TOBACCO sales have generated $19,4 million in the first 17 days of the marketing season this year compared to $81 million realised over the same period last year, statistics from the industry regulator have shown.
According to the Tobacco Industry Marketing Board (TIMB) deliveries of the crop are down 62% to 11,2 million kg.
Average prices dipped to $1,73 per kg from $2,74 per kg recorded over the same period last year.
An industry source told NewsDay that the high cost of transport had affected deliveries of tobacco.
“This season 85% of the national crop is estimated to be contracted. Transport and other selling charges are high and as such growers are preferring to
make bulk deliveries. On average, grade for grade prices are lower than previous seasons, however we need to have more substantial volumes delivered in
order to come up with the reasons why,” said the source.
TIMB last month hiked weighing and auction floor charges from US$4,50 last season to US$7,70 per bale further contributing to the erosion of farmers’ earnings.
Apart from weighing and auction fees, other deductions incurred by farmers include tobacco levy (0,75%), TIMB stop order levies (0,8%) and the Ministry of
Agriculture levy (USD$0,875 per kg).
According to the source, tobacco deliveries are seen improving as the Reserve Bank of Zimbabwe (RBZ) is anticipated to announce a simplified and viable sale proceeds settlement process.
After getting their payment in RTGS dollars farmers are given the option to buy foreign currency at the prevailing rate using 50% of their net earnings, but the process has been described as being unfair.
“The RBZ will be announcing more simplified, attractive and viable sale precedes settlement processes and we sincerely thank the RBZ for this. It is important for farmers to note that 50% US$ retentions, as processed, are being settled by the RBZ. The RBZ has certainly played its part — now our attention is focused on to the market trends and dynamics,” the source said.
Zimbabwe Commercial Farmers’ Union president, who is also chairman of the Federation of Farmers’ Unions, Shadreck Makombe said the majority of farmers were holding onto their crop in anticipation of better prices.
“From the onset the opening prices were low and they demotivated farmers, so they are being forced to hold on their crop anticipating that as the season progresses prices will increase. The buyer is saying this year’s quality is lower than last year’s. But as farmers we are saying the quality is good, it seems they don’t have money.
“Buyers are not sincere, we feel that, in a way, we are being shortchanged. If you consider the inputs farmers used and the prevailing prices you will see that they are not commensurate,” he said.
Last year the country produced a record 252 million kilogrammes of flue-cured tobacco which generated close to a billion dollars in export earnings.