Category: Leaf

Zimbabwe: More Money From Less Tobacco

Photo: Taco Tuinstra
Zimbabwe has sold 201.05 million kg of tobacco worth US$614.27 million since the marketing season opened in March, reports The Star, citing statistics from the Tobacco Industry and Marketing Board.
While being close to matching last year’s output, the value of the crop sold so far this year has surpassed last year’s figure, reflecting firmer prices due to good quality leaf. During the same period in 2021, Zimbabwe’s tobacco growers sold 207.18 million kg for US$578.78 million.
Despite being grown under difficult conditions characterized by erratic rainfall, the seasonal price averaged above US$3 per kg compared to US$2.79 per kg last year.
Ninety-five percent of Zimbabwe’s tobacco crop is grown under the contract system. Only 5 percent of farmers self-finance their crop production, which they then sell through auction floors.
Zimbabwe’s tobacco auction season officially closed July 20, but contract sales are still ongoing.
August 22, 2022
Zimbabwe: Growers Start Land Preparations

Photo: YanaKho
Tobacco growers in Zimbabwe have started preparing land to plant their irrigated tobacco crop in early September, reports The Herald.
Sept. 1 is the earliest legislative date for transplanting tobacco from the seedbed to the field. The bulk of the rain-fed crop will be planted from October to early December, depending on the region. To prevent the carryover of diseases, tobacco farmers are required to destroy tobacco stalks and regrowths, which can host pest and pathogens, by May 1 each year.
Industry representatives expressed concern about the cost of agricultural inputs this year.
“The major challenge on the ground is that input prices are very high, hence the majority of farmers are finding it difficult to continue with tobacco farming,” said Edward Dune, vice president of the Zimbabwe National Farmers’ Union, urging authorities to improve the conditions of payment.
This season, tobacco farmers were paid three quarters of their proceeds in foreign currency and the balance in local currency, converted at the prevailing auction exchange rate on the day of sale.
According to the Tobacco Industry and Marketing Board, prices at the auction floors, at US$3.04, were firm because of low volumes. In 2022, tobacco growers pocketed more than US$620 million from their leaf sales.
August 15, 2022
Pyxus Reports First Quarter Results

Photo: Pyxus International
Pyxus International reported sales and other operating revenues of $343.9 million for the fiscal quarter that ended June 30, 2022, up 3.2 percent over the comparable 2021 quarter. Net loss increased 27.8 percent to $14.7 million, primarily due to a $7.6 million decrease in income tax benefit. Adjusted EBITDA increased 17.1 percent to $17.3 million.
“As expected, our first quarter was consistent with the prior fiscal year, with increased demand and more normalized timing of shipments from Asia, partially offset by the timing of shipments from Africa and South America,” said Pyxus President and CEO Pieter Sikkel in a statement.
“As of June 30, 2022, our inventory increased $126 million compared to the prior year primarily due to higher new crop green tobacco prices and processing costs in South America, and accelerated new crop buying activities in certain key markets. In addition, our processed tobacco inventory continues to be more than 90 percent committed to specific customers.
“The overall increase in inventory and our committed inventory levels for processed tobacco position us to meet near-term demand and we expect to see stronger shipments in subsequent quarters in fiscal 2023, consistent with historical trends. Despite higher green tobacco prices and processing costs in South America, we were able to effectively manage our working capital to meet our purchasing goals for the current crop cycle.
“Crop sizes in certain markets in Africa, Asia and South America are below expectations due to the adverse impacts of prevailing La Nina weather patterns during the growing season, which has exacerbated supply shortages. We continue to engage with customers in transparent dialogue regarding the impacts of La Nina and inflation on our business. In response to these and other market dynamics, we accelerated buying activities in certain key markets, and continue to invest in research trials, local programs, and additional training for our global agronomy team to further support our efforts to maximize grower efficiencies and yield despite unpredictable weather patterns.
“We continue to expect fiscal 2023 sales to be between $1.75 billion and $1.95 billion and adjusted EBITDA to be between $130 million and $160 million. Moving forward, we are committed to recovering crop sizes, and aligning volumes in future years with customer expectations, as we work to deliver stakeholder value, and together, grow a better world.”
August 12, 2022
Universal Reports First-Quarter Results

