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Production to decline as farmers dump tobacco
Paul Nyakazeya, The Zimbabwe Independent
August 25, 2006

http://www.theindependent.co.zw/viewinfo.cfm?linkid=12&id=5707

TOBACCO production is expected to decline because of a drastic reduction in hectarage by farmers fleeing high costs associated with growing the crop, the Zimbabwe Association of Tobacco Growers (ZATG) president, Julius Ngorima, said this week.

Ngorima told businessdigest that while firm prices had seen the country’s foreign currency earnings from tobacco surpass last year’s earnings by 21,98% despite a decline in crop deliveries, a further decline this year was likely to hurt receipts.

"Production is likely to decline next year as most farmers have reduced their hectarage due to the continuous rise of input prices," Ngorima said.

He said farmers who had already started preparations for next year’s crop had indicated to the association that they were contemplating trying other crops as it was no longer viable to concentrate on tobacco alone.

Statistics released by the Tobacco Industry and Marketing Board (TIMB) show that a total of 46,4 million kg of tobacco worth US$93,8 million had been sold by Friday last week, compared with 49,4 million kg worth US$76,9 million sold during the same period last year.

About 9,3 million kg was sold at the Tobacco Sales Floor, six million at Burley Marketers Zimbabwe and 4,9 million at the Zimbabwe Tobacco Auction Centre.

About 29,2 million kg was sold through the contract system while farmers were paid $11,2 billion under the early delivery bonus scheme TIMB said the selling season would end on August 30.

"While as an association we are delighted that foreign currency earnings increased this year, we are worried by the decline in production which is projected to continue next year," said Ngorima.

Ngorima attributed the increase in earnings to firming prices which characterised the auction flow since July.

The golden leaf fetched an average price of US$2,01 cents per kg this year compared to US$1,55 cents last year.

An estimated crop of 50 million kg is expected to go under the hammer this year, compared with 70 million kg sold last year.

Out of the 46,4 million kg sold so far, 20,8 million kg were sold through the auction system while 25,6 million kg were sold through the contract system.

"The golden leaf sold through the auction fetched an average price of US$1,91 cents per kg, less than US$2,10 cents that prevailed for sales done through the contract system," TIMB said.

The wastage rate for auction sales at 12,05% was said to be much higher than 3,53% for contract sales.

Tobacco sales have so far recorded an 8,23% wastage rate for 2006 compared to 8,46% last year.

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