AT least 193 million kg of tobacco had gone under the hammer by Monday as tobacco production edges towards the 200 million kg mark, according to latest statistics from the Tobacco Industry and Marketing Board (TIMB).
CHIEF BUSINESS REPORTER
If it reaches that mark, it would be the first time in 14 years as the rebound in output continues driven by small-scale farmers.
Statistics from TIMB showed that 193 102 862kg had been sold at the country’s three auction floors — Tobacco Sales Floor, Boka Tobacco Floors and Premier Tobacco Floor — and the contract system by Monday (day 80).
The output was 32% up from the same period last year when 145 965 403kg were sold. The value of the tobacco sold was $613 998 297, up 14% from last year’s $539 727 578.
The tobacco selling season normally runs up to day 125. With daily sales reaching about 1 million kg, there are indications that output would be around 130 million kg, short of the 1998 peak of 260 million kg.
Output as of Monday was the ninth highest since 1980.
But the figures don’t look good for the auction floors as they moved a quarter of the output with the remainder going via the contract system.
This will pile more pressure on the auction floors that recently raised alarm that the contract system was pushing them out of business.
Boka chief executive officer Rudo Boka told the Parliamentary Portfolio Committee on Agriculture, Lands and Mechanisation last month that contract marketing in the tobacco industry had become too dominant to the extent that 62% to 70% of business was contracted.
“We also notice in the next five years we will have monopolistic buyers and currently, contractors offer a price of $5,80 while at auction floors the price is reduced at $4,99 and the current pricing system will see contract marketing dominating at 60% to 70%, while our auction floors are operating at 40% capacity because we also have to compete with decentralised auction floors,” said Boka.
“Currently there are 17 floors marketing a tobacco crop size of 166 million kilogrammes and we are concerned that current systems are not user friendly to indigenous players like Premier
and Boka as we invested a lot of money on infrastructure and are told to put up adequate ablution facilities, accommodation, and others and yet contract floors are not given the same terms for operation.”
Contract marketing has been increasing due to the inability of local banks to finance tobacco farming after the fast-track land reform programme left them exposed. Banks were left holding the title deeds as government proceeded with allocating land to locals.