Tobacco season difficult: stakeholders

THE country had a difficult tobacco marketing season this year due to a combination of low average prices, poor yields and erratic rains, officials have said.

BY VICTORIA MTOMBA

Zimbabwe Commercial Farmers’ Union (CFU) president Wonder Chabikwa told NewsDay this week that the selling season was a huge disappointment as prices were too low.

Chabikwa said the average price for both contract and auction tobacco was $2,93 per kilogramme compared to $3,17 last year.

“There were many challenges. Our spirits were dampened this year due to the Class B buyers. Class B buyers are illegal buyers of the tobacco crop who buy tobacco from the farmers and sell at the auction floors. These underhand dealings affected farmers a lot as some did not get the money that they were supposed to get for their crop,” he said.

Chabikwa said farmers would continue to grow tobacco because they have invested hugely in the growing of the crop. However, he said the farmers would negotiate with buyers for better prices while on their side they would improve the quality of the crop.

“Going forward, we need a smaller crop, we believe if we can consolidate and reduce the size of the crop that will help as the quality will improve and the supply will not be more and demand for the crop will be there,” Chabikwa said.

In Zimbabwe, three-quarters of tobacco farmers are on contract farming due to the unavailability of agriculture funding while the remainder source their own resources to grow the crop.

Chabikwa said it was sad that the crop is now on a decline path when it had registered significant growth in the past.

Zimbabwe Tobacco Association chief executive officer Rodney Ambrose said the season experienced weather extremities from a good start to a very dry late 2014 to a wet early 2015. He said this had an impact on farmers’ overall yields, with slower ripening, reaping and curing as well as the style of tobacco produced.

“There is global oversupply of lower leaf grades and qualities and therefore demand for such styles of tobacco is depressed. This is not restricted to Zimbabwe, but to all global markets,” Ambrose said.
“There are also reports of large global stocks of such styles on the market, cheaper than current crop prices. Prices for good quality tobacco in high demand were similar to and for some grades and styles and this affects the farmer’s average price.”

Ambrose said farmers must now concentrate on quality tobacco and manage crop sizes. He said the challenges faced by tobacco farmers this season included weather variances, lower prices, high cost of production, trading inconsistencies, high borrowings, loan repayments below average — all affecting farmer viability.

“Most farmers will not recoup what was invested, such is the season as this one. We have had previous better seasons and we hope for better seasons ahead. The market at times can be cyclical, if certain conditions are present. We anticipate 2016 to be a better season,” Ambrose said.

The Tobacco Industry and Marketing Board (TIMB) closes auction floors today after the season began in March this year. As of Monday a total of 186 million kg had been sold raising $547,9 million. The average cost per kg was hovering around $2,95 for this selling season compared to $3,17 same period last year.

TIMB said all growers that sell the golden leaf through the auctions should complete their grading and baling of operations before today.

TIMB chief executive officer Andrew Matibiri said most of the tobacco produced this year was filler grade which could just fill the cigarette, but had no flavour and nicotine because of low rainfall.

“It was a difficult season. If we start with the growing season it was hot in September and in October rain came late. The rainfall was for 10 days non-stop which made it difficult for farmers to do their normal work and when it went it was for a longer period,” he said.

Matibiri said the middle and top grade of tobacco was more or less like last year. He said as a country there was need to aim for quality as there is little competition for quality tobacco. Matibiri said Brazil and the United States were the major competitors for quality tobacco.

Matibiri said few illegal buyers were caught by the regulator during the season. He said agricultural funding was required to boost production.

Tobacco production has been on the increase since 2009 when the country adopted the multi-currency system. Production took off at 65 million kg and almost doubled in terms of output.