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Tobacco prices firm on strong global demand

Industry experts say apart from the good quality tobacco produced this year, the marketing period has been characterised by stronger demand on the international markets, which has pushed prices northwards.


Zimbabwe’s tobacco prices firmed by 9,78% during the first week of this year’s marketing season, riding on steeper demand on the international markets, Tobacco Industry and Marketing Board (Timb) data has shown.

The Timb said prices averaged US$2,74 per kilogramme on the eighth day of the season compared to US$2,50 per kg during the same period last year.

Industry experts say apart from the good quality tobacco produced this year, the marketing period has been characterised by stronger demand on the international markets, which has pushed prices northwards.

As at Thursday last week, tobacco sales volumes valued US$31,44 million had been traded at auction system and through the contracted crop.

However, the value traded were lower than US$39,76 million worth of tobacco traded during the same period last year.

The Timb data showed that as at Thursday last week, 11,45 million kg had been delivered from both auction and contract floors.

Auction floors had received one million kg, while contract floors had received 10,4 million kg.

During the same period last year 15,9 million kg had been delivered.

Tobacco Association of Zimbabwe president George Seremwe said the season was going well so far, but he said he was worried that fertiliser prices had rocketed in the past few weeks.

The prices were bucking a trend that has been experienced across all commodities, mostly driven by a rapid depreciation of the domestic currency against the United States dollar.

“The season is going fairly okay.

“Prices are going up and generally things are okay,” Seremwe told Standardbusiness.

“It’s only that the price of fertilisers and other inputs that farmers require to take back to their fields have been increasing.”

Farmers travel to the auction floors in urban and peri-urban areas where they sell their crop and buy inputs for the next season before heading back to their farms.

Price hikes for fertilisers have been attributed to supply chain bottlenecks that have been caused by the Russia/Ukraine conflict in Eastern Europe.

The two countries are among the biggest producers, and conflict has disrupted supply affected production, analysts say.

This season farmers operated in a challenging environment, characterised by climate change-induced erratic rainfall patterns with heavy rains in January causing waterlogging and leaching.

Although a higher irrigated crop was grown, planting of the late dry land crop had to be extended to January.

Consequently, this, according to authorities is expected to affect yields and overall national output.

The Reserve Bank of Zimbabwe increased farmers’ foreign currency retention threshold to 75% from last year’s 60%, to give farmers room to manoeuvre.

This means farmers will receive 75% of their earnings in foreign currency, with 25% being paid in the Zimbabwe dollar, converted at the prevailing official exchange rate.

Government has approved the Tobacco Transformation Plan last year whose core objectives are  to increase production to 300 million kg annually of good quality styles desired by the international market, to increase productivity to 2000kg/ha, through vertical growth and loss reduction and to increase value addition and beneficiation to 30% of the crop by 2025 from the current 2%.

The plan seeks to localise the financing of tobacco by injecting seed funds of at least US$60 million, and to attend to the enablers of accelerating research and innovation exploring alternative crops attending to matters of sustainability, traceability, and good agricultural practices, including ethical use of labour.

This year’s tobacco was planted on 110 155 hectares by 122 841 growers, with 600 growers registering for the first time.

The Timb has licensed three auction floors for the 2022 marketing season, which are Tobacco Sales Floor, Boka Tobacco Floors and Premier Tobacco Auction floor.

There are 35 licensed A class buyers and 33 contracting companies.

The board has approved decentralised contract sales in Karoi, Mvurwi, Bindura, Marondera and Rusape.

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