Photo: Taco Tuinstra
Universal Corp. reported sales and other operating revenue of $429.8 million for the three months ended June 30, up 23 percent over the comparable 2021 quarter. Tobacco operations sales and other operating revenues increased 18 percent to $348.1 million, but tobacco operations income declined 9 percent to $8.1 million.
George C. Freeman, III, chairman, president and CEO of Universal Corp. expressed satisfaction with the start of the company’s 2023 fiscal year.
“In the quarter ended June 30, 2022, we continued to effectively navigate increased costs, particularly rising prices for green leaf tobacco and shipping constraints,” Freeman said in a statement. “We succeeded in getting a significant amount of carryover tobacco shipped out of Brazil, and our plant-based ingredients platform continued to exceed our expectations.
“Results for our Tobacco Operations segment were down modestly in the quarter ended June 30, 2022, compared to the quarter ended June 30, 2021, largely on unfavorable foreign currency comparisons due to the strong U.S. dollar.
“Demand for leaf tobacco remains strong, and flue-cured, burley, oriental and wrapper tobacco remain in an undersupply position. We are also anticipating a reduction in African burley tobacco crop sizes due to weather conditions there.
“While we were able to ship a greater amount of carryover tobacco out of Brazil in the quarter ended June 30, 2022, compared to the quarter ended June 30, 2021, we continue to face a challenging logistical environment. We are also continuing to see increased costs for leaf tobacco across virtually all markets.”
August 7, 2022
Generational Change

