Category: Leaf

Mixed Sentiments as Markets Open in Africa

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Farmers earned more than $243,500 from the sale of 94,453 kg of flue-cured tobacco on the first day of Zimbabwe’s 2022 marketing season, reports The Herald. This reflects a 40.54 percent increase over previous year when growers earned $173,256 from 92,106 kg on the first day of sales.
On the first day of the 2022 marketing season the average price was $2.58 per kg, compared with $1.88 on the first day of 2021, according to the Tobacco Industry and Marketing Board (TIMB).
TIMB Chief Execute Meanwell Gudu said prices are expected to be firm this year due to reduced volumes.
“Brazil is likely to be 80 million kg short of their usual production level because of drought. This creates less competition for us. India has fixed its 2021-2022 production of flue-cured Virginia up to 270 million kg, against 236 million kg in the previous year,” he 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. This is likely to be experienced in the medium to filler grades.”
Farmers in Malawi, meanwhile, were dissapointed with their earnings, with some asking President Lazarus Chakwera to intervene, according to The Nyasa Times.
On April 1, the highest price offered on the auction floor was $1.75 per kg and the highest offer on the contract market was $2.30.
Chakwera assured the farmers that the government would intervene. However, he also advised them to grade their tobacco properly to satisfy buyers’ requirement.
According to the Tobacco Control Commission there were more than 1,000 bales on the Lilongwe Auction Floors on the first day of the 2022 tobacco marketing season.
April 1, 2022
Zimbabwe: Farmers Reject Local Currency

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Tobacco farmers in Zimbabwe have requested to receive 100 percent of their proceeds in U.S. dollars as opposed to partially in foreign currency and partially in local currency, reports The Independent. The farmers cited input costs rising due to high inflation and exchange rate volatilities.
The Reserve Bank of Zimbabwe said that tobacco farmers would be paid 75 percent of their sales proceeds in foreign currency. The remaining 25 percent would be paid in the local currency, converted at the prevailing auction exchange rate on the day of sale.
“Expectations are that we retain 100 percent United States dollars (USD). Input costs were very high. Everything was paid in USD, including labor,” Commercial Farmers Union of Zimbabwe President Shadreck Makombe said.
“Contractors need to improve funding per hectare. The dry spell has affected most late crops, and most farmers will have challenges in repaying loans.”
The Zimbabwe Tobacco Association (ZTA) said in its latest newsletter that the forex retention level of 75 percent “will sadly negate all the anticipated positives for the season, hence diversification and identification of alternate crops to tobacco remains key for all growers.”
“Demand for Zimbabwe’s flavor tobacco remains very high. However, it is poor, inconsistent monetary policies that are hurting the local industry and impeding its growth,” the ZTA said.
“We have had a situation last year where contractors failed to pay farmers,” said George Seremwe, president of the ZTA. “To date, some of the farmers have not been paid. We do not expect that situation to happen. We don’t expect the same contractors to be buying tobacco this season until they fulfill last year’s obligations.”
“We expect the grading and pricing system to be uniform. We cannot have one contractor paying one grade higher than the other. We want that to be addressed as well.”
The marketing season officially begins on March 30.
March 28, 2022
Kenya: Push to End Tobacco Farming

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Kenya’s Ministry of Health along with the World Health Organization and the U.N. Food and Agriculture Organization (FAO) launched an initiative to end tobacco farming in the country, reports Xinhuanet.
The initiative is called the Tobacco-Free Farms project, and it will support farmers’ shift to alternative crops, such as legumes, that are less harmful to human health and the environment. It was launched in Migori, which is located in western Kenya.
The goal is a gradual phasing out of tobacco farming at the smallholder level, replacing tobacco with crops that will boost food security and help achieve health-related sustainable development goals.
According to Mutahi Kagwe, cabinet secretary in the Ministry of Health, tobacco has worsened the burden of respiratory diseases in the country, harmed vital ecosystems like watersheds, escalated gender inequality, rural poverty, deforestation and soil degradation.
Ministry of Health data shows that more than 6,000 Kenyans die annually from tobacco-related diseases, and 2.7 million adults and 220,000 children use tobacco products daily.
March 24, 2022
Zimbabwe: Contractors Succumb to Competition

