Tobacco rebounds to rake in US$274 million –– TIMB

ZIMBABWE has earned US$274,1 million from the sale of 92,3 million kgs  of flue-cured tobacco in both contract and auction systems since the beginning of the 2010 tobacco marketing season on February 16, figures released by the Tobacco Industry Marketing Board (TIMB) this week show.

Tobacco sales nearly doubled from 55, 6 million kgs valued at US$167,3 million sold during the same period last year.

Prices of tobacco have over the past two weeks been relatively lower than last year with the seasonal average floating at US$2,97 per kg against US$3 per kg during the same period last year.

According to the figures, tobacco prices are falling as deliveries improve on the auction floors.
The downward trend on prices began in week five, falling from an average of US$3,45 to the current average of US$3. The small number of buyers against improved supplies is being cited as the contributing factor to the price fall.

Tobacco deliveries have considerably increased from an average of around 420 000 kgs a day in the first two months of the season to an average 1, 4 million kgs.

According to TIMB, the increase in deliveries has resulted in the national output target for this year’s crop being revised again on Monday to 114 million kgs, less than two weeks after the industry reviewed the initial target of 77 million kgs upwards to 93 million kgs.

Presenting the 2010 mid-term fiscal policy on Wednesday, Finance minister Tendai Biti said tobacco sales were expected to contribute significantly to the revival of the economy. He projected that a total of 120 million kgs of tobacco would have been sold by the end of the selling season.

According to TIMB, the first statistics were drawn from an early crop assessment where most of the tobacco crop was affected by the dry spell that hit most parts of the country.

Last year, tobacco was the best paying crop in the country. Government still hopes that internally generated sources of funding such as  tobacco, diamonds and other metals’ sales will play a critical role in improving market liquidity and stabilising interest rates.

Tobacco output has plunged in Zimbabwe since 2001 after disruptions following chaotic farm invasions that started in February 2000. In 2000, Zimbabwe produced 236 million kgs of tobacco and was the world’s second largest exporter after Brazil. It now ranks behind Brazil, India, the US, Argentina and Tanzania, according to the website of Universal, the world’s biggest tobacco leaf merchant.

TIMB chief executive Andrew Matibiri said the floors opened early this year instead of the traditional month of April in order to ease cash flow constraints for farmers as well as their ever-increasing overheads.
He said most farmers had cash constraints “and by opening the floors early they could quickly sell their tobacco and offset their loans as well as reduce their interest”. “Besides, farmers will also cut on expenses and losses that come with keeping tobacco that is ready for the market now until April or May.”

 

Paul Nyakazeya