The average grower price paid so far this season for Zimbabwe’s flue-cured tobacco, at US$2.93 per kg, is the same as it was at the corresponding stage of the previous sales season, according to a story in The Herald relayed by the TMA.
The latest figures from the Tobacco Industry and Marketing Board (TIMB) indicate that growers have sold 166.8 million kg of flue-cured tobacco for US$489.3 million since the 2017 marketing season started in March.
During the corresponding period of last year, growers sold 166.9 million kg of flue-cured tobacco for US$489.4 million.
There is if nothing else a consistency about pricing. The average grower prices for flue-cured tobacco in 2015 and 2016 were about the same, at US$2.94 per kg.
Meanwhile, the TIMB has reported that 10,000 new tobacco growers have registered as part of preparations for the 2017-18 tobacco season.
It reported, too, that seed sales had increased by 93 percent year-on-year.
More than 10,000 new tobacco growers have registered with the Tobacco Industry and Marketing Board (TIMB) as part of preparations for the 2017-18 tobacco season, according to a story in The Herald.
Figures from TIMB indicate that of the 47,299 farmers have registered to grow tobacco during the 2017-18 season, 10,789 are new growers.
As of June 21, the communal sector had accounted for the highest number of the new growers. Six thousand and ninety communal farmers had registered to grow the crop for the first time.
Meanwhile, the TIMB said that seed sales had increased by 93 percent year-on-year. So far, tobacco farmers had bought seed equivalent to 84,308 ha whereas, by the same stage of last year’s preparations, they had bought seed equivalent to 43,473 ha.
The Herald story said that tobacco production had been on the increase ‘for the past years because of an organized marketing system, higher prices and better payments modalities’.
But part of this seems at odds with previous official figures. According to these figures, average flue-cured tobacco prices in 2015 and 2016 were about the same, at US$2.94 per kg, but back in 2008, the average price was US$3.24 per kg.
Zambia’s Minister of Agriculture Dora Siliya has said that the country is likely to forfeit about US$100 million in export earnings due to a drastic reduction that has occurred in tobacco production, according to a story in the Zambia Daily Mail.
It wasn’t clear from the story over what period the US$100 million would be forfeited, but the reduction in production was said to have been from 45 million kg in 2013 to 22 million kg in 2017.
In a speech that was read out on her behalf at the 53rd annual congress of the Tobacco Association of Zambia (TAZ), Siliya said the government remained resolute in its aim to turn the situation around through the promotion and development of policies that would encourage investment in the tobacco sector, which, she added, employed about 450,000 people directly or indirectly country-wide.
She said tobacco remained one of the key strategic crops whose relevance to Zambia’s social and economic growth could not be overemphasized.
“If properly harnessed, we can grow our economy and improve the livelihoods of our brothers and sisters whose lives depend on the proceeds from tobacco,” she said. “It is a well-known fact that tobacco farmers also grow food crops such as maize, soya beans and groundnuts using inputs obtained on loans for tobacco growing.”
Siliya said the government would ensure that the benefits tobacco provided to farmers, value chain stakeholders and the nation at large were not compromised.
The TAZ president Ant Ford said reduced crop financing and increased farmer debt on the local and international front had contributed to the reduction in tobacco production.
Meanwhile, British American Tobacco’s security and brand enforcement manager Milupi Nyambe said that about 500 jobs would be created during the construction phase of the US$25 million BAT factory at the Lusaka South Multi Facility Economic Zone.
Zimbabwe’s government is failing to fund the country’s Tobacco Research Board (TRB) despite its being a key institution in the effort to turn around the fortunes of the country’s economy, according to a story in The News Day.
TRB general manager Dahlia Garwe last week told the Parliamentary Portfolio Committee on Agriculture, which was on tour, that 75 percent of the capital used to run the research institute came from their own commercial activities, mostly from seed production at Kutsaga.
“As a parastatal, we are supposed to get funding from the government, but we have not received anything and TRB has been self-supporting,” Garwe said.
“Government collects an 0.078 percent tobacco levy and it is shared by the Tobacco Industry and Marketing Board (TIMB) and TRB, as well as other interested bodies, which contributes to about 30 percent to 35 percent of our revenue, while the 65 percent to 75 percent shortfall is borne by ourselves.”
Despite this lack of government support, the TRB had managed to produce tobacco seed varieties for the local and export market, and Kutsaga was said to be a very reputable seed research institute internationally.
Garwe said the TRB exported annually one and a half tons of Burley seed and 100 kg of flue-cured seed.
And the TRB currently has about 1,200 ha of seedlings that have been booked by farmers for planting in September. The seedlings are sold for $398 per ha.
