Tobacco forecasted to generate US$700 million

via Tobacco forecasted to generate US$700 million | The Sunday Mail 28/02/2016

Livingstone Marufu

TOBACCO exports are expected to rake in US$660 million this year, a decline from $867 million a year ago.

Government and the Tobacco Industry Marketing Board (TIMB) expect to sell 180 million kilogrammes – a drop from 198,7 million kgs last year – at an average price of US$3,70 per kg.

On the overall, production of the golden leaf is projected to decline 9 percent.

TIMB, which regulates production and trade of the crop, is bullish about the prospects of higher prices in the 2015 /2016 marketing season as the current El Nino weather phenomenon is expected to cut production.

Experts forecast that 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 from last year.

Last week, TIMB’s public relations and communications manager, Mr Isheunesu Moyo told The Sunday Mail Business that the production estimates from the first tobacco assessment stand between 170 million kilogrammes and 180 million kilogrammes.

“This is a very difficult tobacco season, there has been poor rains and limited resources but despite all that, we are expecting to get close to 180 million kilogrammes.

“Tobacco is a very sensitive crop which is always judged by quality but this year, tobacco farmers may benefit from decrease in production across the world due to the El Nino induced drought and floods in Brazil. Consequently, the prices are likely to fluctuate to the advantage of the farmers,” said Mr Moyo.

The new electronic trading platform is also expected to promote an orderly market.

“We are rolling out an electronic marketing system this season which will reduce collusion and chances of buyers conniving on the reduced price of tobacco.

“Due to this efficient and digitalised system, we are going to curb those underhand and corrupt dealings.

“This system will speed up all the processes involved in the selling from the booking of tobacco, the auctioning itself and the bidding by various buyers.

“There will be electronic hand held devices that will remove the need for a starter to shout a starting price.

“A winner to bid will be determined by the system,” said Mr Moyo.

TIMB said a total of 57 492 growers have registered for the 2015/16 season, compared to 76 545 who registered in the corresponding period last year.

New farmers account for 9 983 of the total number of registered growers.

The 2016 tobacco marketing and selling season, which has been delayed, is likely to open between March 9 and March 16.

Traditionally, the selling season begins in February.

Last year, the marketing season also began in March following a delayed rainy season.

Government is in the process of resuscitating dams and deepening boreholes across the country as a way of encouraging irrigation.

In an earlier interview with The Sunday Mail Business, Mr Jeffrey Takawira, the director of the Tobacco Industry Development Institute, a regional tobacco lobby group, said this year’s marketing season is likely to be satisfactory for farmers.

Last year, the market was tainted by allegations of price fixing.

“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. The average price is expected to fluctuate around US$3,69 to $3,70 per kilogramme,” said Mr Takawira.

ln the 2014/15 marketing season, China bought 27,8 million kg of tobacco worth US$230 million.

Belgium was the second largest buyer, snapping up 13,7 million kg worth US$61,3 million at an average price of US $4,45 per kg.

South Africa imported 10,7 million kg worth $32 million at $2,97 per kg.