HomeBusiness DigestTobacco sales increase 25%

Civil service strike used as a diversion

Statistics released by the Tobacco Industry Marketing Board (TIMB) show that average prices at US$3,78 are 29% above last selling season’s average. Prices have been favourable this season peaking at US$5,70 under the contract buying system and US$4,99 under the auction system in 2012 compared to US$4,75 in 2011.But a low of US$0,10 per kg has been attained in 2012 as compared to US$0,20 in 2011.

A total of 24 million kgs have gone through the auction system at an average price of US$3,70 and a total of US$31 million having been sold through the contract system at an average price of US$3,84.

Trading at the auction floors has remained skewed to the traditional players, Tobacco Sales Floor and Boka Tobacco Floors, who have both sold a total of 16 million kgs, representing 70% of total sales through the auction system.

New entrants, Millennium Tobacco Floor and Premium Tobacco Floor (PTF), who have absorbed 30% of market share,have been offering competitive prices to growers. Statistics of day 41 show that PTF had a higher average price of US$3,86 above other auction floors.

The bale rejection this season decreased to 5,3% from 7,6% in 2011 with the bulk of rejection mainly attributed to ‘mixed hands’, ‘mouldy’ and ‘badly handled’.
Under the procedures for the sale of flue-cured tobacco, TIMB states that: “Growers shall take all reasonable care to present for sale undamaged tobacco that is uniformly graded, free from contamination and foreign matter or any other non-tobacco materials.”

Small scale farmers usually face problems in curing, grading and handling of their tobacco crop due to lack of resources and adequate skills and this results in a high rejection rate.

Analysts say tobacco deliveries will increase in the coming weeks due to attractive prices currently prevailing on the market. “Deliveries are expected to increase in the coming weeks as growers seek to take advantage of the firm prices,” said an agronomist with a financial institution.

Tobacco deliveries are estimated at 150 million kgs in the 2012 selling season on the back of favourable rainfall season since most tobacco producing provinces received considerable rainfalls.

The Zimbabwe Farmers Union said that the rainfall season is tailing off and most growers are finalising the reaping and curing stages.  “The tobacco crop has been doing well in most tobacco growing provinces. While the early crop is being marketed, the late crop is at reaping and curing stages,” said the ZFU in their weekly bulletin.

Last season, a total of 131,7 million kgs of tobacco were delivered with Mashonaland West province recording the highest deliveries totalling 33,1% of total seasonal sales. Mashonaland Central delivered 30,6%, with Manicaland at 18,6% while Mashonaland East accounted for 17,6%.

ZFU also added that good rains were received in parts of Manicaland, Midlands and Mashonaland (east, west and central) provinces and that the majority of growers are now involved in grading and bailing activities as well as deliveries to the market.

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