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Edgar Vhera
WITH exactly a week to go before the 2023 tobacco marketing season comes to an end on July 31, farmers have pocketed US$882 million from the sale of 291 million kilogrammes of tobacco, which is just three percent shy of besting the 2025 target of 300 million kilogrammes.
In a statement yesterday, the Tobacco Industry and Marketing Board (TIMB) revealed that the 2023 auction tobacco marketing season was closing on July 31 with mop up sales expected to happen thereafter.
“After consultations with all stakeholders, TIMB wishes to advise that the official date of closure for the 2023 auction floors is July 31, however growers will still be able to sell their auction tobacco through a mop-up sale. The final auction clean-up sales will be held on Wednesday August 30. Contract sales will continue to operate until such a time when individual contractors have fully received all their tobacco,” said the statement.
Statistics from TIMB indicate that by Day 92, farmers had sold 271 million kg of the flue-cured tobacco valued at US$825 million on contract and 20 million kg at the auction floors worth US$57 million.
Auction floors handled seven percent of the total sales this marketing season. There has been an 11 percent decline in average auction price from US$3, 21 per kg in 2022 to this year’s US$2, 87.
The cumulative tobacco sales on both floors were 46 and 45 percent higher in volume and value terms as compared to the same period last year.
The average price per kg on auction was US$2,87 against the contract’s US$3,04.
The average price of the golden leaf has declined to US$3,03 per kg this year compared to last year’s US$3,05.
The highest price recorded so far has been US$6, 10 per kg at the contract floors with the auction side recording US$4,99 per kg. Last season’s highest price was US$6,80 per kg at the contract floors with the lowest at US$0, 10 per kg.
Farmers have pocketed US$750 million with the 15 percent balance of gross earnings being paid in local currency at the prevailing interbank rate.
The 2022/23 production season has seen productivity rising from about 1, 7 tonnes per hectare in 2022 to the current 2, 2 tonnes per hectare.
Farmers are, however, worried that although productivity and production has increased this season, their profitability is shrinking due to an increase in cost of production against constant output prices.
Zimbabwe Tobacco Association chief executive officer Mr Rodney Ambrose said tobacco output prices for the 2021, 2022 and 2023 marketing seasons have remained fairly constant, while input prices have increased more than 30 percent in the 2022/23 production season negatively impacting on profitability.
“There is not much difference in tobacco output prices for the past three successive seasons. However, profitability took a knock due to increased costs of production,” said Mr Ambrose.
Mr Ambrose said as long as affordable, seasonal local funding for producing the crop in the region of US$350 million was not availed to farmers, contract farming would remain and farmer profitability would be compromised.
The Government crafted the Tobacco Value Chain Transformation Plan (TVCTP) in 2021, which seeks to achieve a US$5 billion tobacco industry by 2025.
Among its main objectives are sustainable intensification of tobacco production to 300 million kilogrammes, enhancing transparency and fair tobacco marketing and increasing tobacco value addition and beneficiation from the current two to 30 percent by 2025.
Reforming, restructuring and rebuilding institutions to raise the net export benefits for tobacco from the current 12, 5 to 70 percent by 2025, production of alternative crops to tobacco to diversify and enhance traceability in face of climate change and anti-tobacco campaign are the other targeted objectives.
Online Reporter