Tobacco prices slump

HARARE - Tobacco prices have receded to an average of $2,91 per kg this season compared to last year’s $3,49, figures from the Tobacco Industry and Marketing Board (Timb) indicate.

Zimbabwe, currently struggling to revive its agriculture sector, is the world’s second-largest producer of Virginia tobacco after Brazil.

A tobacco industry insider told businessdaily that the price drop will have a negative impact on the commodity’s earnings.

“It is a very sad coincidence that it should happen this year when the country is in poor shape,” the source said, blaming a combination of heavy rains and Brazil’s huge output at more attractive prices for the slump.

Andrew Matibiri, Timb’s chief executive, this week noted that the poor quality of tobacco delivered to the auction floors this season has forced prices to remain subdued.

“The quality of tobacco that we are seeing is not very high as compared to last year’s, but it has improved as compared to the beginning of the season. We have noticed that in the first few days the price was low, but it has now gone up,” he said.

Meanwhile, tobacco sales slumped by 8,4 percent to $39,7 million after 15 days of the selling season compared to $43,4 million recorded in the previous period.

By Tuesday farmers had brought in 13 636 655 kgs of the golden leaf to the auction floors compared to 12 425 246 kgs in 2013.

A total 180 million kilogrammes are seen coming to the country’s three auction floors — Tobacco Sales Floor, Boka Tobacco Auction Floors and Premier Tobacco Floors — as the sector continues on a growth trajectory.

Last year, farmers failed to meet a target of 170 million kg with only 166 million kg being delivered.

Government has now pinned its hopes on the tobacco season and improved revenue collections in the second quarter of the year.

According to Treasury, government’s revenue collection traditionally improves in the second quarter of the year.

Analysts see tobacco sales improving the liquidity situation in the country in the short-term and stimulating the economy.

Consumer spending, a key indicator to economic activity, could improve in the short-term, an upside for an economy separately in need of a stimulus plan.

The current season comes against a background of massive liquidity constraints.

Comments (2)

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pumps - 14 March 2014

Farmers must understand this is business. Merchants wont commit paying huge amounts for bottom reapings. Well grown bottom reapings fit for China are ranging 4.65 top $. The few farmers getting the 4.99 price are offering real leaf. Some of the very few high priced 4.99 tobaccos are from sidemarketing. These sidemarketers confuse the new growers into believing they are getting a raw deal. New farmers should expect higher prices when they sell top reapings. Also they must grade well and make good presentation at point of selling. Pamberi nekudzidza.

Mukorekore - 17 March 2014

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