The TRB management said it was facing challenges over raw materials that had to be ordered from outside Zimbabwe because, at times, it took six months for them to be delivered.
And it was facing problems because it needed to replace the equipment used in its laboratories. Some of this equipment had been used since the 1950s and when it broke down, it was difficult to get replacements because developed countries were now using modern equipment.
Garwe said other challenges included those associated with land, as well as those associated with illegal settlers, some of whom had invaded TRB space and were vandalizing fences and materials such as plastics used for growing tobacco seeds.
Grower prices for Zimbabwe’s flue-cured tobacco are currently running behind those of last year, according to a Bernama News story relayed by the TMA
The latest data from Zimbabwe’s Tobacco Industry and Marketing Board (TIMB) indicates that, since the 2017 selling season began on March 15, tobacco growers have sold 161 million kg of leaf for US$470 million at an average price of US$2.92 per kg.
This compares with the approximately 157 million kg that was sold for US$461 million at an average price of US$2.94 per kg during the comparable period of last year.
The TIMB public relations and communications manager Isheunesu Moyo said deliveries this year had now declined because the peak-season period was over. The TIMB would shortly announce the closing date for regular sales and a date for mop up sales.
In February, the Zimbabwe Farmers’ Union said it expected flue-cured tobacco prices to be ‘favorable’ this year.
The quality of the crop was said to be excellent and so grower prices, which were said by buyers to be based on quality, should be excellent also.
At that time, growers believed that prices ranging between $4.00 and $5.00 per kg would be favorable.
Such prices, they said, would allow them to break even and to continue producing flue-cured tobacco next season.
In 2015 and 2016, the average price paid to Zimbabwe’s flue-cured tobacco growers was about $2.93 per kg.
The Lilongwe tobacco auction
Meanwhile, in Malawi, good quality leaf has attracted better prices than those of last year.
Since the start of sales on April 10, according to a story in the Maravi Post, relayed by the TMA, growers had sold 65.1 million kg of leaf (Burley and flue-cured) for US$125 million, seven percent up in respect of the volume sold during the corresponding period of last year and 38 percent up in respect of the value of those sales.
The Tobacco Control Commission (TCC) data indicated that the current average price of leaf stands at US$1.91 per kg, up from US$1.47 per kg during the same period of 2016.
Burley tobacco sales earned US$84.4 million from a volume of 50.1 million kg sold at an average price of $1.68 per kg, while flue-cured tobacco was said to have generated US$36 million, presumably at an average price of US$2.40 per kg.
The TCC’s acting CEO attributed the increase in earnings to the quality of the leaf.
Coltabaco S.A.S., Colombia’s biggest tobacco company, is one of hundreds of Colombian businesses that are employing former members of the Revolutionary Armed Forces of Colombia (FARC) in an effort to integrate them into the society against which they previously fought, according to a story by John Otis for Bloomberg News.
When Colombia’s government signed a peace treaty with FARC last fall, it meant more than an end to a 52-year conflict that had left an estimated 220,000 people dead and forced more than five million civilians from their homes. It also meant 7,000 guerrillas would have a chance to disarm and enter the workforce.
Miguel Suárez, a top official at the Reincorporation and Normalization Agency, the government body that receives newly demobilized fighters, was quoted as saying that it was the responsibility of all Colombians to generate opportunities and make the integration policy work.
Coltabaco has spent $15 million on minimarkets and tobacco plantations that employ former guerrillas as well as members of the paramilitary death squads that were the rebels’ archenemies.
“We have to co-operate so that these people don’t return to a life of crime,” says Humberto Mora, Coltabaco’s vice president.
“We are not doing this simply out of altruism. This is also a form of self-protection.
The outlook for global leaf-tobacco market-conditions in fiscal year 2018 are positive, with good early weather patterns supporting better global growing conditions than occurred in the previous year, according to the CEO and president of Alliance One International, Pieter Sikkel, in yesterday reporting results for the company’s fourth-quarter and fiscal year 2017.
Full-year sales were reportedly down by 10.0 percent to $1,714.7 million mainly because of smaller crops in the US, Brazil and Tanzania, primarily caused by El Niño weather conditions, the strong US dollar, changes in product mix and the timing of crops.
Gross profit as a percentage of sales improved to 12.7 percent from 11.9 percent, while gross profit fell by 3.9 percent to $217.0 million due to lower volume and average sales price.
The net loss was $62.9 million, while adjusted EBITDA was $136.6 million or 8.0 percent of sales.
“With our heavy weighting in Brazil, the United States and Tanzania – three crops that were hit hardest by El Niño and had related reductions in crop size and yields and consequently increases in conversion cost – we were significantly impacted in fiscal 2017 by unusual and uncontrollable events, which overshadowed substantial improvements in many origins and targeted improvements to the balance sheet,” said Sikkel…
“As we look to fiscal year 2018, global market conditions are positive with good early weather patterns that support better global growing conditions. These conditions should result in increased crop sizes in Brazil and Argentina.
