TIMB bullish about tobacco prices

via TIMB bullish about tobacco prices | The Sunday Mail

THE Tobacco Industry Marketing Board, which regulates production and trade of the crop, is bullish about the prospects of higher prices in the upcoming marketing season.

Experts forecast prices might be as high as US$4 per kilogramme, which is markedly higher than prices of between US$2 and US$3 per kg last year.

TIMB’s public relations and communications manager Mr Isheunesu Moyo said last week the specific production estimates would be known after an ongoing Government crop assessment ends.

“We are hopeful that good quality tobacco will be delivered this season by the farmers. TIMB does not set tobacco prices. We have been training farmers on good agronomic practices and our aim is to improve the quality of tobacco and aim to influence prices this way.

“Good quality tobacco fetches good prices. The decrease in hectares planted cannot be treated in isolation as quality of tobacco produced as well as yield per hectare are important factors,” said Mr Moyo.

The 2016 tobacco selling season has been postponed indefinitely to allow farmers to harvest the crop that was planted late due to poor rains in the 2015/16 farming season.

Traditionally, the selling season begins in February. Last year the marketing season also began in March following a delayed rainy season.

In the 2016 Monetary Policy Statement, Reserve Bank of Zimbabwe Governor Dr John Mangudya underscored the need to reduce over-reliance on rain-fed agriculture.

He said there is scope for Government to dedicate more effort towards the establishment and resuscitation of irrigation infrastructure across the country in order to increase agriculture production, especially in line with the Climate Resilient National Water Resources and Irrigation Master Plan.

In 2015, tobacco export earnings increased to US$867 million compared to US$772,5 million a year earlier.

However, this year the hectarage under tobacco has declined 14 percent to 92 160 hectares as at January 22, compared to 107 546ha the previous season.

Industry experts say reduced output could result in better prices for the golden leaf.

Director of the Tobacco Industry Development Institute, a regional tobacco lobby group, Mr Jeffrey Takawira said: “We believe that this selling season will be devoid of price demonstrations and politicisation of the auction system. Last year this resulted in farmers accusing the regulatory body of fixing prices on behalf of international buyers.

“There is likelihood that this year’s crop will be far much less than last season because of the late and unreliable rainfall patterns the country is currently facing. In the same the average price is expected to fluctuate around US$3,69 to US$3,70 per kilogramme.”

In 2015 farmers protested against prices that were as low as US$1/kg, forcing buyers to suspend sales.

The TIMB said farmers should channel grievances through representative bodies to avoid disruptions.

“The auction system is a free market system. If a farmer is not happy with the price offered, they can approach grower representatives at the floors before the sale is concluded as well as TIMB personnel and cancel a sale.

“What we discourage is group action as it disrupts the whole process,” said Mr Moyo.

He added that floods that have been experienced in Brazil, which has been the world’s biggest exporter of flue-cured Virginia tobacco since 1993, were likely to positively influence prices.

“There were floods in Brazil and that could affect their production. However, Zimbabwe tobacco sells on its merit and we will not focus on the misfortunes in other countries.”

Tobacco is one of Zimbabwe’s largest foreign currency earners.

Of the tobacco produced in Zimbabwe, only two percent is consumed locally, according to the TIMB.

But the international market is slowly responding to worldwide anti-tobacco sentiment on health grounds with France recently banning public smoking.

Further, general global price delcines of commodities and the economic slowdown in China may dampen the hype on local markets.

China buys most of Zimbabwe’s tobacco.