Cut Rag Processor’s factory in Harare, is nearing completion, reports The Sunday Mail. The plant will process cut rag tobacco and manufacture cigarettes for domestic and export markets.
According to Cut Rag Processors Managing Director Nyasha Chinhara, the project, which will triple the company’s current production is about 85 percent finished. Construction is almost complete and technicians have been installing production machinery and ancillary services.
The company expects to commence production of cut rag tobacco before the end of 2024.
“With this facility providing both cut rag processing and cigarette manufacturing, coupled with the increased installed production capacity, there shall be an increase in value addition of Zimbabwean tobacco products,” Chinhara told The Sunday Mail.
“The sustainable growing, processing and manufacturing of tobacco products in Zimbabwe shall play a key role in Zimbabwean tobacco’s competitiveness in future.”
Pyxus International reported sales of $634.9 million for the first quarter of 2025, up 33.1 percent from the comparable 2024 quarter. Operating income grew to $40.5 million, and net income was $4.6 million.
Pieter Sikkel
“We are pleased with our strong first-quarter results, which are underscored by gains in revenue and profitability, as well as the significant growth of shipments for the period,” said Pyxus President and CEO Pieter Sikkel in a statement.
“Earlier leaf purchasing compared to the prior year remained a theme in the first quarter, particularly in South America and Africa. This trend was driven by a highly competitive market environment, which was influenced by reduced crop sizes due to El Nino and sustained, strong demand.
“Our crop purchases in South America were completed early in the quarter, and we are nearing completion of our buying activities across Africa. We are pleased with our teams’ ability to navigate the competitive market to successfully secure leaf volumes on an expedited crop purchasing schedule.
“As mentioned last quarter, we do expect some margin pressure in coming quarters, particularly related to shipments out of South America. This is mainly due to impacts on this crop from El Nino on volume and margin, as well as shipping container shortages, primarily from Asia.”
For fiscal year 2025, Pyxus continues to expect sales in the range of $2.1 billion to $2.3 billion and adjusted EBITDA in the range of $165 million to $185 million.
Zimbabwe is poised to plant a record area of tobacco for the 2024–2025 growing season, reports The Herald.
As of Aug. 1, growers had purchased more than 1 million grams of seed with potential to cover 201,036 hectares, according to the Kutsaga Tobacco Research Board. By the same time last year, they had bought only 831,000 grams with the capacity to plant 164,200 hectares.
Zimbabwe Tobacco Growers Association chairman George Seremwe said the likelihood is high that the country will eclipse both the area record of 146,000 hectares, set in 2019, and the output record of 296 million kg, established in 2023.
“This could be a record-breaking year encouraged by last season’s good prices and the absence of alternative crops paying better than the golden leaf,” he was quoted as saying.
Tobacco Farmers Union Trust Vice President Edward Dune noted that seed sales were a reliable index for hectarage estimations. “Given the tobacco pricing matrix over the years, coupled with the positive effects of the forecast La Nina weather, farmers will have no choice but do anything possible to get good quality leaf that will fetch high prices,” he said.
Malawi has earned $295.31 million from tobacco sales to date, 40 percent more than it collected during the 2023 selling season, reports The Nyasa Times. The country sold $132.8 million kg of tobacco at an average price of $2.95.
Despite the improved earnings, the income is enough to keep the southern African nation’s economy running for just over 1.5 months, according to analysts. Malawi has long struggled with a balance-of-payment crisis.
TAMA Farmers Trust President Abiel Kalima Banda described this year’s tobacco selling season as successful, noting that auction prices had increased for the first time in up to six years. The extra income, he suggested, would motivate farmers to stick with the crop.
The Tobacco Commission has licensed 60.2 million kg of leaf for the next growing season, almost triple the volumes licensed at the same time last year.
The regulator aims to increase annual tobacco production to 200 million kg by 2028, noting that demand for Malawi’s burley tobacco has in recent years outstripped supply.
