HomeBusiness DigestFuel crisis plunges tobacco sales

Fuel crisis plunges tobacco sales

By Lucia Mutikani

ZIMBABWE’S tobacco sales have plunged as farmers struggle to deliver their crop to auctions because of an acute shortage of fuel, further jeopardising the country’s economic recovery prospe

cts, industry officials said on Wednesday.

Tobacco is one of Zimbabwe’s major foreign currency earners, accounting for about a third of the country’s earnings, but production has dropped sharply in the past four years – largely blamed on government seizures of white-owned farms for resettlement by landless blacks.

During its heyday as the world’s second-largest tobacco exporter, tobacco earned the country as much as US$400 million. Export earnings declined to US$130,2 million last year from just over US$201 million in 2003.

Zimbabwe – already facing foreign exchange shortages, high inflation and more than 70% unemployment – is experiencing its worst fuel crisis in years with petrol stations going dry for weeks, grounding public transport and hitting an industrial sector already operating well below capacity.

Tobacco Sales Floor (TSF) marketing manager Lodwin Gatsi told Reuters: “Deliveries have slowed down to about a quarter of potential sales. On Monday, we sold 100 000 kg. If things were normal we would have sold four times as much.”

He said the TSF had secured fuel supplies, resulting in improvement in deliveries.

“Unless things change in terms of diesel supply, we will need to go back to the authorities for more supplies,” he said.

Since the start of the auction season in April, tobacco exports have brought in US$56,7 million. Depending on the fuel situation, the auction session is scheduled to end in late August or early September.

“Our target for sales this year is 80 million kg. So far we have received 39 million kg and the auction season is almost through,” said Gatsi.

Tobacco sales totalled 69 million kgs last year. Tobacco production has plunged from 236 million kgs in 2000. Gatsi said that due to low prices farmers withheld their crop when the season started in April, but they had improved and could reach the US$2/kg level.

On Tuesday, the price was around US$1,84/kg, still lower than the US$1,98/kg fetched during the same period last year.

The decline in tobacco sales volumes comes at a time when the government is pushing to revive an economy which has suffered six years of recession.

The government is trying to use agriculture to spearhead the recovery, but a poor harvest due to a late season drought has forced the central bank to revise growth estimates for this year.

Growth is now expected to average between 2 and 2,5% this year from previous estimates of 3 and 5%. But analysts reckon these estimates are too optimistic, given the persistent fuel and foreign currency shortages.

Zimbabwe is reeling from its worst economic crisis since independence from Britain in 1980, blamed on Mugabe’s policies. Mugabe says the economy is a victim of sabotage by opponents opposed to his farm seizures. – Reuter.

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