HomeBusiness DigestTobacco farmers to remain under contract

Tobacco farmers to remain under contract

MOST of Zimbabwe’s tobacco has been sold under contract in the current marketing season with indication the trend will continue as growers are unable to fund their operations, latest Tobacco Industry and Marketing Board (TIMB) figures show.

Taurai Mangudhla

The farmers cannot afford costly inputs hence their option to go under contract growing, TIMB CEO Andrew Matibiri told businessdigest this week.

The ratio for auction and contract sales is now about 25-75% because very few farmers can afford to buy their own inputs,” he said in an interview.
“If there is funding from banks we can see that changing, but remember we have not been living in ordinary circumstances for a while and the same reasons that resulted in contract growing such as lack of funding and high costs of inputs still prevail.”
Matibiri said the board’s goal was to maintain the two marketing systems side by side.

The latest TIMB weekly bulletin for the period ending June 13 2014 shows current cumulative auction sales at 48,2 million kg. The figure is likely to go below 2013 auction output which recorded slightly more than 52 million kg while contract sales have already performed better than previous season and currently continue to dominate the market with cumulative sales recording more than 143 million kg averaging US$3,70/kg.

At the current rate, auction sales averaged around 33% of total sales.

“During the same period last year contract sales had contributed about 95.0 million kg averaging US$3,70/kg,” said TIMB.

The sales were 32,2% up on the same period in 2013 in terms of volumes and 13,6% up in value terms.

“Auction floors throughput has significantly dropped and now signaling the end of the 2014 selling season,” the bulletin read.
Of the auction floors sales, Boka Tobacco Sales Floors sold 12 million kg worth US$31,3 million whilst Tobacco Sales Floor sold 24, 3 million kg worth US$69 million and Premier Tobacco Auction Floor sold 11,9 million kg valued at US$31,6 million in the period under review.

The average price for the season has however dropped by 14,1% to US$3,18/kg from US$3,70/kg in the same period last year. In terms of distribution of growers, 35% of the growers are A2 resettlement farmers while 28% are A1 resettlement farmers.

Communal farmers made up 27% of the growers while small scale commercial farmers made up 10% of the 86 117 growers in the season under review.

With low cotton and maize producer prices obtaining over the past few years, many farmers have turned to tobacco.

So significant is tobacco to Zimbabwe’s revenue generation that sales of the golden leaf contributed to a 1,8% growth in deposits held by the country’s financial institution between February and March 2014, offsetting successive slowdowns which characterised the period August to November 2013, statistics show.

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