HARARE – Zimbabwe’s Tobacco Industry and Marketing Board (TIMB) says about 8.10 million kilograms of tobacco worth $14.11 million have been sold so far since the start of the selling season in March.
Although at a slow pace, golden leaf deliveries have started picking up amid concerns over side marketing. In light of the prevailing economic environment, local famers anticipated an improvement on pricing and being paid part of their produce in hard currency as promised by the central bank earlier on.
To restore normalcy 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. Also TIMB and the Reserve bank of Zimbabwe (RBZ) insisted to 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 want half of his payment in foreign currency a farmer will liaise with TIMB and a bank to get foreign currency at the ruling rate.
Tobacco is the southern African nation’s top export earner after the yellow metal. 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 from the industry regulator shows that the volume of tobacco sold so far represents a 65.91% decline from 23.77 million kgs worth $65.47 million traded in the same period last year.
Of the total volume of tobacco sold so far this year, at least 5.71 million kgs went through the contract system while the remainder went under the hammer. The average price at both auction and contract floors stood at $1.74 per kg which is 36.75% lower than in the 2018 marketing season.
The crop has so far fetched a highest price of US$5.10 per kg while the lowest has been 0.20 cents per kg. Rejected bales declined 28.96% from 13 376 in 2018 to 9 502 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, which have affected the crop’s full potential.
Tobacco exports have already earned $177.64 million since January to mid-March this year, with South Africa and China being 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.