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Nine Zimbabwean tobacco contractors have collapsed in the past year due to cutthroat competition, according to the Tobacco Industry and Marketing Board (TIMB).
“There is a lot of competition in the contracting space in terms of pricing,” TIMB CEO Meanwell Gudu told The Zimbabwe Independent. “If a contractor does not pay the correct price, that contractor will not get tobacco. Last year, we had 42 companies, and now, we have 33. Some of them have fallen by the wayside because they could not compete.”
Once characterized by auction sales, Zimbabwe’s tobacco trade is now dominated by contract growing, with up to 96 percent of leaf tobacco being produced under agreements between buyers and farmers.
More than half of the $748 million earned by Zimbabwe’s golden leaf farmers in 2020 was pocketed by contractors, mainly big foreign corporations that repatriate the hard currency back to their countries, according to critics.
Last week, Gudu also said the TIMB was set to crack the whip on tobacco “side marketers”—buyers who illegally purchase leaf from farmers contracted with other organizations—with stiff penalties that will see offenders serving up to six month jail terms.
March 23, 2022
Zimbabwe Trade Gears up for Selling Season

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Zimbabwe’s tobacco auctions are set to open on March 30, with all three auction floors prepared to follow Covid-19 protocols, reports All Africa.
Majority of sales will take place through contract floors while auction floors will cover 5 percent of sales.
Prices are expected to be firm. Due to the rainfall, output of the crop is expected to be down 15 percent, according to New Zimbabwe.
Tobacco leaf has a capacity of earning $15 billion per year for Zimbabwe, according to Bulawayo 24 News, but the country is currently only bringing in $900 million.
Tobacco Industry and Marketing Board CEO Meanwell Gudu stated that there’s a need to invest in value addition for the industry and country to fully benefit from the crop and that sustainability issues could affect the markets if not adhered to.
March 22, 2022
Indian Growers Hopeful for Better Prices

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As tobacco auctions began in Prakasam and Nellore, Indian tobacco farmers are hoping to see better than average prices for their leaf during the 2021–2022 season, reports The Hindu.
Farmers had a hard time marketing leaf the past two years due to lower demand caused by the economic crisis and uncertainties due to Covid-19.
“We hope to make a kill[ing] this year, thanks to the lifting of pandemic restrictions. There are no logistic problems that were witnessed in the last two years when Covid cases were at peak,” said a group of farmers waiting for buyers at the Ongole I auction platform. Exporters have not entered the market yet due to the lack of confirmed orders from their counterparts overseas.
“The exporters are expected to enter the market during next week when the bales put for auction will be stepped up from the present 200 to 300 in each auction platform to 500 to 600,” SLS Regional Manager D. Venugopal assured the farmers, who were worried over nonparticipation in the auctions by all the registered traders.
March 18, 2022
Zimbabwe to Crack Down on Side Marketing

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Zimbabwe’s Tobacco Industry and Marketing Board (TIMB) is cracking down on the side marketing of tobacco leaf during the 2022 selling season, according to The Sunday Mail.
“We have engaged relevant authorities to come up with a Statutory Instrument (SI) on side marketing,” said Saviour Muvirimi, TIMB head of inspectorate. “We also recruited informers in all farming areas in order to receive information on the presence of illegal buyers in communities.”
Police would be brought in to arrest those caught side marketing, according to Muvirimi. “TIMB will be making constant radar sweeps on frequency of sales on grower numbers with the view to identify grower numbers perpetuating side marketing. Respective individuals will be called to explain these sales, and if we are not convinced, we will block and suspend the grower numbers and refer such criminal elements to the Zimbabwe Republic Police for arrest.”
“Farmers who side market tobacco actually play around statistics by adjusting estimates,” he said, adding that the police department would be strict on addressing adjustment of estimates by farmers.
“TIMB will not hesitate to suspend sales and revoke licenses from contractors involved in side marketing. (We will) increase our surveillance patrols in farming communities in order to identify makorokoza’s (dealers) and errant licensed contractors engaging themselves in side marketing,” Muvirimi said.
March 15, 2022
Zimbabwe: Good Quality Leaf Expected

