Average tobacco prices down y/y

Source: Average tobacco prices down y/y – The Zimbabwe Independent July 15, 2016

With the tobacco marketing season drawing to an end, the average tobacco price has gone down by 0,6% as compared to last season weighed down by prices offered at auction floors.

By Fidelity Mhlanga

According to statistics from the Tobacco Industry Marketing Board (Timb), as of day 72, average price was pegged at US$2,94 down from US$2,96 recorded in the same period last year.

The average auction floor price has been static at US$4,99 while the contract floor is up US$6,25.

Zimbabwe Commercial Farmers Union president Wonder Chabikwa said about 25% of tobacco was delivered via auction floors, adding that poor prices offered there affected the average tobacco price movement.

“It looks like the buying system is now discouraging auction buying. There has been suspicion that non contracted farmers were using banned chemicals in their crop, hence poor prices,” Chabikwa said.

Statistics shows that auction floors have received 32,6 million kg while contract floors had 140,5 million kg.

Chabikwa said this year’s tobacco quality was similar to that of last year due to equivalent effects of mid-season drought experienced.

“Prices at this moment are a bit firm but the low average price has been dragged down by tobacco priming that were delivered which fetched poor prices during the open days of the marketing season,” he said.

Timb statistics shows that 173,1 million kg valued at US$509,8 million has been delivered at both auction and contract floors down from 163,5 million kg worth US$ 484,4 million in 2015.

In 2009, flue-cured tobacco prices averaged US$2,98/kg before dropping slightly to US$2,88/kg in 2012 and further retreating to US$2,73/kg in 2011.

The average price of flue-cured tobacco closed the 2012 marketing season at US$3,65/kg and grew further to US$3,67 per kg in 2013 which was the highest price in post dollarisation era.

In 2014, the average tobacco price dropped to US$3,17/kg before tumbling further to US$2,93/kg in 2015, a development that prompted some farmers to ditch the crop.

Official figures from Timb show the number of tobacco growers plunged by 22% from 92 430 last season to 71 728 after farmers failed to raise money for inputs ostensibly due to poor prices.

This year’s season has been dogged by cash shortages as tobacco farmers have to wait for almost two weeks at banks at the floors in a desperate attempt to withdraw all their money.

This year’s tobacco marketing season is anticipated to end mid next month.