HARARE – Zimbabwe’s Tobacco Industry and Marketing Board (TIMB) says about 876,804 kilograms of the golden leaf worth US$1.5 million have been sold since the start of the selling season in March this year. This represents a 90% decline from last year’s figures.
During the last few days, local famers continued to hold on to their crop, citing poor pricing and not being paid part of their produce in hard currency, as promised by the central bank earlier on. In a bid to improve deliveries at the auction floors, the treasury then scrapped the 2% electronic transfer tax on all activities being done at the southern African nation’s tobacco floors.
TIMB and the Reserve bank of Zimbabwe (RBZ) also reiterated their commitment of paying farmers 50% in US Dollars in their Nostro FCA and the remainder in functional currency at the interbank rate. For instance, in the event that a farmer wants half of his payment in foreign currency, they would liaise with TIMB and a bank to get foreign currency at the ruling rate.
Previously a preserve for commercial farmers, tobacco is fast becoming an attractive source of livelihood for many of Zimbabwe’s small scale and communal farmers. Latest statistics from the industry regulator show that the volume of tobacco sold so far represents a 90.15% decline from 8.9 million kgs worth US$24.57 million traded in the same period last year.
Of the total volume of tobacco sold so far this year, at least 244,999 kgs went through the contract system, while the remainder went under the hammer. The average price at both auction and contract floors stood at $2.67 per kg, which is 38% lower than in the 2018 marketing season.
The crop has so far fetched a highest price of US$5.00 per kg while the lowest has been 0.30 cents per kg. Rejected bales declined 70.84% from 8 516 in 2018 to 2 483 this year.
This year tobacco was grown under two extremes of weather characterised by delayed rains and prolonged drought. The golden leaf, which is grown by over 170 000 consisting mainly small scale farmers, recorded an “all-time record” after delivering 252 million kgs last year.
However, this year’s output is expected to dwindle due to drought. Tobacco exports have already earned US$177.64 million since January to mid-March this year, with South Africa and China the top buyers.
The country’s tobacco earnings closed 2018 at $892 million from 184.1 million kgs exported to different parts of the world. The bulk of the tobacco has been exported to China with the rest going to South Africa, Belgium, the United Arab Emirates, Indonesia, Sudan and Russia.