Zim rakes in US$250m in 80 days

LIVINGSTONE MARUFU

Zimbabwe’s tobacco export receipts trebled to US$250.48m in the first 81 days of this year from US$80.3m realised in the prior comparative period due to firming prices on the international market, Business Times can report.

The Tobacco Industry and Marketing Board (TIMB) latest statistics show that  local tobacco was exported to over 40 countries.

“As of today (Tuesday) the country  exported 49.7m  kilogrammes (kg) at an average price of US$5.04 per kg  against 32.8m kg exported at an average price of US$2.45/kg,” TIMB said.

Last year, Zimbabwe grossed US$819.7m after exporting 183.6m kg of tobacco to five continents, with the Far East exporting US$485.2m followed by the European Union with US$118.4 and Africa with US$102.3m.

Tobacco worth US$46.4m was exported to Europe while tobacco worth US$17.3m was exported to America.

China spent more than US$300m on Zimbabwean tobacco.

The Zimbabwe Tobacco Association (ZTA) expects the prices to be firmer this year on the back of high demand.

“With the significant drop in production in 2022, reduced uncommitted stock levels and a post Covid-19 recovery in demand, prices will be firmer this season.

“It is estimated that the average prices will be closer to US$3.00/kg up from US$2.01/kg in 2021.

“For Zimbabwe, all of the above dynamics point to much firmer prices this season. While there may be minimal upward movement in top leaf prices, especially China grades, there will be strong demand for the middle and bottom plant positions.

“A 15%  to  20% increase in average US$ prices is expected this season,” ZTA said.

Tobacco, which used to be the leading foreign currency earner, has gone down resulting in the golden leaf losing ground to gold, platinum and diaspora remittances.

This comes as the excellent export receipts don’t help the majority of the desperate farmers as 80% of the earnings remain in the hands of merchants who  provide inputs to farmers.

Many farmers are in serious debt.

Farmers said the current funding system was not benefiting the tobacco farmers but middlemen such as tobacco merchants, leaving most of the farmers in dire straits.

It is estimated that over 95% of the tobacco farmers in Zimbabwe are under tobacco merchants’ contracts.

The tobacco merchants provide the farmers with inputs, since most farmers cannot raise their own capital required to undertake a tobacco farming business.

The inputs are sometimes overpriced, as the merchants take advantage of the desperate tobacco farmers.

Under such contract agreements, the tobacco merchants deduct their dues-the principal amount plus interests- at the auction floors, a situation which has seen some tobacco farmers taking home negative balances as some debts are carried forward.

This situation has affected production.

Farmers’ output, they claim, has not been creating sufficient returns to repay the loans in full and at least take home something significant.

This implies that the pressures on tobacco farmers are significant and the situation has left most tobacco farmers living on the margins.

This year, the tobacco farmers’ registrations fell 17% to 119 979  compared to 140 771 registered last year.

This shows that the appetite for growing tobacco in Zimbabwe has diminished.

ZTA expects Zimbabwe production to drop to 190m kg from above 200m kg last year.