Photo: Universal
Human rights and the environment are at the core of Universal’s social and sustainability goals.
By Timothy S. Donahue
There are numerous moving pieces in the sustainability puzzle. Many global enterprises now see environment, social and governance (ESG) programs and sustainability issues as urgent business matters. Strong corporations realize that managing ESG programs effectively enables the company to build trust and long-term value in an ever-changing business environment.
According to experts, sustainability, as a part of a company’s ESG standards, must be a corporate strategy and is critical for a business to stay competitive.
Being an agricultural company, Universal Corp., the world’s largest supplier of leaf tobacco, must be ultra-aware of the impacts of environmental issues such as climate change and the social supply chain risks that it encounters. Universal understands the need to adapt to survive. It has been a lesson learned throughout the company’s long history.
Founded in the late 1800s, Universal incorporated in 1918 and was listed on the New York Stock Exchange in 1927. The company has survived the stock market crash of 1929, two world wars and two pandemics.
Early on, Universal’s environmental programs were traditionally focused on reducing carbon dioxide emissions centered around efficiency and cost savings. Today, those early efforts have evolved into a variety of policies and practices that are designed to enhance the resilience of Universal’s infrastructure and its supply chains.
This is now referred to as ESG, the corporate governance and investment framework. Sustainability is the relationship between a company and the environment. ESG encompasses a set of standards for Universal’s socially conscious investors to screen potential investments, including sustainability.
According to Airton Hentschke, senior vice president and chief operating officer for Universal, the company considers a science-based and evidence-based approach to its sustainability practices. Universal is concerned about climate change and how it will impact its footprint in the future.
“We have set emissions targets that were approved by the Science-Based Target Initiative, and we are in the process of formalizing our approach to reduce emissions. We are looking into the future for pathways to net-zero emissions,” he explains. “Engagement throughout the supply chain has made the most impact in reducing emissions. Engagement allows us to align expectations from our customers through to our farmers and supply chain partners.”
Hentschke says that the evidence is clear that Universal must contribute to emission reductions to build sustainability and support a thriving planet. “Universal relies on the communities we operate within and attempts to address the root causes of social and environmental issues in these communities,” says Hentschke. “We believe in being a responsible and sustainable corporate citizen and will continue to implement practices with the intention of benefitting our diverse global stakeholders.”
Challenges lie ahead. Universal operates throughout the world and impacts thousands of people every day. The company operates in more than 30 countries, employing a multicultural and multinational workforce. Universal’s global operations face unique challenges in each of their operating environments related to local social dynamics and traditions, according to Karen Hall, director of sustainability at Universal. She says that ESG is a collection of numerous programs, such as Universal’s corporate human rights policy, which extends equitable expectations to all its operations and to its suppliers.
“We support our local teams so that they can focus on their communities and supply chain and address risks and opportunities as they arise. One example is in Brazil where we needed a larger workforce than the adjacent community could fulfill, so we contracted buses to bring workers from rural regions to our operation,” Hall explains. “A risk and opportunity were addressed here. The risk was a labor shortage, and the opportunity was to engage and employ a rural workforce that would not have had access to these jobs without our support.”
Facing the Issues
Experience makes a difference. The Universal team is skilled at identifying risks and opportunities in communities where it contracts tobacco. Its farmers are the most important segment of Universal’s supply chain operations. Universal is involved in the Sustainable Tobacco Program (STP), an industry-wide initiative jointly developed by tobacco manufacturers and experts to assure standards in agricultural practices as well as environmental management and key social and human rights matters.
In 2020, the STP made changes to better address eight core issues: governance, crop, climate change, human and labor rights, livelihoods, natural habitat, soil health and water.
Universal has been supportive of the STP from the program’s inception. Lea Scott, vice president of agronomy for Universal, said the STP provides an alignment across the tobacco industry under a cohesive set of standards and best practices.
“It’s positive for all stakeholders from investors to smallholder farmers. The new program has several strengths, including aligning common goals and focusing on continuous improvement,” says Scott. “With any new program, we are working through implementation with the aim of continued improvement and transparency.”
Prior to 2020, Universal took a risk-based approach to addressing issues in its operations and supply chain. The company would implement programs that addressed mainly key risks in particular regions. Its Agricultural Labor Practices (ALP) program, for example, sets global expectations, such as no child labor, fair worker renumeration and no forced labor in the tobacco supply chain.
“In regions where a specific risk has been identified by our farmer monitoring, we tailor programs to address these risks. In the United States and Europe, for instance, we have worker interview programs to engage farm workers and monitor their treatment while in other regions we have child labor programs that focus on removing identified root causes of child labor,” says Scott. “The new STP in 2020, along with ALP, better highlights Universal’s efforts and the commitment we put into addressing the identified risks. It has also reinforced the unity and commitment within the industry to addressing human rights violations in the tobacco supply chain.”