Not all stakeholders are keen for Malawi to increase tobacco production, however. In late 2023, the nation ratified the World Health Organization Framework Convention on Tobacco Control, which among other things encourages signatories to replace tobacco with alternative crops.
Malawi’s economy relies heavily on tobacco exports. Various initiatives are underway to diversify the nation’s economy, including projects sponsored by tobacco companies trying to develop supplemental income streams as global demand for cigarettes stagnates.
Tobacco remains a scarce commodity. Universal Leaf estimates world leaf production, excluding China, at 4.66 billion green kg in 2023, down from 4.86 billion kg in 2022. This year, the merchant expects global production to rise to 5.2 billion kg, but there are issues that might alter this forecast.
“The undersupply of leaf tobacco remains the key global trend,” says Ivan Genov, manager of tobacco industry analysis at the International Tobacco Growers’ Association (ITGA). “Leading tobacco purchasing companies continue to report very low levels of uncommitted stock. In general, sales go very fast. In Brazil, the flue-cured Virginia (FCV) crop was almost completely sold by the end of April, which is unusual (see “The Great Scramble,” Tobacco Reporter, May 2024). In Zimbabwe, export figures from early May are up significantly from last year. Burley is also in short supply.
“The market in Malawi, one of the key countries for the variety, opened on April 15. In the U.S., our members see strong short-term opportunities in burley. They also believe that the supply shortage will recover, but more slowly than in the past, which also means that prices should improve to meet these market shortages.”
At least the rapid rise in production cost that has been plaguing growers in recent years appears to be leveling off in some origins. While costs remain a concern, Genov has seen positive developments in key markets. “For example, in Brazil, where cost of production for FCV and burley was going upward of 30 percent year-on-year, for the current crop that is nearly fully realized on the market, the increase is limited to single digits,” he observes. “This goes in line with global inflationary and commodity price dynamics, where it seems we are now past the highest points. This being said, the pressure on growers remains. Even though such drastic increases are tamed, the new price levels remain at the higher end.”
At the same time, tobacco prices in most of the leading markets have gone up in 2023–2024. “Growers are positive about this dynamic, but their margins remain thin,” says Genov. “Additional efforts need to be made to increase these margins. ITGA is currently undertaking a big research effort in collecting information from influential tobacco-growing regions in finding the so-called game changers that could increase farmer productivity and improve the long-term prospects of growers.”
More than two years into Russia’s invasion of Ukraine, other factors worrying farmers in 2023 have also eased, according to Genov. “In the early stages of the conflict, there was a real uncertainty related to agrifood commodities, especially in Africa,” he says. “The continent has a big exposure to some essential products coming from Russia and Ukraine. However, our associations in Africa have recently reported that fertilizer supply has immensely improved, and pricing has stabilized, with some reduction. Navigating complicated geopolitical pressures in the future will likely keep the situation vulnerable.”
China Boosts Production
Chinese tobacco production is believed to be approaching 2 billion kg. | Photo: Jingmei Zhang
Global FCV production, excluding China, rose to an estimated 1.92 billion kg in 2023, up from 1.64 billion kg in 2022, according to Universal Leaf’s data. For 2024, the company expects a slight drop to an estimated 1.88 billion kg.
The world’s burley production stood at an estimated 443 million kg in 2023, up from 354 million kg one year previously. Production is anticipated to increase to an estimated 447 million kg in 2024.
Oriental production declined to 109 million kg in 2023 from 116 million kg in 2022. The volume is expected to decrease even further to 104 million kg this year.
Dark air-cured production rose from 115 million kg in 2022 to an estimated 119 kg in 2023. However, Universal expects production to fall to 109 million kg in 2024.
With an FCV production of 1.97 billion kg in 2023, rising to an estimated 1,971 kg in 2024, according to the ITGA, China remains the leading tobacco-cultivating country by far. In addition to its huge FCV production, the country in 2023 grew 9 million kg of burley, anticipated to increase to 10 million tons this year.
