Tobacco earnings hit $61m

HARARE - Zimbabwe has earned a total $61,1 million from tobacco sales since the beginning of the 2013 marketing season a month ago, a 7,4 percent increase from $56,9 million realised same period last year.

The tobacco auctions have so far sold 17 million kg of the commodity at an average $3,59 per kg, up from 15,7 million kg sold last year.

Statistics from the Tobacco Industry and Marketing Board (TIMB) show that at least 10,9 million kg of tobacco were sold through contract sales while the remainder went under the hammer.

Approximately 216 028 bales were delivered to the three auctioneers — Boka Tobacco, Tobacco Sales and Premier Tobacco — while 16 909 bales were rejected.

On daily total sales, 679 499 kg worth $2,6 million of the golden leaf were sold on day 19 compared to last year’s figure of 576 932 kg worth $2 million.

At least 10 608 bales were delivered on the same day for auctioning compared to 8 271 bales during the same period last year.

Agriculture experts contend that the firming tobacco sales are a reflection of high prices the golden leaf is fetching on the international markets.

A leading United States-based farming publication, the Tobacco Farmer Newsletter (TFN), recently noted a likely improvement in tobacco prices in 2013 as a result of various market factors, including a deficit caused by poor to mediocre quality of flue-cured tobacco in Brazil and the US in the previous two successive seasons.

“Also, it may be that Brazil has hit a ceiling on the amount of flavour-style flue-cured it can produce.

 If so, then increased demand for flavour-style flue-cured will have to be met with increased production in the US and Zimbabwe,” said TFN, adding tobacco buyers also indicated optimism for the flue-cured market beyond the 2012 crop and were actively seeking ways to retain current growers and increase production.

Flavour-style flue-cured tobacco is grown mainly in the US and Brazil, with Zimbabwe re-emerging after the collapse of its agriculture sector following its fast-track land reform  programme of 2000.

The publication said consequently, global supplies of premium flue-cured tobacco were currently low even though overall supplies were up.

According to TFN, there was an anticipated increase in demand for flue-cured tobacco mainly because of increased cigarette production in China.

“The global trend toward banning flavourings in cigarettes may increase the amount of flavour-style flue-cured needed in blends to compensate for no flavourings.”

Last year, Zimbabwe produced about 144,5 million kg of tobacco and raked in $527,6 million sales, surpassing the projected 130 million kg.

Since the adoption of multiple foreign currencies, the tobacco industry has become one of the fastest to recover from the economic meltdown over the last decade.

The sector has been on a rebound as over 70 000 farmers have registered to grow tobacco this season.

Tobacco is one of Zimbabwe’s major agricultural exports and accounts for 10,7 percent of the country’s gross domestic product. Major export destinations include South Africa, China, UK, Indonesia, the United Arab Emirates, Mauritius and Russia. - Business Writer

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