“We have almost completed buying in Zimbabwe and are approximately 65 percent complete in Brazil.”
Sikkel said the 2016 Brazilian Virginia flue-cured crop was small, at about 410 million kg, but that the good-quality 2017 crop was about 50 percent bigger, at 600 million kg.
The Malawi crop was smaller this year while the US crop was only now in the ground.
“Based on current conditions, our internal forecast anticipates significantly increased full-service and processing volumes, improved sales and pricing, as well as improved adjusted EBITDA for fiscal year 2018 when compared to fiscal 2017,” said Sikkel.
“Sales are anticipated to be in a range of approximately $1,900.0 million to $2,000.0 million with adjusted EBITDA in a range of approximately $165.0-$185.0 million.”
In the wake of World Day Against Child Labor on June 12, some US politicians are attempting to reintroduced the Children Don’t Belong on Tobacco Farms Act, according to a TMA report citing Congressional Documents and Publications.
The act, if passed, would amend the Fair Labor Standards Act effectively to prohibit children under the age of 18 from working on tobacco farms.
One of the sponsors of the bill, US Senator Dick Durbin (D-IL), was quoted as saying that it had been known for decades that tobacco companies had no qualms marketing their deadly products to minors.
But Big Tobacco’s willingness to exploit children for profit didn’t end there, he said. Children as young as 11 or 12 had been found risking nicotine poisoning and long-term health consequences from handling tobacco plants.
US law prohibited children under the age of 18 from buying cigarettes, but children as young as 12 were permitted to work in tobacco fields, where handling tobacco plants could lead to nicotine poisoning.
Tobacco companies and growers’ associations in the US recently adopted voluntary standards to limit child labor in tobacco work, but this bill would codify the implicit agreement that a tobacco farm is no place for children to work.
The Indonesian government is expected to require local tobacco manufacturers to buy domestic leaf tobacco as a prerequisite for importing tobacco, according to an Antara News Agency story.
The Trade Ministry’s Director General for International Trade Oke Nurwan said in Jakarta yesterday that the government was acting in the light of a decline in farmer selling prices on the domestic market.
“[Importers] must use domestic tobacco, Oke said. “If they fail to buy even a single leaf of tobacco, then they cannot import.”
The Antara story said the ministry had prepared a ministerial regulation as the legal basis for controlling the import of tobacco, and that the regulation was expected to be ‘completed’ this year.
“We already finished it, and we will discuss it with other stakeholders,” Oke was quoted as saying.
Meanwhile, the chairman of the Indonesian Tobacco Society Alliance Budidoyo told Antara that he welcomed the government’s plan to protect tobacco growers’ interests.
“It is the manufacturers who know the amount of raw materials they need; thus, local tobacco should be absorbed first before they import it to cover the shortage,” Budidoyo said.
He added that quality had become one reason for the low demand for local tobacco, but that this problem should be overcome through a ‘partnership’ between farmers and cigarette producers.
Flue-cured-tobacco grower-prices are down from where they were last year on Zimbabwe’s contract and auction markets, according to a story in The Herald relayed by the TMA.
The Tobacco Industry and Marketing Board said recently that 144 million kg of flue-cured tobacco had been sold so far this selling season for US$416 million.
This compares with the 127 million kg that had been sold for US$370 million during the equivalent period of last year.
So the average price was down from US$2.91 per kg in 2016 to US$2.89 per kg this year.
According to the TIMB, the contract floors had accounted for 117 million kg of flue-cured tobacco having been sold for US$338 million, or US$2.89 per kg, so far this season.
The auction floors, meanwhile, had reportedly accounted for the sale of 27 million kg for US$78 million, also at an average of $2.89.
Meanwhile, an opinion piece in the Zimbabwe Herald that welcomed the success of the country’s farmers in producing what was expected to be another flue-cured crop in excess of 200 million kg, also sounded a warning.
‘But as the country celebrates this remarkable achievement by our tobacco farmers, there is a greater need to strike a sustainable balance between the country’s economic interests and those of the environment,’ the piece said.
‘A majority of the farmers who have taken up tobacco growing as a business rely on firewood to cure the crop, but at a huge cost to the environment. They don’t have woodlots for this purpose. They are decimating indigenous trees at a time when the world is concerned about the environment and climate change, and its impact on our future.
‘This is clearly not sustainable as it is very difficult to replace the precious indigenous trees which face the prospect of being wiped out if deliberate efforts are not taken to control their use.’