“China is a very restrictive market,” says Genov. “Nevertheless, available data shows that production is growing—approaching 2,000 million kg. In FCV, this represents approximately half of the global market. What is more interesting is that after Covid-19, China is continuously growing tobacco imports. In 2023, the country imported over 180 million kg of tobacco. China also resumed buying U.S. FCV, which has an impact on local growers. Chinese demand is likely to remain strong based on local consumption patterns.”
The U.S.-China trade war heavily impacted the flue-cured tobacco leaf trade. In 2019 and 2020, China imported 100,000 kg and 0 kg of FCV, respectively, from the U.S., according to TMA’s Tobacco Trade Barometer. From 2021, imports began to rise back to pre-trade war levels. By 2023, Chinese FCV imports from the U.S. reached almost 25 million kg.
Adverse Weather
In the most recent season, key leaf-growing markets fared very differently in terms of leaf volume, quality and prices. Brazil’s 2023–2024 crop will be at least 14 percent smaller than the country’s previous harvest, Genov points out. “The initial estimate of Afubra, the Brazilian tobacco growers’ association, was for approximately 522 million kg—475 million kg of FCV and 39 million kg of burley,” he says. “All tobacco-growing areas in South Brazil were severely affected by adverse weather conditions. So, the final quantities produced are likely to be even lower—around 460 [million kg] to 470 million kg of FCV and 35 million kg of burley.”
Brazil’s reduced volumes were a result of excessive rains, induced by the El Nino weather phenomenon, during the growing season. Adverse climate conditions are likely to impact next year’s harvest as well. In late April and early May, Brazil’s principal tobacco-growing state, Rio Grande do Sul, suffered its worst flooding in 80 years, temporarily bringing tobacco operations to a halt and causing some farmers to lose seedlings.
Zimbabwe, by contrast, suffered from El Nino-induced drought. “As a result, a state of disaster was declared in early April,” says Genov. “Last year’s record FCV production volume of 297 million kg is unlikely to be matched, with a level of around 250 million kg much more likely. Last year’s record crop was also marked by a reduction in the average price for tobacco, particularly bad news for small-scale growers that are faced with issues, including a high level of indebtedness. This year, pricing is better—showing a double-digit increase compared to last year.”
In the U.S., the season was stable, observes Genov. According to the ITGA, the country produced 142.9 million kg of FCV, 29.3 million kg of burley, 16.1 million kg of fire-cured and 5.5 million kg of dark air-cured tobacco as well as 2.3 million kg of cigar filler in 2023. “Market conditions will continue to weaken for dark-fired tobacco due to the growing pouch market,” predicts Genov. “Stronger short-term opportunities exist for burley. Separately, U.S. growers expect to be positioned well to benefit from company ESG activities as their tobacco is regarded as very high quality and does not suffer from sustainability-related issues present in other markets. However, alternative crops are offering greater opportunities for growers, and the continuation of tobacco farming is a real issue.”
African Upswing
Malawi, the world’s leading producer of burley, sold 120.5 million kg of leaf tobacco in 2023 against 85 million in the previous year. | Photo: Taco Tuinstra
Malawi, the world’s leading producer of burley, sold 120.5 million kg of leaf tobacco in 2023 against 85 million in the previous year. Burley accounted for 103 million kg of this figure. “Average pricing was up to $2.35 per kilogram compared to $2.14 per kilogram in the year before,” says Genov. “Big global demand for burley against a short supply in recent years pushed up demand and therefore competition on the market. Entry of two more buying companies further increased the competition. The recently started 2024 season so far offers better prices to growers. Ten days after the start of sales, average burley prices exceed $2.60 per kilogram.”
A remarkable jump in leaf production took place in Tanzania, where yield was increased from around 60 million kg in 2022 to 122 million kg in 2023. As of December 2022, Tanzania had earned $316 million from tobacco exports. According to local press reports, the country aims to sell $400 million this season. Tanzania’s recent production figures make it Africa’s second-largest producer after Zimbabwe and ahead of Malawi, Mozambique (65.8 million kg), Zambia (44 million kg; also see “Brand Zambia,” page 30) and Uganda (13 million kg).
