at US$0,20 per kg.
