A brief analysis of Tobacco prices on floors this year 2018
Tobacco prices obtaining at the floors this year are better than last year with associations attributing the trend to stiff competition by buyers.
Tobacco Industry and Marketing Board TIMB statistics show that the average price of $2,81 per kg as of last week was 3,3% higher from the price which obtained in the same period last year.
BY FIDELITY MHLANGA
The average price during the same period last year was $2,72 per kg.
Federation of Farmers Union president Wonder Chabikwa said the surge in price was due to the fear by buyers of a reduced output this year.
“What I think is happening is that buyers are afraid that the crop might be in small supply this year due to the January dry spell. Of course we had a recovery but that fear of not having adequate quantity has caused an increase in prices among buyers. I am not sure what has happened on the international supply but the price has a bearing on our prices. If the international supply is lower the price goes high,” he said
The scramble for tobacco is despite the fact that the industry has projected an ambitious 200 million kg tobacco output this season.
The golden leaf has as of now attracted a highest price of $6,25 only in contract floors, whereas auction floors has had a ceiling of $4,99.
The lowest price is stagnant at $0,10.
Zimbabwe Tobacco Association chief executive Rodney Ambrose said the rate at which the seasonal average is improving has slowed down due to daily prices being slightly below 2017.
“As volumes increase and better quality of tobacco comes onto the market we hope the seasonal average will remain above 2017, whereas in previous seasons the average prices paid to farmers have been on a downward trend against increased costs,” Ambrose said.
He said world supply of tobacco remained relatively static, with demand remaining in a decline. Ambrose said the quality of tobacco on offer was better than last season and this should drive the market to pay more.
“Consideration should also be made in the case of Zimbabwe the difference between the international US$ price paid for tobacco and the high local dollar costs,” Ambrose said adding that the industry appreciated the 12,5% Reserve Bank of Zimbabwe (RBZ) export incentive which would partially assist with the absorption of increased local costs.
“Our appeal to the RBZ remains — allow tobacco farmers direct access to US$ facilities. Any form of additional funding made to support tobacco farming should be channelled towards improving the viability of farmers rather than targeting increased growers, hectares and volumes.”