This year’s tobacco marketing season kicks off today with the usual ceremony this morning at the Tobacco Sales Floor opening the auction sales with the contract floors, which will handle 95 percent of the crop, opening tomorrow.
Lower volumes of the bottom half of the quality ladder, the medium to filler grades, could mean higher prices although the top grade tobacco is likely to remain at US$3,50 to US$5,40 a kilogramme.
Speaking after yesterday’s Cabinet meeting, Information, Publicity and Broadcasting Services Minister Monica Mutsvangwa said tobacco merchants exported 47.6 million kg of tobacco valued at US$245 million after last season, compared to 28.7 million kilogrammes worth US$69.6 million exported the previous season.
“Cabinet noted that reaping and curing are the main activities and are at advanced stages for the irrigated tobacco crop, while weeding, de-suckering and topping are in progress for the late dry-land tobacco crop,” she said.
This season, the Tobacco Industry and Marketing Board registered 123 595 farmers, down from the 145 625 growers for the last season, although not all registered growers actually plant anything.
The number of new growers fell from 1 916 last year to 705 this season.
The bulk of the tobacco will be sold through contract floors as 95 percent of the crop is grown under contract system while only 5 percent farmers are self-funded or are able to borrow money from banks.
Tobacco Sales Floor, Boka Tobacco Floors and Premier Tobacco Floors are the three registered auction floors and all have prepared for the opening of the marketing season, including adhering to the Covid-19 regulations as required by the TIMB and displaying relevant posters and fliers.
The floor operators confirmed that they are now ready to receive tobacco and farmers started delivering yesterday in time for today’s sales.
This season, tobacco farmers will be paid three quarters of their sales proceeds in foreign currency and the remaining quarter in local currency, converted at the prevailing auction exchange rate on the day of sale.
The 75 percent will be paid directly into the growers’ foreign currency accounts and this is treated as free funds while the 25 percent local currency will be deposited into the growers’ local bank accounts or e-wallets.
Growers were last season getting 60 percent of their money in foreign currency and 40 percent was converted at the prevailing auction exchange rate on the day of sale and paid in local currency.
TIMB has licensed 33 contractors compared to 39 last year, 33 A class buyers compared to 31 last season and also licensed suppliers for wrapping paper.
Prices on auction floors will be determined by the bidding process, the highest bid being the final price on every tobacco bale.
TIMB chief executive Mr Meanwell Gudu said 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.
Mr Gudu said this will be experienced in the medium to filler grades.
“Top quality tobacco grades for premium brands are likely to remain unchanged ($3.5 – $5.40/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 and there are no indications to change prices upwards,” he said.
“Some kind of hoarding of tobacco is likely to happen that may influence prices to be better because of disruptions in logistics caused by Covid-19. The 2021/22 tobacco crop was affected by late rains.”
The irrigated crop is medium to heavy bodied, predominantly lemon in colour and reflecting a fair to good quality.
The main dryland crop is medium bodied in the commercial sector while being light to medium bodied in the smallholder sector. The late dryland crop has poor stand due to prolonged dry spell which was experienced after planting time towards end of December.