HomeBusiness DigestUS$33m tobacco sold at auction floors so far

US$33m tobacco sold at auction floors so far

Paul Nyakazeya

ZIMBABWE has so far earned US$33,7 million ($3,4 trillion) from 18 million kg of tobacco that have gone under the hammer since the auction floor opened on

April 25, the Tobacco Industry Marketing Board (TIMB) said.

In its latest weekly update, TIMB said 18 073 776 kg of flue-cured tobacco worth US$33 702 853 had been sold at the country’s three auction floors.

During the same period, farmers were paid $1,2 trillion under a 35% early delivery bonus put in place by the Reserve Bank of Zimbabwe (RBZ) to entice farmers to deliver their crops early.

This season’s tobacco production declined from 73 million kg recorded last year to 50 million kg due to late disbursement of funds, rising production costs and excess rains.

The Tobacco Sales Floor (TSF) auction floors have so far handled the largest volume of tobacco, with 4 265 377 kg being traded.

The Burley Marketing Zimbabwe (BMZ) auction floors have to date handled 2 780 891 kg while the Zimbabwe Tobacco Auction Centre (Zitac) handled the lowest volume of of 2 070 100 kg.

Zitac usually caters for large-scale tobacco farmers, while TSF mainly accommodates smallholder farmers. BMZ attracts medium to large-scale tobacco growers.

TIMB said crop deliveries to the auction floors last week improved with farmers selling more than 6 million kg of tobacco.

Since the start of the tobacco selling season, auction floors were averaging about 3 million kg a week.

A total of 8 936 368 kg of tobacco worth US$16 829 418 produced under contract farming has gone under the hummer since the auction floors opened.

During the same period last season, contract farming had fetched a total of US$14 612 773 from 12 172 840 kg sold.

This season’s earnings are 48% higher than earnings made during the same period last season. This is largely a factor of inflation for the Zimbabwe dollar component of the earnings.

Prices during the period under review have averaged US$1,98 a kg compared to last season’s average of US$1,61 The lowest price the crop has fetched to date is US10c a kg.

Meanwhile, the TIMB has hinted that the 2006 tobacco selling season could close earlier than usual due to a decline in crop output.

Traditionally, business started in March and usually closed at the end of October.

This year’s tobacco auction had started on a low note with farmers unhappy with prices merchants were offering.

Although activity has improved, farmers are still advocating an upward review of the buying price.

Industry players predict prices to average US$2 per kilogramme this season, up from a seasonal average price of US$1,61 last year.

TIMB said in general there has been strong demand for lemon tobacco compared to other forms of tobacco.

The highest price to date is US$2,99 for strip, A2E grade and US$2,91 for bundle, L2L grade.

The prices have generally been firmer compared to last season and gross earnings for the first fortnight of sales were US$1,9 million compared to US$1,2 million for the same period in 2005.

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