Zim’s tobacco sales drop 71% to $32 mln as holiday effect fails to come into play

Almot Maqolo

HARARE – Zimbabwe’s tobacco sales continues with its downward trend as 18.54 million kilograms of tobacco worth $31.98 million have been sold so far since the start of the selling season in March this year.

Latest data from the Tobacco Industry and Marketing Board (TIMB) for Day 21 – shows that sales declined by 71% from $112.10 million recorded in the same period last season.

However, expectations were high that the sales will improve as tobacco farmers rush to the floors in search of cash ahead of the independence and Easter holidays as was the norm previously. Alas, farmers continue to hold to their crops citing poor pricing.

The independence and Easter holidays ran from Thursday up to yesterday.In light of the prevailing economic environment, characterised by high cost of production and inflationary pressures, local farmers still anticipates an improvement on pricing and being paid part of their produce in foreign currency as promised by the central bank earlier on.

Albeit several attempts, to restore normalcy at the floors by the apex bank through the scrapping of the 2% electronic transfer tax on all activities being done at the southern African nation’s tobacco floors and their commitment of paying farmers 50% in US Dollars in their Nostro FCA and the remainder in functional currency at the interbank rate – remains to be in vain as deliveries are yet to improve.

The golden leaf, is the southern African country’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.

Of the total volume of tobacco sold so far this year, at least 14.23 million kgs went through the contract system while the remainder went under the hammer. The average price at both the auction and contract floors stood at $1.72 per kg, representing a 38% decline from the $2.78 per kg in the 2018 selling season.

The crop has so far fetched a highest price of $5.25 per kg while the lowest has been 0.10 cents per kg. Rejected bales further declined by 48.45% from 36 803 in 2018 to 18 971 this year. The golden leaf, which is grown by over 170 000 farmers, consisting mainly small scale farmers, recorded an all-time record last year after delivering 252 million kgs.

However, this year’s output is expected to dwindle owing to the low rainfall experienced throughout the country. Recently, the industry regulator said it carrying out a crop assessment to ascertain this year’s output – still waiting for the outcome.Tobacco exports have already earned the country US$177.64 million since January to mid-march this year, with South Africa and China being top buyers.

Also the southern African nation’s tobacco earnings closed 2018 at $892 million from 184.1 million kgs exported to different parts of the world. Other countries who imported Zimbabwe’s golden leaf includes Belgium, the United Arab Emirates, Indonesia, Sudan and Russia.

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