Child labor is a major concern for Universal. Seventy percent of child labor is estimated to occur in agriculture, mainly taking place in family subsistence and commercial farming. While there have been significant advances made in tackling child labor, in recent years the progress has slowed and has been uneven across regions. According to the United Nations, the number of children in child labor has declined by an estimated 19 million since 2000.
Universal is committed to an industry that works in unity and alignment on human rights issues, including child labor, according to Hentschke. Universal, along with other major transnational tobacco companies, has been involved with the Eliminating Child Labour in Tobacco-Growing Foundation (ECLT), a Swiss-based nonprofit organization dedicated to eliminating child labor since its inception in 2000.
The ECLT focuses on regions where child labor is at higher risk for occurrence and where local stakeholders are willing to engage in programs, explained Hall. The ECLT functions as a link between industry and local stakeholders like government and nongovernmental organizations so that programs are designed in sustainable and impactful ways.
“Universal believes that children should grow and have access to educational opportunities that are not impacted by labor requirements at home,” says Hall. “While technology has been beneficial in understanding the extent of child labor, understanding root causes does more to benefit children and reduce the risk. When we understand why children work at a young age in various regions, we can address the underlying cause. For example, in Africa, we found that mothers and children in some areas had to walk a long distance for access to clean water.
“Based on a geographic information system analysis of existing boreholes and water access, we drilled and repaired boreholes to increase water accessibility. Technology helped reduce the risk of child labor, but the root cause needed to be identified for the appropriate technology to be implemented.”
Being Transparent
Universal has a variety of projects all over the world that reinforce its commitments to environmental, social and financial sustainability. Hall says programs and projects are most effective when they engage a variety of stakeholders and address motivators of an identified risk or issue.
“Effective programs not only mitigate the issue but also educate, have strong community participation and contribution and are the basis of sustainable change and improvement,” she says. “Programs with these characteristics have the potential to result in real cultural change.”
Another example of Universal’s unique commitments is its Village Savings and Loan (VSLA) project in Malawi. In this program, Universal subsidiary Limbe Leaf Tobacco Company works with an NGO to bring financial literacy to the region’s growing areas. The program focuses on teaching women how to manage money and how to invest. The VSLA addresses several social issues, including women’s empowerment, child labor and farm livelihood.
Words mean little in sustainability and other ESG goals. Without openness in failures and successes, the impact of any efforts is greatly reduced. Hall says that the key to managing ESG issues effectively is transparency. Universal uses the services of an outside law firm to conduct an independent benchmark assessment of its various compliance policies.
Scott adds that Universal’s operational and supply chain practices are routinely assessed, and its global operations work together to provide the data and resources used by third-party groups and stakeholders to verify the company’s practices. STP has also been a great resource to highlight the adequacy of Universal’s programs.
“While the tobacco industry continues to effectively work together, we are increasingly utilizing third-party assessments. For example, we are engaging NGOs to conduct Human Rights Impact Assessments to support our social programs,” Scott says. “We will utilize the results from these assessments to refine our programs and further improve our local actions as well as share this feedback with other regions in our supply chain.”
Hall says that, internally, Universal believes its ESG and sustainability goals are aligned with global best practices and meet stakeholder expectations; however, the company is always looking forward. She said that preparing for the unexpected is a necessity to ensure that in 2050, the goals that Universal is creating now will come to fruition.
“It might be costly now, but what’s the cost really going to be like in the future? And how much do we invest in people right now and [in] social programs right now?” Hall asks. “But how far will that investment take us if we don’t also do what we need to as an industry to reduce our climate impacts?”
Universal will continue to adapt to changing expectations and conditions. It is difficult to predict what will change, but if the current climate situation does not improve, Hall says the world will continue to see increasing changes to global weather patterns. Universal intends to be mindful of these changes and will use data and resources to adjust its operational programs and practices as needed.
Hall adds that the company will also build resilience through continued variety in development, agricultural practices and communications with Universal’s grower base. Farmers, Hall says, are the most important link in Universal’s supply chain, and the environment is the major concern for them.
“We will need to monitor the environmental and social situations in our supply chain and continue to have diverse global sourcing to mitigate any future unforeseen issues that may arise. We will take the lessons learned from the past century—especially the last decade—and apply them to the future,” says Hall. “No supply chain will be perfect, but Universal intends to have programs and practices in place that help us manage and mitigate risk to the benefit of our all of our stakeholders and global customers.”
Timothy Donahue is the assistant editor of Tobacco Reporter. Since joining our team in January 2013, he has become not only an expert on the traditional tobacco business but also a well-respected voice in the rapidly developing vapor industry. Tim spends much of his time on the road, attending conferences and interviewing industry representatives. His networking skills, work ethic and quick mind are valuable assets to our diverse audience.