“The importance of Tanzania in the global leaf market is growing significantly,” Genov explains. “The country’s minister of agriculture, Husein Bashe, recently noted that for the 2024–2025 season, they are optimistic to reach 200 million kg against the target of 300 million kg by 2025–2026. He targets the No. 1 producer place in Africa, so Tanzania’s ambitions are now well known.”
And it’s not just leaf traders who are keeping an eye on Tanzania. In February 2024, Philip Morris International announced that it would build a cigarette factory in Morogoro and buy at least 12 million kg of Tanzanian tobacco annually over the next five years. The company has not purchased leaf from Tanzania since 2017. Operations are expected to commence toward the end of this year.
Genov emphasizes significance of growers to the supply chain and industry. “Often neglected, their role remains absolutely pivotal,” he says. “ITGA is working hard to defend the legitimate interests of tobacco growers, and we are actively supporting them to ensure the long-term survival of rural communities around the world.”
One example of ITGA’s efforts was to prepare its members for the EU Corporate Sustainability Due Diligence Directive (see “Diluted Diligence,” Tobacco Reporter, June 2024), which was adopted by the European Parliament on April 24. “The directive will require the whole tobacco supply chain to address human rights and environmental concerns,” says Genov. “We conducted a survey among participants in our last year’s annual meeting focusing on the directive. A lot of them were worried about the necessary transformation that would lead to more pressure on them. Nevertheless, half of the participants have already taken proactive measures in preparation for it while only a quarter have not, showing that more adjustments will have to be made. Undoubtedly, making the entire process more transparent will have positive effects.”
Stefanie Rossel is Tobacco Reporter’s editorial contributor. An experienced trade journalist, she combines sharp reporting skills with in-depth knowledge of the tobacco and vapor industries. Prior to joining Tobacco Reporter, Stefanie was editor-in-chief at Tobacco Journal International, where she worked for a decade. Fluent in English, German and French, Stefanie covers tobacco news around the world. She is based in Germany.
Brazil exported 195.26 million kg of leaf tobacco from January to June, down 8.82 percent from the same period in 2023, according to MDIC/ComexStat. The value, however, increased by 7.56 percent to $1.24 billion. China, Belgium, the United States, Indonesia and Egypt were the top destinations for Brazilian tobacco during the period.
In 2023, tobacco represented 11 percent of Rio Grande do Sul’s exports, according to SindiTabaco, which expects this share to increase. “The expectation is that we are going to export a smaller volume, due to the smaller size of the crop, but with revenue increasing by 10 percent to 15 percent in dollar terms,” said SindiTabaco President Iro Schuenke.
Iro Schuenke
The Brazilian tobacco industry, which is concentrated in the country’s three southernmost states, is still recovering from devastating floods in May.
A survey carried out by SindiTabaco and its associate companies revealed that the storms hit 75 tobacco-producing municipalities and 1,929 farmers, with losses estimated to amount to BRL95 million.
According to Schuenke, the impact of the floods was somewhat mitigated by the high per-kilo prices this growing season (see “The Great Scramble”) and the fact that most farmers had already delivered their tobacco to the dealers due to the small crop this year.
“We regret the one-off losses of some municipalities and tobacco farmers, but we are confident that the size of the tobacco crop in the most affected areas shall remain close to the estimated projections for the 2024/2025 growing season,” he said in a statement.
KT&G volunteers assisted Boeun County tobacco farmers with their tobacco harvest on July 19.
Farmers in South Korea have been facing labor shortages due to the ongoing decline in rural populations and aging demographics. The situation is particularly critical during the tobacco harvest season in July and August, which is labor intensive and largely unmechanized.
To alleviate the burden, KT&G volunteers have been visiting tobacco farms annually since 2007. After assisting with transplanting tobacco seedlings in the spring, the employees also contribute to the tobacco leaf harvest.
Additionally, KT&G has been carrying out welfare improvement projects for tobacco farmers. In June, the company provided KRW420 million ($303,829.67) to support tobacco farmers with health checkup costs, children’s education fees and fuel-saving curing devices. Since 2013, the company has provided KRW4.27 billion, benefiting 15,212 farmers.