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Zimbabwe is expecting good quality tobacco leaf this year despite an expected reduction in output. The quality should attract higher prices, according to xinhuanet.com.
The anticipated reduced volumes are likely to push demand and selling price up, according to Tobacco Industry and Marketing Board Chief Executive Meanwell Gudu.
Tobacco hectarage for the season declined by 11 percent, according to results of the first-round crop and livestock survey for 2021–2022.
“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 upward. This is likely to be experienced in the medium to filler grades,” Gudu said. Top-quality grades for premium brands are likely to remain unchanged, he said. The current price for top-quality grades ranges from $3.50 to $5.40 per kg.
“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 upward,” Gudu said.
“We expect top-quality grades. The irrigated crop is medium[-bodied] to heavy-bodied, predominantly lemon in color and reflecting a fair to good quality.
“The main dryland crop is medium-bodied in the commercial sector whilst being light[-bodied] to medium-bodied in the smallholder sector. The late dryland crop has poor stand due to prolonged dry spell, which was experienced post-planting time toward the end of December.”
“Brazil is likely to be 80 million kg short of their usual production level because of drought. This creates less competition for us,” Gudu 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,” he added.
“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,” Gudu said.
Zimbabwe sold 186.6 million kg of tobacco leaf valued at $515.9 million during the 2021 marketing season, up 16.8 percent in volume and 31 percent in value over 2020 sales.
March 11, 2022
Zimbabwe: New Tobacco Floor

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Ethical Leaf Tobacco has opened an auction floor in Mvurwi, according to allAfrica. Farmers in Mvurwi used to travel to Bindura for auction.
Patience Mushore-Chizodza, public relations and marketing manager for Ethical Leaf Tobacco, said the company expects to buy 5 million kg of tobacco, up from 4.6 million kg last year.
“We have adopted a paradigm shift and embraced social marketing through various strategies to empower smallholder tobacco farmers,” Mushore-Chizodza said. “This year, the company has embarked on a plough back initiative in all our four tobacco farming regions by recognizing the best farmers who have shown vigilance and best farming practices.”
Wonder Matizamhuka, Tobacco Industry and Marketing Board technical officer for Mvurwi, warned farmers against side marketing as the start of the season gets closer. “As tobacco floors open on March 31, sell your crop to the company that contracted you,” he said. “Side marketing is a crime, and this year, we will be arresting people.
“Don’t look for middlemen at tobacco floors; a good crop sells itself. Unscrupulous people moving in farms buying your crop are ripping you off. Go with your tobacco to the floors.”
Zimbabwe decentralized tobacco marketing to minimize movements in the wake of the coronavirus pandemic.
March 4, 2022
Tobacco Commission Malawi Returns to Profit

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The Tobacco Commission of Malawi posted a profit of MKW325 million ($404,374) in 2021, allowing the parastatal to recover from previous financial losses, reports The Nyasa Times.
In 2019–2020, the Tobacco Commission posted revenue of MKW3.6 billion but recorded a loss of MKW81 million.
Tobacco Commission spokesperson Telephorus Chigwenembe attributed the improvement to reforms implemented last year. “The improved performance has come about because of sound financial management measures that the institution put in place to avoid the loss that was recorded in 2020,” he told The Nyasa Times.
Between March 2021 and February 2022, the Tobacco Commission said it strengthened its regulatory framework, enhanced tobacco production and marketing integrity, improved stakeholder understanding of the commission’s mandate and roles, improved financial sustainability and bolstered “institutional capacity.”
The Tobacco Commission generates its revenues from statutory levies.
February 22, 2022