16 March 2017

Zimbabwe: Tobacco Marketing Season Kicks Off

Photo: The Herald
Unprocessed tobacco (file photo).

THE 2017 tobacco marketing season kicked off yesterday with the official opening at Boka Tobacco Floors marking the beginning of auction sales.

Three auction floors, Tobacco Sales Floor, Premier Tobacco Auction Floors and Boka Tobacco Floors have been licenced to auction the golden leaf this year.

The 2017 starting price was US$4,60 per kilogramme (kg) and the lowest price was US$0,20 per kg.

Contract sales are expected to begin today at all tobacco contract floors. There are 19 tobacco contractors for 2017 among them Aqua Tobacco, Boostafrica Traders, Chidziva Tobacco Processors, Premium Leaf Zimbabwe, Shasha Tobacco and Mashonaland Tobacco Company.

Premium Leaf Tobacco is a new entrant and is expecting at least 20 million kilogrammes (kgs) of tobacco to pass through its floors.

Premium Leaf Zimbabwe manager, Darlington Chiundura, said the company will be opening for marketing on March 20 and will be buying from both the auction sales and contract sales.

"At least 80 percent of the crop will be coming from the small scale farmers and we will be buying from both our farmers and from the auction sales," Chiundura said.

Premium Leaf is the third largest tobacco merchant in the world, headquartered in Dubai, with operations in Tanzania, Malawi and now Zimbabwe.

The company invested over US$11 million in this year's crop, contracting 12 000 small-scale farmers and nine commercial growers.

The 2017 crop, with an expected target of 205 million kgs is expected to rake in between US$600 and US$700 million based on last year's output of 202 million kgs valued at US$600 million.

Tobacco Industry and Marketing Board (TIMB) chairperson, Monica Chinamasa, said the board was happy with the state of preparedness of all auction floors with security, banking facilities, clinics, IT systems and ablution services all up to standard.

"All of them are ready, raring to go and with e-marketing, it has brought in some excitement and if there are any challenges, TIMB and the floor personnel will be available to assist farmers. We want to move with the times and we want to expose our growers to the new system," Chinamasa said.

"It's a learning curve and it's also a process. If we have challenges, TIMB and the floors are there together and it will work. Where we got it wrong, we will be here to assist," she said. "We have tried to expose the growers to the new system. We see the positive in it."

The tobacco e-marketing system is expected to reduce corruption and improve transparency. The electronic auctioning of tobacco will also reduce the processing time for grower payments and eliminate illicit floor activities such as ticket tampering.

Chinamasa also urged farmers to bring in a good quality crop that will fetch good prices.

"Generally the tobacco crop is very good but the irrigated crop was affected by the rains but the younger crop is thriving and looking good," she said.

Last year, the season ended with an average price of US$2,95 per kg with the contract sales averaging US$3 per kg and auction sales US$2,54 per kg.

A total of 82 699 growers have registered for the 2016/17 season up from 71 597 last year.

The tobacco marketing season will continue for the next 115 days.

Tobacco production is one of the country's largest foreign currency earners and statistics from TIMB show that for 2017, the country has exported 32,5 million kgs valued at US$171 million.

Tobacco production in Zimbabwe has been on a steady increase since 2010 when production swelled to 123 million kgs from an all time low of 48 million kgs in 2008. In 2000, the crop hit an all time high of 236 million kgs.

Price wars have erupted over the years as farmers complained of poor prices, accusing buyers of hoarding the crop for resale at higher prices.

Tobacco growers would complain of low prices especially at auction floors where a ceiling price of US$5 per kg would be the highest price throughout the selling season while merchants argued that the quality of the crop was low.

On the global arena, Brazil is looking forward to 620 million kgs although the middle and lower leaves were affected by drought. The Tanzanian crop is expected to decline by five to 10 percent, while Malawi is looking forward to about 180 million kgs.

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