“The company annually conducts employee volunteer activities to support stable farming operations for tobacco farmers facing labor shortages,” said Jung-Ho Kim, head of KT&G’s SCM division, in a statement. “We will continue our support for mutual prosperity with farmers.”
Zimbabwe’s Tobacco Industry and Marketing Board and Boost Africa have jointly introduced a centralized curing business system for smallholder tobacco farmers, reports News Day.
According to Boost Africa representative Henry Dike, the system will not only reduce production cost and efficiency but also boost sustainability.
Smallholders in Zimbabwe have traditionally cured their tobacco individually. Most use wood as a fuel source, which has led to concerns about deforestation.
“By providing them with the necessary resources and training, we are not just improving their yield but also elevating their entire farming operation to a commercial level,” said Dike.
“It’s not just about financial gains; it’s about creating a sustainable, scalable farming practice that can be replicated across the country,” he added.
Tafadzwa Mukarakate, agronomist and head of the Zimbabwe Farmers’ Union, said the project was critical in ensuring that farmers have the means to reinvest in their operations.
“The success of this project is a clear indication that with the right support, smallholder farmers can achieve commercial success,” he said.
African Extracts of Zimbabwe is looking to process tobacco scrap into fertilizer and agricultural chemicals, reports The Herald.
According to African Extracts CEO Sunny Singh, the company extracts crude nicotine from the tobacco waste. The crude nicotine is then used in multiple industries with further processing.
“By doing so using our cutting-edge technology, we turn tobacco waste into a valuable resource and in turn boost earnings for farmers, as they will be able to derive more value from the entirety of the tobacco crop rather than just from the marketable leaf,” said Singh.
Extracting the nicotine allows for the waste to be used more safely as manure or converted to organic fertilizer, according to African Extracts. “We understand the negative impact and complexities disposing such waste has on the soil and environment,” said Singh.
“Through further processing, we will produce organic soil conditioners, pesticides and other agricultural inputs contributing to sustainable agricultural practices.”
The million-dollar project is set to begin production in August.
“We could see the challenges being faced by the tobacco processers in disposing their waste in an eco-friendly manner therefore our technology and production processes facilitates for a nonhazardous way of disposing tobacco waste,” said Singh.
“There are opportunities to increase the level of value addition and beneficiation of tobacco,” said Emmanuel Matsvaire, Tobacco Industry and Marketing Board CEO, highlighting the government’s recent attention to value addition.
Farmers in Zimbabwe have earned $1.3 million so far after selling 92 percent of the projected shisha crop size this marketing season, reports The Herald. The season is coming to a close with only one outstanding sale before the 2024 marketing season ends.
Yield projections dropped from 800,000 kg to 500,000 kg due to the El Nino weather pattern, which caused drought and negatively affected the 2023/2024 agricultural season.
Recent Tobacco Industry and Marketing Board statistics showed that growers sold 387,559 kg of shisha leaf valued at $1.27 million. The average price dropped from $3.44 per kilogram to $3.28 per kilogram. The highest price of the season was $5.70 per kilogram, and the lowest price of the season was $0.75 per kilogram. There has been an 8 percent rejection rate.
“We are left with only one sale to clear all the produced shisha crop,” said Tinashe Mukadzambo, CEO of Cavendish Lloyd, the country’s sole shisha buyer.
The 2024/2025 season is expected to be more lucrative due to forecast La Nina weather patterns. Cavendish Lloyd has begun contracting farmers.
“Growers should have enough arable land for crop rotations, preferably sand to sandy loam soils with priority given to those with a good source of water and can irrigate,” said Mukadzambo. “A risk assessment will be done to check on whether the grower has any outstanding loans from their previous tobacco seasons.”
Shisha production increased 270 percent from 110 hectares during the 2022/2023 season to 407 hectares in the 2023/2024 season. Production is expected to increase to 500 hectares in the 2024/2025 season.
