Zimbabwe’s tobacco export earnings fell 13.8 % to US$398m in the 10 months to October 2020 from the same period last year due to fall in deliveries this year amid fears the drop could worsen the forex situation in the economy.
In the same period last year, tobacco export receipts were US$462m.
The government in June this year introduced a forex auction system but several businesses say the forex traded on the platform was inadequate.
Tobacco Industry and Marketing Board (TIMB) chief executive Andrew Matibiri told Business Times that the Covid-19 lockdown has dealt a huge blow to the movement of international buyers who buy the golden leaf throughout the year.
“Year-to-date tobacco exports for 2020 have reached 119m kg traded for US$398m compared to 117m kg worth US$462m that were exported during the same period last season,” Matibiri said.
Over the years, China has been using over US$350m to buy tobacco from Zimbabwe. The highest price at the auction floors was US$4.99/kg and the lowest was US$0.10/kg.
Tobacco delivered in the 10 months to October stood at 183m kg worth US$459m compared to 253m kg delivered during the same period in 2019 TIMB is pushing for the decentralisation of tobacco sales points to decongest auction floors in Harare.
Last year, the Reserve Bank of Zimbabwe proposed 20% of offshore loans for the production of the crop and 10% for value addition while the investor gets 70%.
The season kicked off at a time when the tobacco farmers had rejected the 50% forex retention offered by the Reserve Bank of Zimbabwe.
They wanted 100% of the sales proceeds. Farmers said the 50% forex retention had negative repercussions to the country’s tobacco industry and the economy as farmers feel the local payment system could wipe their earnings due to galloping inflation.
Zimbabwe Commercial Farmers Union president Wonder Chabikwa said: “The tobacco prices were satisfactory but there is a need to review the foreign currency retention threshold to help the farmers to increase productivity on the farms.”
Last year, tobacco exports tumbled 7% to US$846.7m from US$907.8m due to the unfavourable tobacco selling regimes.
The latest statistics say a total of 14 062 ha, of which 13% is dry land, have been planted as at October 22 2020 compared to 11 777 ha planted during the same period in the 2019/20 season.
About 112 472 growers have registered for the 2020/21 season so far, compared to 132 987ha that had registered in the previous season during the same period and of the registered growers, 1 624 are new.
Of the total registered growers, 110 047 are contracted tobacco farmers. Mashonaland West has the highest registrations with 40,979 followed by Mashonaland Central with 38,758 then Manicaland with 17,516 and Mashonaland East with 14,970.
Small scale farmers accounted for 79% of the total growers registered in the 2019/20 season.