Commercial Farmers' Union of Zimbabwe

Commercial Farmers' Union of Zimbabwe

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Tobacco Prices Remain Depressed

Tobacco Prices Remain Depressed

Tabitha Mutenga 19 Mar 2015

Tobacco trucks in KaroiTobacco deliveries and prices continue to be depressed at an average price of US$2,14 per kilogramme, over a week since auction floors opened.Statistics from the Tobacco Industry and Marketing Board (TIMB) show that prices after seven days had gone down by 21 percent compared to an average price of US$2,72 per kg in 2014. There has been a switch to tobacco farming in the past few years leading to increased supply on the market. The start of the marketing season at the three auction floors, Boka Tobacco Auction Floors, Tobacco Sales Floor and Premier Tobacco Floors, was marred with protests by farmers who denounced the low prices that prevailed after the first bale sold at US$3,50 per kg compared to US$4,85 per kg for the first bale in 2014.

Poor prices dampened the opening of the season, as prices dropped further to a paltry US$0,06 per kg by mid-morning last week on some auction floors. Contract sales have, however, recorded the highest price of US$5,60 per kg, although the daily average price of US$2,04 per kg is way below the average price of US$3,33 per kg last season.

At least 1,5 million kg have been sold at the auction floors at an average price of US$1,55 per kg compared to 2,2 million kg purchased through auction floors during the same period
last year at an average price of US$2,40 per kg. Ten contractors have bought 1,5 million kg at an average price of US$2,74 per kg compared to 2014 contract purchases amounting to two million kg at an average price of US$3,09 per kg. A week after the opening of the auction floors, seasonal sales were three million kg averaging US$2,14 per kg. During the same period last season, 4,2 million kg were sold at an average price of US$2,72 per kg.

Although calm has returned after farmers rioted over floor prices, farmers are hopeful that the prices will firm after the deliveries of primmings ends, as indications on the market show
that there is demand for good quality tobacco. In her address officially opening the marketing season, TIMB chairperson Monica Chinamasa raised concern over the ceiling price of US$4,99 per kg that has prevailed at the auction floors for the past few seasons.

“The maximum cap or ceiling price of US$4,99 per kilogramme that has prevailed at auction floor sales for the last two years is not desirable as it certainly does not reflect the true
value of the leaf,” she said.

“This has resulted in a number of tobacco grades, of clearly different styles and quality, all fetching the same price.”

A total of 91 307 growers have registered for 2015 the 2015 season, while new registrations have increased to 17 255. Between 180 million and 190 million kg of the golden leaf are expected to go under the hammer this year, compared to 216 million kg sold last year.
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