The 2022 tobacco campaign went well with a firmer average price due to low volumes compared to last year.
This was attributed to unpredictable weather conditions and erratic rainfall which heavily affected the production of the crop.
According to the Tobacco Industry and Marketing Board, statistics show that the average price has risen to US$3 per kg this year from US$2.73 the same period last year.
The Vice President of the Zimbabwe National Farmers Union, Mr. Edward Dune, said there was a need to ensure sustainable tobacco production in Zimbabwe and to improve the payment of growers by contractors. He also said the other challenge facing the industry is the viability or abandonment of tobacco growers due to the high costs associated with tobacco production.
“Some contracting companies have encountered difficulties that have affected the processing of payments to farmers. Some do not pay on time and therefore input prices are high. This affects tobacco production, especially for small-scale miners where we see their dropouts because they fail to cover production costs,” he said.
Tobacco growers who sell through auction houses are self-funded, they support their own tobacco production until they sell in the market. With limitations in accessing bank finance due to lack of collateral, most farmers are now opting for contract farming. This is why tobacco auction sales have declined.
This season, the Tobacco Industry and Marketing Board has registered 123,595 farmers, compared to 145,625 growers last season, although not all registered growers are planting anything.
The number of new producers increased from 1,916 last year to 705 this season. Most tobacco is sold through contract floors, as 95% of the crop is grown under a contract system, while only 5% of farmers are self-financed or can borrow money from banks .
This season, tobacco growers are paid three-quarters of their sales proceeds in foreign currency and the remaining quarter in local currency, converted at the exchange rate prevailing at the auction on the day of the sale. The 75% is paid directly into producers’ foreign currency accounts and is treated as free funds, while the 25% in local currency will be deposited into producers’ local bank accounts or e-wallets. Last season, producers received 60% of their money in foreign currency and 40% was converted at the prevailing auction rate on the day of the sale and paid in local currency. TIMB licensed 33 contractors compared to 39 last year, 33 Class A buyers compared to 31 last season and also approved suppliers for wrapping paper.