Tobacco sales increase 206%

THE value of tobacco crop sold at both auction and contract floors increased 206,54% to US$101,5 million as of day 21, statistics from the Tobacco Industry and Marketing Board show.

BY FIDELITY MHLANGA

This is up from 33,1 million kilogrammes delivered during the same period last year.

Tobacco amounting to 44,87 million kilogrammes has been delivered at both auction and contract floors, up 138,30% from 18,82 million kg delivered during the same period last year.

While the average had increased by 28,63% compared to last year, farmers are failing to recoup their investment due to problems emanating from the exchange rate.

Tobacco growers are paid 50% of their sale proceeds in forex with the remaining percentage paid in local currency at the official exchange rate of US$1: $25. This is way below the parallel market rate of about US$1:65.

George Seremwe, the Tobacco Association of Zimbabwe president expressed concern over the exchange rate losses endured by farmers which is now an albatross to the tobacco farming business.

“Exchange rate is our biggest challenge. Yes farmers are paid using a mockery 1:25. That is going to affect next season. We approached the central bank and we are still waiting for their response,” Seremwe said.

He said the situation was detrimental to tobacco farming.

“We are encouraging those who can delay selling their tobacco to do so while waiting for response from Reserve Bank of Zimbabwe. We cannot continue selling with this payment system which erodes the tobacco producers’ earnings, with imports being pegged at parallel market rates,” he said.

This year’s tobacco season commenced on April 29 after several deferments as authorities were grappling with measures to put in place at the floors to prevent the spread COVID-19.

Tobacco is one of the country’s top forex earners which has helped shore up importation of industrial raw materials, fuel and pharmaceuticals, among others.

The highest price offered by buyers at the auction floors is US$4,99 per kg. Apparently this has been the ceiling for many years.

However, buyers have continued to offer higher prices at the contract floors, with the highest so far at US$ 6,60 per kg above US$5,25 per kg recorded last year.

Previously a preserve for white commercial farmers, tobacco farming in Zimbabwe has, over the years, grown to become the mainstay for smallholder and subsistence farmers, providing a source of livelihood for most of the country’s rural population.

TIMB projects this season’s output at 225 million kg from an all-time high of 259 million kg last year.

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