HomeBusiness DigestTobacco output expected to increase

Tobacco output expected to increase

ZIMBABWE’S hopes of boosting its export earnings buoyed by improved tobacco output could be dampened by incessant rains that have ravaged most parts of the country since January, spelling doom for the primary commodity-driven economy.

By Taurai Mangudhla

Tobacco is the country’s second largest foreign currency earner after gold.

As Zimbabwe — which has perennially had a trade deficit — fails to effect structural changes in respect of its policy and political environment that has chased out capital and cost the economy potential investment, Finance minister Patrick Chinamasa looks to the primary industry — mainly gold in mining and tobacco in agriculture — to drive exports and generate the much-needed foreign currency.

Zimbabwe has been unable to meet its statutory payments and make other foreign remittances in recent months due to export collapse.

Exports have dwindled over the years due to deindustrialisation as business remains uncompetitive.

The country’s trade deficit, according to Zimstat, in the 11 months to November 2016 narrowed by 27% to US$2,2 billion, compared to US$3 billion in the previous corresponding period.

Zimstat figures show that exports amounted to US$2,5 billion against US$4,7 billion imports. Exports were driven by gold and tobacco which raked in US$781 million and US$753 million, respectively.

As a result, government has come up with an import priority list as a counterbalance for declining exports and cash demands.

Notwithstanding the incessant rains that have caused flooding in some areas, Chinamasa sees foreign currency earnings improving this year, driven by the cash crop.

Zimbabwe is currently facing a severe cash crunch that forced government to inject bond notes — a fiat currency — to ease the shortages.

“This is why we are looking for inflows from the sale of our tobacco. I am anticipating a bigger crop from tobacco because the season has been good. So I have high prospects for a greater output from tobacco especially from foreign currency earning.

“As you know because of the 5% incentive it has actually motivated tobacco farmers to increase their crop,” Chinamasa said.

Zimbabwe’s largest farmers’ body, the Zimbabwe Farmers’ Union (ZFU, has already indicated the wet spell could pose a huge threat to the country’s tobacco growers by causing the false ripening of the golden leaf.

“Tobacco false ripening is very common with excessive rains. False ripening is when the leaf shows fake ripening signs due to excessive rains,” the ZFU said in a market update released early this month.

“To confirm the maturity of the leaf, growers are urged to do a closed cupboard test before reaping. The leaves are tested for ripeness by placing them in a closed cupboard for 2-3 days. The leaves that are ready for reaping will turn to a lemon-yellow colour and unripe leaf will not colour well,” ZFU added.

However what remains to be seen is the extent to which these rains could have damaged the crop.

While a comprehensive assessment of the impact of false ripening on the overall tobacco output is yet to be done, ZFU director Paul Zakariya warned the impact could be huge.

“Assessments are not yet done because a lot is still happening on the ground, but the impact could be very huge depending on planting dates… a whole crop planted on a particular day could be damaged, it’s quite a danger because it reduces quality,” Zakariya said.

“False ripening means your leaf doesn’t turn golden yellow on curing, instead it gets moulds so you would have lost that crop.”

Tobacco Industry and Marketing Board (TIMB) CE Andrew Matibiri said false ripening will affect both quality and output.

He said the extent of damage depends on the stage of the crop.

“Normally a farmer reaps two to three leaves per week but now they will be forced to do four or five leaves which brings into question whether they have the labour to reap and capacity to cure the four to five leaves per week,” Matibiri said, adding “in some cases the extra leaves are just thrown away and this is a huge loss”.

“The extent of damage depends on the stage of the plant but definitely the false ripening will affect yields,” Matibiri added.

Statistics from the TIMB show that as of December 29 2016, a total of 164,5 million kg of tobacco valued at US$933,6 million has been exported to various destinations across the globe.

Stakeholders in the tobacco industry have pegged this year’s golden leaf output at 200 million kg despite indications excessive rains may militate against a better yield.

Reserve Bank of Zimbabwe (RBZ) governor John Mangudya last year lobbied for the early opening of the golden leaf’s marketing season, saying it is crucial in oiling the country’s nostro accounts.

With the golden leaf final crop assessment expected any time from now, indications are that this year’s marketing season will be open earlier than last year.

The RBZ has also given a 5% export incentive to tobacco exporters in order to stimulate production of the crop.
The central bank disbursed a total of US$29,3 million to pay tobacco farmers who had submitted their banking details through the TIMB.

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