Melisa Chatikobo
LOCAL tobacco stakeholders are optimistic that the golden crop will fetch better prices this season because of reduction of yield and increase in global prices.
Speaking at the Tian Ze annual farmers awards yesterday, Tobacco Industry Marketing Board chairperson Patrick Devenish said this season the country’s golden crop would most likely fetch a good price because of production disturbances in other nations.
“As far as the market is concerned, production in Brazil, which is one of the largest producers of tobacco, dropped this year due to climate change and political disturbances and this will put Zimbabwe tobacco at a good price,” Devenish said.
Tian Ze managing director Hua Wang said despite the drop in quantity his company was expecting to purchase, they still hoped the price will be good this marketing season.
“Tian Ze is expecting 65 million kg of packed tobacco to be handled from Zimbabwe, a reduction compared to last season where we handled half of the national crop size which was almost 200 million kg.
“From our understanding global prices are going up so we expect the average price to improve from last season.
“We have about 117 commercial farmers and 20 000 small scale farmers putting the total hectarage planted to around 9 000 hectares. Some of the tobacco will be contributed by merchants,” Wang said.
Meanwhile Agriculture deputy minister Vangelis Haritatos said the private sector was augmenting efforts by the government to increase agriculture performance especially in the tobacco value chains.
“Tobacco is Zimbabwe’s biggest foreign currency generator and 186.6 million kg of leaf tobacco valued at US$515.9 million was sold during the 2021 marketing season according to the TIMB.
“The figures are up 16,8 percent in volume and 31 percent in value over the 2020 sales. The TIMB noted that contract farming is the dominant supplier of tobacco, accounting for 93,4 percent of total sales compared to 6,6 percent for sales on auction floors,” Haritatos said.
Recently the TIMB chief executive officer Meanwell Gudu however, said it was unlikely that tobacco prices would be higher than last year.
“Top quality tobacco grades for premium brands are likely to remain unchanged US$3,5 to US$5,40 per kg in prices compared to last season. The high-end market for this grade has reached its ceiling in price increase. The major market for these grades is in China,” Gudu said.
He further said some kind of hoarding of tobacco was likely to happen that may influence prices to be better because of disruptions in logistics caused by Covid-19.
“Due to anticipated reduced volumes in Zimbabwe this season, there will be more pressure on the demand side to take the crop, which should naturally increase prices upwards. This is likely to be experienced in the medium to filler grades.
“Supply chains were disrupted from 2020 into 2021 due to shortage of vessels and closure of some shipping lines. Now that the world has lifted the Covid-19 restrictions and uncertainty in the possibilities of other waves, customers are likely going to grab this opportunity to stock up their tobacco, thereby increasing artificial demand.”
