Tobacco farmers rake in $236 million

HARARE - Zimbabwe's tobacco farmers have so far earned over $236 million from 83 million kilogrammes (kg) that have gone under the hammer at the country’s auction floors in the last 30 days.

Statistics from the Tobacco Industry and Marketing Board show that last year during the same period, the farmers had sold 79 million kg of tobacco worth $227 million.

As the deliveries improve, seasonal average prices have increased from $2,76 per kg last year to $2,87 per kg. The highest price at the auction floors remains at $4,99 per kg while the prices for the contract sales have reached $6,25 per kg.

Tobacco production dropped from 202 million kg in 2016 to 189 million in 2017 as some farmers who benefited from Command Maize substituted the crop for maize.

Given the adverse weather season characterised by the late onset of rains and prolonged dry spells, the top foreign currency earner production is forecasted to drop to 185 million kg in 2018 and gradually improve to 200 000 million in 2020.

The outbreak of the potato virus is also expected to affect the quality of the golden leaf in this marketing season.

As part of efforts to enhance foreign currency inflows into the country, the Reserve Bank of Zimbabwe increased the Tobacco Finance Facility from $28 million in 2017 to $70 million for the 2018 planting season which supports increased production forecasts in 2019 going forward.

The auction floors which now manage about 16 to 20 percent of the crop have so far raked in $37 million from 13 million kg with the Tobacco Sales Floor recording the largest quantities of tobacco passing through the auction floors at 8,9 million kg.

Contract sales have so far contributed about $199 million to the total earnings with the 23 contractors having bought 69,4 million kg from the farmers.

About 80 percent of the small-scale producers producing tobacco in the country are contracted.

— The Financial Gazette

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