What next for Zim tobacco sector?

via What next for Zim tobacco sector? – NewZimbabwe 10 April 2015

ZIMBABWE’S tobacco industry, a key part of the country’s struggling agricultural sector, is facing an uncertain future with tobacco growers recently rioting at auction floors due to low prices being offered for the “golden leaf” amid concerns about poor quality production.

The agricultural sector has over the years been regarded as the backbone of the country’s economy. But over the past 15 years, the sector has also suffered following prolonged periods of local economic recession.

The tobacco regulatory body, the Tobacco Industry and Marketing Board (TIMB), however, is optimistic the agricultural sector, driven by a resurgent tobacco industry, will recover.

TIMB chief executive officer Andrew Matibiri told the African News Agency (ANA): “The TIMB believes that national production levels will be determined by the tobacco markets and availability of funding.

“The production of 216 million kilograms in 2014, following a very wet 2013/14 growing season, indicates that the country has the potential to produce more.”

However, experts say the new tobacco growers – mostly communal farmers who have ditched growing the staple maize crop and other grains – have been found wanting, bringing to the floors lower grade tobacco leaves known as primings.

But Matibiri played down the fact that new growers were compromising quality.

“Most of the registered tobacco farmers have been growing tobacco for at least three seasons.

“Therefore, it would be incorrect to say that the entry of the new farmers into the industry has affected quality,” he told ANA.

In the opening week of this year’s selling season, farmers rioted at the auction floors after prices had plummeted to very low prices of between $0.10 and $3.10 per kilogram.

Riots over prices

The farmers had been used to the $4.85 opening price last auctioning season. The price fall was driven by the low quality of the crop delivered at the floors.

Every year sees a huge number of players registering to grow the golden leaf.

For the 2014-15 growing season, there were 28,769 new registrations with TIMB. The 2015-16 growing season has seen 17,344 new registrations so far.

The 2014 auctioning season showed some signs of recovery, with 216 million kilograms of the golden leaf going under the hammer at the country’s three floors – Boka Tobacco Auction Floors, Tobacco Sales Floor and Premier Tobacco Floors.

But things are not looking that rosy this year as concerns over the quality of the crop new farmers are bringing to the auction floors dominated discussions.

As of Thursday this week, 25.7 million kilograms of tobacco worth $67.4 million has been sold at the auction floors, compared to 28.7 million kilograms valued at $88.1 million in the corresponding period last year, a significant 10.4 percent and 24 percent drop in volume sales and value respectively.

The average selling price this selling season has also suffered a 14.6 percent dip, at $2.62, down from $3.07 last year.

Future uncertain

The number of rejected bales is higher this year with 41,416 failing the test as compared to 28 721 rejected last year.

For a country which used to be regarded as the breadbasket of southern Africa, maize production has taken a dive, as has small grains, cotton, and wheat.

Tobacco, now the biggest export earner in the country’s agricultural sector, has been left as the sole crop supporting the economy. But its future and sustainability now hangs in the balance.

With the country attaining a 256 million kilogram high just before the turn of the millennium as well as before the chaotic land reform programme, the sector has struggled to reach similar figures again in recent years.

Between 2007 and 2009, production of the crop plummeted to a lowly 56 million kilograms.

Inexperienced farmers

The land redistribution exercise saw the black population getting huge tracts of land, although most were and still are inexperienced farmers.

At the beginning of this year’s selling season, TIMB chairperson Monica Chinamasa urged farmers not to bring primings to the floors.

“Buyers have already indicated they want good cured leaf and will not accept scrap and primings,” Chinamasa said.

“Farmers are aware of this position and they should present a high quality tobacco crop to fetch higher prices,” she said.

“Merchants want the Zimbabwean tobacco because of its unique flavour. Zimbabwe produces good flavour because of the favourable climatic conditions.”