August 1, 2022
Tobacco Auction Season Ends in Zimbabwe

Zimbabwe’s tobacco farmers are making their last deliveries as the tobacco auction season comes to a close.
The auction season, which started in March, closed on Wednesday, with more than 180 million kg of the golden leaf having been sold at an average price of $3.04 per kg.
However, due to the significant volumes that are still being received, the Tobacco Industry and Marketing Board (TIMB), said contract sales will continue until further notice. A mop-up sale will be conducted on August 17.
“This season was okay, although not as good as last year,” said Tafadzwa Mugwagwa, a small-scale farmer from Rusape, a farming region southeast of Harare.
“We experienced erratic rainfall, there was a dry spell and the rains were late. The crop was affected when we applied fertilizers but it picked again when the rains came, that’s why the crop wasn’t auctioned on time,” he told Xinhua, according to CTGN Africa.
While most farmers had already delivered their crops to the auction floors before the end of the selling season, many farmers from Manicaland Province said they are yet to bring all their crops to the market.
“We haven’t brought all the crops to the market, we still have tobacco crops back home because we didn’t finish harvesting on time. We were still curing tobacco in June,” said Dorothy Chigwededza, a tobacco farmer.
July 21, 2022
Zimbabwe to Wrap up Auction Sales

Photo: Taco Tuinstra
Zimbabwe expects to wrap up its tobacco auction season July 20 with slightly better prices than last year, reports Xinhua News Agency, citing the Tobacco Industry and Marketing Board (TIMB).
A flue-cured auction mop-up sale will be conducted on Aug. 17, 2022, and depending on the volume of deliveries, the clean-up sale may be continued for more than one day until all delivered tobacco is sold.
The TIMB added that because of significant volumes that are still being received, contract sales will continue until further notice.
Zimbabwe’s 2022 tobacco auction selling season started March 30, 2022.
Tobacco prices have been slightly firmer this year, due to better leaf quality despite the difficult weather conditions experienced during the season.
The opening price this year was $4.60 per kg, compared with $4.30 last year.
Over the course of the selling season, prices remained firm, averaging above $3 per kg compared to an average of $2.80 per kg last year.
As of July 12, farmers had sold 179.4 million kg of golden leaf at an average price of $3.04 per kg.
The bulk of Zimbabwe’s tobacco leaf is sold through contract floors, as only 5 percent of farmers are able to self-finance tobacco leaf production.
Tobacco is Zimbabwe’s second foreign currency earner after gold, with China and South Africa being the major buyers of the country’s golden leaf.

July 17, 2022
TIMB Vows Crackdown on Side Marketing

Photo: Taco Tuinstra
Zimbabwe’s Tobacco Industry and Marketing Board (TIMB) vowed to crack down on side marketing, noting that five exporters lost $57 million due to the practice in 2021, according to News Day.
Side marketing is a form of contract breach in which contracted tobacco growers sell their produce to third parties in violation of an agreement to sell all their leaf to the party who provided the agricultural inputs.
“This year, 2022, the Tobacco Industry and Marketing Board is on an accelerated drive to end tobacco side-marketing. This criminal practice is responsible for the loss of millions of dollars annually and has the potential to kill the tobacco industry,” the TIMB wrote in an article published on its website.
“TIMB cannot accurately ascertain how much is lost annually since side-marketing is an illegal activity whose statistics cannot be accurately ascertained. However, in 2021 alone five exporters lost US$57 million as a result of several factors and chief among them being side marketing,” it said.
Prior to Zimbabwe’s radical land reform program in the early 2000s, most of the country’s tobacco was produced by commercials farmers who funded their own operations and sold their leaf at auction. Today’s Zimbabwean tobacco production is dominated by smallholder production and contract buying, as most of the new farmers are unable to pre-finance their crops.
In 2021, the TIMB created a special unit, the inspectorate department, to prevent, detect and investigate side marketing and other illegal activities in the tobacco industry.
July 12, 2022
Boka Tobacco Sales Suspended

Photo: Taco Tuinstra
Zimbabwe’s Tobacco Industry Marketing Board (TIMB) has suspended the Boka Tobacco Sales Floor (BSF) from purchasing tobacco from farmers with immediate effect, reports Africa Press.
The regulator acted on July 14 following several reports by growers that they have spent more than a month without receiving payment for their produce.
TIMB Public Affairs Officer Chelesani Moyo said the suspension will be reviewed after the BSF clears all its outstanding dues and provides proof of adequate financial resources.
“We have received several complaints from growers who have not been paid by Boka Tobacco Sales Floor after sales,” she said.
“As a regulator, we have engaged with Boka management to resolve the issue in an amicable manner.
With immediate effect, TIMB has suspended all tobacco purchases by Boka until they have cleared all outstanding payments and provided proof of adequate financial resources.”
July 11, 2022
Zim Tobacco Earnings Surpass Last Year’s

Photo: Taco Tuinstra
Zimbabwean tobacco growers had sold 167 million of tobacco and earned $505 million by the end of June, reports The Herald, citing statistics from the Tobacco Industry and Marketing Board.
By comparison, in the entire 2021 marketing season, farmers pocketed $504 million from the sale of 183 million kg.
While this year’s volumes are lower than in 2021, the higher quality has been commanding better prices, according to experts.
The average price for this year is $3.02 per kg while that of last season was $2.76 per kg. The lion’s share of Zimbabwean tobacco is sold under a contract system. Only 5 percent of farmers are sufficiently solvent to borrow from banks or fund their own operations.
Tobacco is a key crop for Zimbabwe, with exports and supporting activities contributing earnings of more than $1.2 billion annually.
Eager to capture more value from the golden leaf, the government aims to transform the business into a $5 billion industry by 2025. Its Tobacco Value Chain Transformation plan calls for increasing primary production to 300 million kg by 2025 and localizing financing for smallholder farmers, among other initiatives.
July 6, 2022