adminWalter Muchinguri Assistant Business Editor
Virginia tobacco sales have topped the $400 million mark with at least $420,6 million having been sold so far under both the auction and contract systems, representing an 8 percent increase from the $388,8 million sold during the same period last year. The $420,6 million was achieved after the sale of 131,5 million kg which is 25,64 percent higher than the 104,7 million kg sold during the same period last year.
The average price for the season has, however, remained depressed at $3,20 per kg which is 13,92 percent lower than the $3,71 per kg during the same prior period.
The bulk of the tobacco has been sold through the contract system which has been offering better average prices than those obtaining at the auction floor, a factor that has been attributed to a deliberate ploy by buyers to undermine the auction system.
Contractors are also buyers at the tobacco auction floors and therefore have the ability to set low prices at auction floors to influence farmers to turn to the contract system.
This has serious implications on the viability of tobacco auction floors, mainly the two indigenous auction floors, Boka Tobacco Auction Floors and Premier Tobacco Auction Floors, which have a smaller market share in the auction system compared to Tobacco Sales Floors.
According to figures released by the Tobacco Industry and Marketing Board contractors are offering an average price of $3,35 per kg against $2,82 per kg for the auction system.
As a result contract sales have grossed $312,4 million from the sale of 93,1 million kg while auction sales have realised $108,1 million from 38,4 million kg.
Tobacco Sales Floor has sold the most tobacco under the auction system after realising $56,2 million from the sale of 19,2 million kg at an average price of $2,92 per kg, followed by Premier Tobacco floors, which has raised $27,07 million from 9,9 million at an average price of $2,73 per kg.
Boka Tobacco Auction Floors, which has the lowest average price of $2,69 per kg, has realised the lowest amount of $24,8 million from the sale of 9,2 million kg.
Bales laid have increased by 32,52 percent during the period under review to 1,8 million from 1,4 million last season.
The percentage of rejected bales has, however, come down from 7 percent last year to around 5,49 percent during the period under review.
Government has set a target of
185 million kg for this year which is an improvement on last year’s target of 170 million that was missed by 3,4 million kg after 166,6 million kg,
valued at US$612,1 million was delivered.
Online Reporter