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Samuel Kadungure
Senior Reporter
TOBACCO deliveries have surpassed the 211 million kilogrammes recorded last season amid high hopes that the record 252 million kgs delivered during the 2018 marketing season is within reach as deliveries peak at the auction and contract floors.
This year, about 117 928 hectares were put under tobacco, with a seasonal projection of 230 million kilogrammes.
There has been high demand of the cash crop in China, and funding from both Government and private tobacco companies have boosted output.
Statistics released by the Tobacco Industry and Marketing Board (TIMB) on Wednesday, which was Day 56 of the marketing season, showed that 231.5million kg of tobacco worth US$700 million had been sold, thereby surpassing the 211 million kg produced during the 2022 season.
During the same period last year, about 148 million kg worth US$445 million had been delivered to the market.
Of the 231.5million kg sold so far, 214.5 million kg with a value of US$648 million was sold at contract floors.
On the other hand, the auction floors account for close to 17 million kg valued at US$48,7 million.
A total of 2 694 084 bales weighing between 70 and 100kg have been sold at the contract floors this season, while 227 284 bales have been sold at auction floors.
The auction floors had a bale rejection rate of 10 percent (27 319 bales), compared to the 1.83 percent (50 270 bales) recorded at contract floors.
The highest contract price was US$6.10, which, however, is still below the US$6.80 offered last year. The auction floor price was capped at US$4.99.
Statistics availed by ZimStats show that for the period running from January to December 2022, export earnings from tobacco products were US$998 million, up from the US$836.5million recorded during the same period in 2021.
TIMB acting chief executive officer, Mr Emmanuel Matsvaire said about five million kg of the golden leaf are sold every day at an average price of US$3.
In light of the increased production, economists have called for an increase in tobacco value addition initiatives.
Currently, only 2 percent of the total tobacco produced is value added; and there are calls to push that to more than 30 percent so that the country’s economy benefits more from the export of processed products.
In 2021, Government put into effect the Value Chain Transformation Plan that will see the country achieving a US$5 billion industry by 2025, chiefly through increasing tobacco value addition and beneficiation.
On Wednesday, economist Professor Gift Mugano told Post Business that if the country can increase value addition and beneficiation of tobacco, the economy will soon be US$5 billion richer through tobacco products.
Currently tobacco is exported from Zimbabwe as partly or wholly stemmed/stripped or not stemmed/stripped.
It is also exported as refuse, smoking tobacco, manufactured tobacco as well as cigars, cheroots and cigarillos containing tobacco.
Professor Mugano said cigars, cheroots and cigarillos containing tobacco cost as high as US$60 per kilogramme, while partly or wholly stemmed tobacco only fetches about US$6 per kilogramme on the international market.
He said on average, cigarettes cost US$4,50 per kilogramme, while manufactured tobacco, extracts and essence cost US$3,50.
The country is therefore losing a lot by revenue by exporting tobacco in its raw form.
“If we value added tobacco and beneficiate our tobacco, the price can go up to as far as US$60 per kg.
“Imagine the jump, we are talking of 231 million kg here, we could be talking of more than US$6 billion.
“Value addition of tobacco can go a long way in clearing our national debt. The Value Added Tax and Excise Duty we could be getting from the processed tobacco products could help us clear our national debt in a year or two. We have an opportunity to maximise on tobacco value addition,” said Professor Mugano.
He said Government should take the initiative and set up a tobacco value addition plant, adding that multi-national companies would not support such an idea as they would prefer to maximise on the cheaper raw material (raw golden leaf).
“Tobacco value addition does not require a lot of money. We can set up our tobacco value addition plant in the same way we are doing dams and roads. In fact, Government needs to come up with a policy banning export of raw tobacco.
“The multi-national companies cannot do it for us.
“They will not support the initiative because they want the cheaper raw materials they are getting from us for a song,” said Prof Mugano.
The Tobacco Farmers’ Union Trust president, Mr Victor Mariranyika said value addition will result in the production of highly valuable finished tobacco products.
Tobacco has become the biggest success story of the Land Reform Programme, with tens of thousands of black farmers who benefited from the program growing the cash crop.
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