Tobacco Sales Rake in US$80m

ZIMBABWE has so far earned US$81 million from 28,1 million kg of tobacco that have gone under the hammer since the auction floor opened last month, the Tobacco Industry Marketing Board (TIMB) said yesterday.


If the average prices and selling pattern prevail until end August, the country would expect to earn about US$160 million. The amount is nearly two percent of what Zimbabwe needs to turn around the economy that has been unstable for the past decade.

Sales are expected to be complete well within 80 selling days or at the latest by 28 August.
In its latest weekly update, TIMB said 28,1 million kg of flue-cured tobacco worth US$81 million had been sold at the country’s three auction floors.
The money achieved so far is a 22,68% increase from US$72,1 million sold from 22,9 million kg during the same period last year.
Tobacco is the country second largest foreign currency earner after mining.
The Tobacco Sales Floor (TSF) auction floors have so far handled the largest volume of tobacco, with 4,1 million kg valued at US$12,1 million being traded. The average price was US$2,90.
The Burley Marketing Zimbabwe (BMZ) auction floors have to date handled 3,1 million kg valued at US$9,2 million at an average price of US$2,96 while the Zimbabwe
Tobacco Auction Centre (Zitac) handled 3,5 million kg valued at US$9,7 million at an average price US$2,74.
A total of 17,3 million kg valued at US$49,9 million has gone under the hummer under contract farming at an average price of US$2,88.
Zitac usually caters for large-scale tobacco farmers, while TSF mainly accommodates smallholder farmers. BMZ attracts medium to large-scale tobacco growers.
Auction floors opened last month and the Zimbabwe Tobacco Association estimates that 45 million kg of tobacco will be sold this year, down from 48 million kg sold last year.
TIMB acting chief executive officer, Andrew Matibiri said this year’s process was running smoothly, unlike the previous years were farmers ended up side-marketing their crops to black market buyers.
Tobacco production has been declining since 2 000 due to late disbursement of funds, rising production costs, excess rains and inexperienced farmers soon after the land reform.
Tobacco auction floors outside premises in Harare have been turned into a flee market as enterprising businesspeople have set up stalls to lure free spending tobacco farmers who are paid in hard currency.
Tobacco is being sold between US$2 and US$5 at three auction floors and farmers are painting the town red as they are paid up to US$1 500 cash on the spot.
The balance is deposited on their bank accounts. Last year farmers spent weeks sleeping in the open hoping to get paid in the valueless Zimbabwean dollar only to be paid using agro-cheques which were not accepted by shops. However, it is the spot payment that caused black farmers go speeding sprees.
An ordinary blanket is sold at US$35 but in shops in town the blankets only cost just US$12. To justify they spending spree farmers said they do not have time to go into town for shopping.
Zimbabwe is the largest producer of tobacco leaf in Africa and the world’s fourth-largest producer of flue-cured tobacco, after China, Brazil and the United States of America. Since cigarette production in Zimbabwe is on a small scale, the major activities in the tobacco industry are the growing, curing and subsequent handling and distribution of tobacco leaf. The country does not have a large tobacco manufacturing industry and produces only enough cigarettes to supply domestic demand and provide a relatively small volume for export. Therefore 98 percent of all tobacco production is exported.
Tobacco production makes an important contribution to GDP and to export revenue, and plays a major role in the national economy. The crop normally accounts for more than 50 percent of agricultural exports, 30 percent of total exports and nearly 10 percent of GDP. All tobacco grown in Zimbabwe is sold on the auction floors in Harare as unprocessed green leaf. In terms of revenue to farmers, total annual sales since 1990 have ranged between US$270 million and US$593 million. Tobacco sold through the auctions then undergoes further processing by merchant companies to remove stems and tips from the leaf, before being shipped abroad. This adds 30 percent to 50 percent to the crop’s final export value. In 1998, the total value of tobacco exports was roughly US$582 million.

BY PAUL NYAKAZEYA.

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