Tobacco export receipts near US$800m

LIVINGSTONE MARUFU

Zimbabwe’s golden leaf export receipts rose 9% to US$776.34m as of December 6 2021 from US$715.14m earned during the same period last year due to the firming tobacco prices.

Over the years, the authorities were betting on tobacco’s export receipts but with the gaining influence of contract farming, a huge chunk of foreign currency is repaid to tobacco merchants through loans, leaving the country with little to count for its golden leaf.

Tobacco is the country’s fourth highest forex earner.

Tobacco Industry and Marketing Board (TIMB) chief executive officer Meanwell Gudu told Business Times that this year’s tobacco was characterised by good prices and this will encourage more farmers to grow the crop.

“As at end of Monday this week, 171m kilogrammes were exported to over 40 countries at an average price of US$4.54/kg against 174m which were exported during the same period last year at an average price of US$ 4.11per kg,” Gudu said.

He said the 10% firming in this year’s prices was instrumental in pushing the golden leaf’s export receipts.

Tobacco export receipts are recorded from January 1 to December 31 every year.

In most circumstances, last year’s tobacco would be kept for resale this year.

Yearly, China uses over US$350m to buy the country’s tobacco and it is often followed by South Africa.

At the auction floors, the highest price was US$4.99/kg and the lowest was US$0.10/kg.

This year, tobacco farmers delivered 210.95m kg worth US$589.5m compared to 184m kg worth US$459.6m delivered during the same period in 2020.

The average price for 2021 tobacco marketing season was at US$2.79/kg against US$2.50/kg in 2020.

Contract sales accounted for over 95% of the total sales and controlled tobacco market share while the auction accounted for 5% of the total sales.

TIMB is pushing for decentralisation of tobacco sales points to decongest Harare auction floors.

It is always the norm that tobacco export earnings will peak in the last quarter of the year.

The season kicked off at a time when the tobacco farmers rejected the 60% forex retention offered by the Reserve Bank of Zimbabwe as they want 100% of the sales proceeds.

This could have some 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 Shadreck Makombe 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.”

In 2019, tobacco exports tumbled 7% to US$846.7m from US$907.8m due to unfavourable tobacco selling regimes.

The latest statistics show a total of 39 528 hectares has been planted compared to 38 398ha during the same period in the 2021 selling season.

Manicaland has the highest area planted at 14,684 followed by Mash West with 12,119 then Mashonaland East with 8 172 and Mashonaland Central with 4,486ha.

Small scale farmers account for 79% of the total growers.