Tobacco production in Zimbabwe is expected to grow by 9%

 Tobacco production in Zimbabwe is expected to grow by 9%

Tobacco production in Zimbabwe is expected to grow by 9%.

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Tobacco production in Zimbabwe is expected to grow by nearly 9% due to good rainfall in 2020/2021 agricultural season.

Tobacco sales are expected to reach approximately 200 million kilograms against last year’s 184 million kilogram due to normal and above normal rainfall season, the country’s Tobacco Industry and Marketing Board estimate.

Tobacco farmers in around Zimbabwe’s ten provinces are now flocking to Auction floors as tobacco sales season begins this month despite strict health restrictions against covid19.

In 2019/2020 season tobacco earns the country USD782 Million in sales for Zimbabwe which remains the leading producer of the crop.

The auction floors open on a high note with the highest price of USD4.30 and the lowest USD 4.30 Tobacco Farmers Union of Zimbabwe President Believe Tevera confirmed

“The highest bid was US$4.30 and the lowest bid was US$2 “, he said

Tobacco farmers flocked the auction floor as of Wednesday 7 April 2021 to mark the start of selling season, anticipating to yield better profits this year’s tobacco selling season.

“We are happy, we are happy for this season, there has been an improvement in prices, ToFUZ president Believe Tevera added.

As one of the biggest employers in the country, the tobacco industry is hard hit by unemployment, despite its agricultural and mining resources.

Tobacco is a major source of foreign exchange for this southern African nation with sales reaching $782 million in 2020.

The government of Zimbabwe has announced the 60% foreign currency retention for the Tobacco farmers for 2021 tobacco selling season.

The reserve banks last month has announced that farmers will retain 60 % of their earnings in foreign currency this year, while the remainder will be liquidated at the prevailing exchange rate.

Last year farmers earn 50% foreign currency retention which was did not went well with farmers as most of them failed to recapitalise due to increased price of inputs used tobacco production.

Despite all the efforts by government to stabilise the exchange rate through the auction exchange rate   farmers are being ripped of the value of their money, especially when they liquidate their hard-earned foreign currency at the official exchange rate of 1:83. Input suppliers, on the other hand use the black-market rate of 1:140, leaving farmers disadvantaged.

From the current auction exchange rate farmers will loose of about 30% of their value, through the black-market rate whenever they make their purchases. That money is huge, in terms of the opportunity cost on the farmer.

Given the cost structure of the farmers, it is therefore strongly recommended from farmers union and lobby groups that the government should reconsider its position and increase the foreign currency retention of the tobacco farmers.

Most if not all service providers now require hard currency and therefore the great need for hard currency to the farmers.

Tobacco is a major source of foreign currency in Zimbabwe.

Chris Louw

Featured Financial Writer for SA Shares - Read more about Chris's Bio -

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