Tobacco industry needs US$200m capital injection

Gamma Mudarikiri

ZIMBABWE’S recovering tobacco industry needs US$200 million in fresh capital if it is to return it to its peak production record of 237 million kilogrammes, Tobacco Industry Marketing Board (TIMB) CEO Andrew Matibiri said this week.The country last year recorded sales volumes of 131 million kg.
In an interview with businessdigest, Matibiri said although output this selling season had so far been better compared to 2011, it was still down from the peak production figures of 237 million kg recorded in the year 2000. Tobacco sales volumes for the current season have so far reached 132,1 million kg sold at a value of US$488,8 million. This is up 7.3% in volume and 45% up in terms of value compared to the same period last year. The average price for the cash crop is currently at US$3,70 /kg, up 35% from the same period in 2011.
“Our major challenge remains limited financing, as we need about US$200 million to fully recover,” said Matibiri.
Contract sales volumes continue to dominate, currently at 82,2 million kg and accounting for 62% of total sales. Matibiri said contract farming would continue to dominate due to lack of funding from the fiscus.
Tobacco output was this year projected at 150 million kg but was later revised downwards to 130 million kg, owing to decline in the planted hectarage and bad weather.
The Medium-Term Plan has projected tobacco output this year at 180 million kg, which is however 28% higher than the revised output figures.
In 2008 Zimbabwe’s tobacco output fell to a low of 48 million kg, but now the sector is on a recovery trajectory.