Low Prices Depress Tobacco Earnings
LOW prices dampened earnings during the 2015 tobacco marketing season, resulting in reduced revenue from sales during the year compared to the previous year.
After 103 days of tobacco marketing, 194,1 million kilogrammes of tobacco worth US$571,5 million had been sold, an eight percent drop from last year’s sales of 211,2 million kg.
Although the tobacco auction sales closed on July 15, 2015, contract sales have continued, earning the country US$458,3 million from 147,6 million kg of tobacco.
The three auction floors, Boka Tobacco Auction Floors, Tobacco Sales Floor and Premier Tobacco Auction Floors, closed the season after selling 46,5 million kg valued at US$113,2 million.
During the same period last year, the country had earned US$670,1 million compared to the US$571,5 million earned so far.
Statistics from the Tobacco Industry and Marketing Board show that during the 2015 marketing season, low prices prevailed at the floors with prices averaging US$2,94 per kg compared to US$3,17 per kg last season.
Although expectations were high that the country would produce above 220 million kg, the delayed rains and the late harvesting of the crop saw the industry revising the targets down to 180 million from 200 million kg.
Heavy rains received in January and February greatly compromised both the quality and quantity of tobacco.
There are prospects that the deliveries may surpass the targeted volume after the mop up sales to be conducted this month.
At the beginning of the marketing season in March, farmers rioted and boycotted the low prices that prevailed at the auction floors as they never expected prices to fall as low as US$0,20 per kilogramme on the first day of sales. Tobacco sales were halted as farmers pushed for better prices.
The first bale was sold at US$3,50 per kg with the lowest fetching US$0,10 per kg.
From the 97 616 registered growers for the 2015 season, production by province shows that Mashonaland West produced 67,4 million kg of tobacco this year, Mashonaland Central 51,2 million kg, Mashonaland East 41,5 million kg, Manicaland 27,6 million kg, Midlands 451 368 kg, Masvingo 200 589 kg and Matabeleland 30 066 kg.
Production by grower class indicates that A2 farmers produced 63,4 million kg, A1 farmers 50 million kg, communal farmers produced 56,4 million kg and the small scale commercial farmers produced 18 million kg.
In preparation for the 2016 season 542 155 grammes of tobacco seedlings have been sold, enough to cover 90 359 hectares.
Zimbabwe produced 216 million kg in 2014 and 165 million kg in 2013.