Low tobacco prices hit farmers hard

Source: Low tobacco prices hit farmers hard – The Standard July 28, 2019


The Zimbabwe Tobacco Association (ZTA) has blamed low prices for the golden leaf on local auction floors on the poor quality of the crop and inconsistent government policies.

The industry says the country is recording the lowest prices in close to a decade during this year’s marketing season, putting the future of farmers in jeopardy.

Prices fell by an average of 32% to $1,98 per kg from $2,92 per kg recorded last year.

ZTA chief executive Rodney Ambrose said the drought during the past agricultural season was largely to blame for the poor quality of the crop.

“Policy formulation inconsistencies and the drought affected the quality of a portion of the crop, which in turn resulted in weaker demand and pricing,” he said.

“Premium styles, which are first and second grade, good quality, soft nature, correct chemical balanced tobacco for the Chinese market, narrowed too.”

Prominent economist John Robertson said China, a major consumer of tobacco, showed no appetite to replenish its stocks this year and this affected demand for Zimbabwe’s produce.

“China warned us before sales started that they had large stocks of tobacco and wouldn’t be buying as much as before. Also, the quality was affected by the long dry spells,” he said,

“Many more growers registered for this year, so we might have had a greater proportion of less experienced farmers.”

A Rusape farmer, Munyaradzi Mudyiwa, said the low prices would see most farmers incurring huge losses as they acquired inputs using foreign currency.

“The majority of the small-scale and communal farmers incurred huge losses,” he said.

“This year government really let the farmers down by their policies of paying farmers RTGS when tobacco is an export crop.

“Most farmers had hope of getting hard currency, but alas government shifted goal posts.”

The Reserve Bank of Zimbabwe early this year came under fire after it introduced measures that will see farmers paying 70% of their loans to merchants in United States dollars.

The balance will be paid in local currency.

With mop-up sales scheduled for around September, projections indicate that prices will plunge below the 2015 levels, which averaged $2,95 per kg.

Last year the average tobacco price was at $2,92, in 2017 it was $2,96, while in 2016 and 2015 it stood at $2,95.

The slump in prices did not affect output, which surpassed the set target of 220 million kg to 236,9 million kg of July 24 this year.

The highest price fetched so far is $5,75 against $6,25 earned last year.