Zimbabwe - Tobacco Reporter

Mixed Sentiments as Markets Open in Africa

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

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

Zimbabwe: Contractors Succumb to Competition

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

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

Zimbabwe to Crack Down on Side Marketing

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

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

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

Zimbabwe Marketing Dates Announced

The Zimbabwe Tobacco Industry and Marketing Board (TIMB) has announced the opening dates for auction and contract floors for the 2022 season, according to ZBC News.

“The TIMB wishes to inform all stakeholders that the 2022 tobacco marketing season kicks off on the 30th of March 2022 for auction floors and Thursday, the 31st of March for contract floors,” said Chelisani Moyo, spokesperson for the TIMB.

“We registered 122,000 farmers for this season compared to 145,000 last season, mainly due to the fact that TIMB has come up with a framework to bring sanity in the industry to ensure that proper farmers are the ones who are registered,” he added.

The number of registered Class A buyers has increased to 33 from 28 in 2021.

Over the past two years, sales have been conducted under strict Covid-19 protocols, and the TIMB is currently conducting crop assessment with the parastatal set to issue the sales guidelines before the marketing season starts.

February 22, 2022

Voedsel To Set Up Leaf-Processing Plant

Voedsel Tobacco International will set up a $6 million leaf-processing plant in Rusape, Zimbabwe, this year, reports Bulls n Bears.

“We have purchased the material to set up a tobacco-processing plant for the value addition of tobacco,” said Voedsel’s commercial director, Tennyson Hwandi.

“This process involves beneficiating the tobacco from its state into a semi-finished product. It also means that there is going to be more earnings for the farmers as we grow the value chain. As an indigenous company, we are proud to have achieved this as this creates new jobs.”

Hwandi said the plant is expected to start operations this year.

Voedsel’s investment is in line with the government’s Tobacco Transformation Plan, which aims to grow the Zimbabwean tobacco industry to $5 billion by 2023 by increasing the level of value-added tobacco to 30 percent from the current 2 percent.

February 17, 2022

Zimbabwe Licenses Buyers for 2022 Season

Zimbabwe’s Tobacco Industry and Marketing Board (TIMB) has licensed 33 buyers and 31 contractors for the 2022 tobacco marketing season, reports The Herald.

TIMB statistics indicate that 122,769 growers have registered for the 2022 growing season compared with 145,625 last year.

According to Tobacco Association of Zimbabwe President George Seremwe, most farmers with an irrigated crop have finished reaping, and some have started grading their leaf.

“The dry land tobacco was planted a bit late, so most of the farmers are on their first reaping,” he added. “Most of the small-scale tobacco farmers grow dry land tobacco, which is still in the field.”

The Zimbabwe Tobacco Association expects good yield despite adverse weather during the growing season. “The crop has grown out well and clean in many areas and naturally in areas that received large amounts of rain,” said ZTA Chief Executive Rodney Ambrose.

Ambrose did, however, express concern over electricity supply. “Extensive load shedding coupled with faults has seen growers go days and weeks without power,” he said.

During the 2022 tobacco marketing season, growers will retain 75 percent of their earnings in hard currency, up from 60 percent last season.

February 17, 2022

Tag: Zimbabwe