Better tobacco prices expected this season
Tobacco farmers can expect better returns for their crop this marketing season after structural economic issues that negatively affected prices last year were resolved, the Tobacco Industry and Marketing Board (TIMB) said yesterday.
The golden leaf is a strategic crop to the domestic economy, generating circa US$1 billion in exports for the country annually.
The opening date for this year’s tobacco marketing season is yet to be determined, but indications are that the deliveries will start at least a month from now.
Deliveries last year hit a record of 258 million kilogrammes, after bettering the previous high of 252 million kg.
The Central Bank Governor Dr John Mangudya, is on record that the amount of foreign currency generated from tobacco exports is enough to import fuel for the nation the whole year.
Once Zimbabwe’s biggest foreign currency earner before gold took over, tobacco contributes significantly to gross domestic product (GDP) and employs nearly 60 percent of workers in agriculture.
TIMB chief executive Andrew Matibiri, said farmers got low prices last year after Zimbabwe switched on from a US dollar monetary regime to local currency at crossover rate of 1 to 1.
Dr Matibiri said this negatively affected the amount of money tobacco merchants eventually paid for tobacco, leading to grossly discounted prices paid to the farmers for their toil.
The average price of tobacco last year was 31 percent lower compared to those of the prior year.
The average price in 2018 was 2,92 US cents per kg compared to US2,02 cents last year.
However, the major issue that suppressed prices was resolved following the floating of the reintroduced Zimbabwe dollar on the interbank market in February last year and merchants can easily convert their funds at the ruling official exchange rate.
Notably though, even after the domestic currency was floated, it started at a very low market exchange rate of $2,5 dollars to the US dollar before gradually and exponentially rising to the current levels of $17,84 to the greenback.
“There were monetary changes that were introduced last year that affected the value of money that buyers had, that’s why I think the prices were down,” Dr Matibiri said.
“Personally, I remain very positive that prices will be much better than they were last year and the demand for Zimbabwean tobacco is still there.
Zimbabwean tobacco is a premium product and it is wanted by all cigarette manufacturers for inclusion in their blends,” he said.
But Dr Matibiri said this year’s crop suffered very much; as it was planted late on dry land while the rains came a bit late.
“Farmers planted in October, November and some of the seedlings that they had planted dried up in the scorching heat.”
“But fortunately, tobacco being what it is, recovered very well and it looks like we will get something almost near full potential.
“Also remember that the previous season was dry and most farmers did not have water for seed beds, let alone water for planting tobacco, so this is why you see the number of farmers coming down,” he said.
While output is projected to be lower than last year on account of reduced hectarage and fewer growers, TIMB believes deliveries will not be down by more than 20 percent.
Area under tobacco crop this year has gone down to 100 000 hectares compared to total planted area of 106, 558 ha last year.
The tobacco industry regulator also noted that while early harvested tobacco appeared to be of low quality this was expected of bottom plant leaves given the negative effect of the late onset of the rains and dry spell in December.
“But we believe that from now on, the quality of leaf that they will get will be of much better quality because the weather conditions are perfect for tobacco leaf expansion and for curing.”