LIVINGSTONE MARUFU/ CHENGETAI ZVAUYA
Zimbabwe has projected an output of 240m kilogrammes of the golden leaf in the 2020 tobacco marketing season, marked decline on last year’s deliveries as most tobacco crop rejuvenated in mid-February to boost the total output.
The projected output is 7.5% lower than last year’s figure of 258 million kg. ‘’The tobacco season officially kicked off yesterday with first bale being sold at US$4 per kg.
Economists say the favourable prices at the start of the marketing season would encourage golden leaf farmers to deliver their crop to the auction floor.
Tobacco Industry and Marketing Board (TIMB) chairman Patrick Devenish told Business Times that despite earlier drought challenges the crop managed to spring back to life after good rains.
“Judging from what we have seen in our assessments, we expect the output to be at around 240m kg this year. We agree that we had a slow start to the season but when rainfall patterns improved from Mid-January to end of February our resilient crop recovered well and improved total output,” Devenish said.
He said this year’s selling season has a lot of promises as the farmers’ payment methods were simplified and clarified by TIMB and Reserve Bank of Zimbabwe (RBZ).
Tobacco is the country’s second largest foreign currency earner after gold at 19% of the total export receipts and improves liquidity in the economy and its operation is critical to the economy.
During this time of the year monetary authorities suspend all borrowings from Afreximbank as the golden leaf will oil the dry market from February to August. Devenish said TIMB has laid down guidelines on 2020 sales procedures to avert the threat of the Covid-19 virus.
The TIMB has enlisted all relevant authorities, which include the Zimbabwe Republic Police and local government authorities, to enforce the complete closure and removal of all flea markets and all vendors around the perimeter of the auction floor and contract sales during the 2020 tobacco marketing season.
The delivery today and sale tomorrow policy has started to take shape. Last year, tobacco exports tumbled 7% to US$846.7m from US$907.8m due to unfavourable tobacco selling regimes.
China spends over US$350m on Zimbabwe’s tobacco and there were fears that outbreak of Covid-19 would result in a slowdown in the uptake of the golden leaf by the Asian giant.
Lands Agriculture Water and Rural Resettlement minister Perrance Shiri said yesterday that sales to China will not be affected by the coronavirus pandemic.
Shiri told Business Times at the start of the tobacco marketing season at Tobacco Sales Floor in Harare that the Chinese had agreed to accept the country’s tobacco despite the coronavirus outbreak in the country. “We know that there is coronavirus globally but China have agreed to continue to trade with us and we don’t know the impact the coronavirus will have on the tobacco industry,” Shiri said.
He said the tobacco will be stored in warehouses before it is shipped to China later during the course of the year. Among some of the Chinese companies buying tobacco is Tian Ze Tobacco.
China is one of the major buyers of Zimbabwe’s tobacco. Shiri said government had to use unconventional methods in dealing with tobacco during the coronavirus period.
“In these unusual moments we have to make many difficult decisions that understandably frustrate a lot among us including confined to homes for weeks and sometimes to do things in unconventional ways like selling tobacco in the absence of growers,” he said.
Globally, more than three million cases of Covid-19 caused by coronavirus have now been reported with over 200,000 deaths.
Last month, President Emmerson Mnangagwa introduced a lockdown to contain the spread of Covid-19. Zimbabwe has 32 confirmed cases, four deaths and five recoveries. On average international and local buyers mobilise an average of US$800m yearly to buy local tobacco.
The season kicked off at a time when the tobacco farmers have rejected the 50% forex retention offered by 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 economy as farmers feel the local payment system could wipe their earnings due to galloping inflation.
In 2019, RBZ proposed 20% of offshore loans for the production of the crop and 10% for value addition while the investor gets 70%.
RBZ is hoping that the tobacco selling season will help ease the crippling foreign currency crisis bedevilling the economy.
Buoyed by last year’s success of over 258 million kilogrammes of the tobacco output, latest statistics say 81 977 hectares of tobacco had been planted compared to 79 708 hectares for the same period last season.
According to TIMB bulletin tobacco registrations have fallen 15% to 143 568 in 2020 season from 168 735 the previous year while new growers fell 82% to 7447 from 40 772.
The board has licenced three auction floors for the 2020 marketing season which are Tobacco Sales Floor, Boka Tobacco Floors and Premier Tobacco Auction Floor.
The inspected the level of preparedness at the licensed auction floors and three floors were found to be ready for business including compliance to Covid- 19 guidelines.
The Board licensed 32 Class A buyers and 33 contract buyers.