ZIMBABWE has breached the 100 million kilogramme (kg) mark in tobacco exports, raising US$529,2 million as demand for the country’s golden leaf increases, the Tobacco Industry and Marketing Board (TIMB) has said.
In the same period last year, tobacco exports reached 93 million kg at an average price of US$4,62 per kg.
TIMB acting chief executive officer Emmanuel Matsvaire told NewsDay Business on the sidelines of the company's annual general meeting this week that the Far East has remained the top destination for the country’s golden leaf.
"Currently, 105 million kilogrammes of tobacco have been exported to date at an average price of US$5,04 per kg,” he said. “The Far East remains the top destination for Zimbabwe tobacco with about 41% of current total exports being destined for the Far East.”
Matsvaire said the Far East also had the highest average export price among all the continents due to the high quality of tobacco that goes there.
Available statistics show that the continent absorbed 52% of total exports in 2016 and 43% in 2022.
China and Indonesia are the main markets for Zimbabwe’s tobacco, with the European Union and Africa also being significant destinations, absorbing a combined 37% of total exports in 2022.
Zimbabwe is optimistic that this year’s tobacco exports will surpass 199 million kg exported last year following good rains countrywide. The 2023 tobacco auction marketing season officially closed on July 31, 2023, according to TIMB.
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However, the contract floors and delivery sites, which handle roughly 95% of the crop, will remain operating until all the crop has been delivered.
According to TIMB statistics, 19,9 million kg of tobacco worth US$56,9 million had been sold through the auction floors at the official closure of auction floors.
A total of 295,4 million kg of tobacco worth US$837,8 million had been sold on the contract floors as of August 11, 2023.
The southern African nation has made a total of US$894,8 million, an increase of 41,97% over the previous year.
However, the TIMB's official statistics indicated more farmers are turning to contract farming as a result of the lack of funding. Farmers' unions claim that contract farming has ensnared them in debt.
For years now, farmers have been caught in a vicious cycle of taking out loans from tobacco companies to finance their operations.
The loans come with a catch — they are tied to a contract which requires the farmers to sell their tobacco exclusively to that company.
This year, again, the farmers found themselves unable to service their loans, forcing them to sign another contract binding them to the company for another season.
The threat of losing their properties or being taken to court hangs over their heads like a Damocles sword.
The situation is worrisome not only for farmers, but the entire Zimbabwe tobacco industry. With fewer farmers affording to take out loans, the industry could suffer a drop in production levels.
Zimbabwe Tobacco Growers Association president George Seremwe told our sister paper, The Standard, recently that “farmers are not happy because they are trapped in debt.
They could not service their loans this season, meaning to say they are automatically forced to go back into contract to be able to service their debts.”
Ultimately, farmers did not gain any extra amount, despite an increase in volumes.
While volumes have increased, prices remained low on both auction and contract floors against high cost of production. The cost per kilogramme averaged US$3 throughout the season.
Farmers also raised concern that 80% of the proceeds of tobacco sales was going to loan repayment.
This is a big challenge for tobacco farmers, given that production costs have risen 30%, which will affect production of the golden leaf next season.
