LIVINGSTONE MARUFU
International tobacco buyers will mobilise about US$600m to buy the golden leaf amid indications the inflows will oil the forex-starved economy and stabilise exchange rates, Business Times can report.
The tobacco marketing season is expected to open by end of March with 144,462 farmers anticipated to reap windfalls from the golden leaf.
Despite tobacco falling to become the fourth biggest foreign currency earner for the country, the golden leaf is key in oiling the cash-starved economy especially at a time when the foreign currency auction system is failing to satisfy the market.
The forex auction market is allotting about US$35m weekly against the market demand of US$80m.
Tobacco Industry and Marketing Board chairman Patrick Devenish told Business Times that the tobacco season was critical to the economy in that hard cash exchanges hands thereby helping more money to circulate in the formal economy.
“We expect the national tobacco output to be around 210m kilogrammes and we anticipate the average price to be over US$2.50/kg hence the international buyers are mobilising a total of between US$500m and US$600m worth of foreign currency.
This money is expected to improve foreign currency inflows in the market. The forex is expected to be released as soon as the 2021 tobacco selling season is set,” Devenish said.
“In terms of the money, disbursement to the farmers depends with each bank, some banks have more cash than others and banks will announce the limit on the day of opening the auction floors.”
He said tobacco stakeholders have submitted their opening proposal date to the Lands, Agriculture, Fisheries, Water and Rural Resettlement Ministry for the announcement.
“We expect to open the floors any time after three weeks of March as the Agriculture ministry and tobacco stakeholders discuss the way forward to begin the season,” Devenish said.
The country’s three auction floors which include Premier, Tobacco Sales and Boka have begun the 2021 tobacco marketing preparations.
29 “A” class buyers and 23 contractors are licensed to participate in this year’s tobacco selling season.
According to a crop assessment by the Tobacco Industry and Marketing Board and Agricultural Technical and Extension Services in all tobacco-growing areas, an average yield around 2,000kg/ha from all the sampled farms. This is from a total hectarage of 107 558.
Reaping and curing of the irrigated crop was at an advanced stage with more than 80% of the crop having been harvested.
Most of the cured leaf is lemon to orange in colour and of fair to good quality, the crop assessment said.
The average yield from this planting is projected to be around 2,300 kg/ha on the irrigated crop and the dry land crop average output per hectare is 2,000kg/ha.
RBZ governor John Mangudya said the opening of auction floors early will reduce the dry spell of foreign currency and ease cash shortages. Last year, tobacco exports fell 9% to US$757m after shipping out 186m kilogrammes to 42 countries from US$832m after exporting the same number of kilogrammes in 2019.
As at January 8 2021, 1.6m kilogrammes were sold to over 30 countries while earning US$5m against 1.3m kilogrammes sold for US$3.7m during the same period in 2020. In 2019, tobacco export receipts tumbled to US$846.7m from US$907.8m in 2018 due to payment methods that enslave the farmer.
Of the 144,462 registered, 76% (110 047) are contracted tobacco farmers.
