Tobacco forex earnings dip

ZIMBABWE’S tobacco export proceeds last year were US$746 million, down from US$838 million during the 11 months to December 2018, data provided by the Zimbabwe National Statistics Agency shows.
This was despite a bump in production, from 252 million kilogrammes (kg) in 2018 to 255 million kg in 2019.
The decrease in earnings, however, was in line with the depressed prices realised during the year.
The Zimbabwe Tobacco Association (ZTA) said prices of the golden averaged US$1,65 per kg, compared to US$2,91 per kg in 2018. Zimbabwe’s tobacco earnings reached record levels in 2018, where 70 percent of the 252 million kg output was registered by small-holder farmers, but performance in 2019 was below expectation as a result of the government’s inconsistent currency policies.
The tobacco season started on a poor note as sales continued to be dogged by disputes between merchants and farmers over payment terms. The farmers wanted to be paid 100 percent in US dollars for their produce, but the central bank offered them 50 percent, while the merchants also wanted their loans extended to farmers repaid in US$.
According to the TIMB, tobacco deliveries dipped by 52 percent to 17,5 million kg in the first 20 days of trade while the value of tobacco sold was US$30,3 million down by 70 percent compared to the same period last year.
Meanwhile, some believe the crop has capacity to earn the country up to US$10 billion annually.
Anxious Masuka, Zimbabwe Agricultural Society’s (ZAS) chief executive says there is need for collaboration among various stakeholders in the tobacco industry to ensure maximum production and value addition.
“Despite exporting largely semi-processed tobacco worth some US$1 billion, Zimbabwe does very little value addition of this product,” Masuka said in ZAS’ 2019 annual report, which was published recently.
“There is perhaps 10 times more value of tobacco as cigarettes. So why can this not be a US$10 billion industry by 2030 for which we can lay the foundation now,” he said.
The crop, which is grown by more than 170 000 farmers locally, is Zimbabwe’s second-biggest earner of foreign currency after mining. In 2019, tobacco accounted for 17 percent of the country’s US$4,3 billion exports.
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