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Tobacco yield lower but quality higher

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TOBACCO yields this year are estimated to be lower than last year by 10%, giving a crop estimate of between 180 million kilogrammes and 185 million kilogrammes due to excessive rainfall which has resulted in some areas experiencing waterlogging, the Zimbabwe Tobacco Association (ZTA) has revealed.

DUMISANI NYONI
In its latest report, ZTA said despite the problem of too much rain, the quality of the crop cured is very better compared to last year.

“Yields in general are estimated to be below last season by 10%. Yield ranges, depending on area, vary from 3 200 to 4 000kg per hectare,” the report reads in part.

“Yields have been estimated to be much lower than last season because of the very wet weather experienced in January and February. Estimates go as low as 2 000kg/ha up to 3 000kg/ha for commercial growers and 800kg/ha to 1 400kg/ha.

“The higher-than-normal rainfall has resulted in some areas experiencing waterlogging of fields and leaching of some crops. A thinner crop is expected. Disease, such as frog eye, angular, wildfire can be found in a major portion of the crop. Potential overall quality however remains good. Sucker control varies from good to poor.

“National average yields will be lower than last year at 1400 kg/ha – giving a crop estimate of 180 and 185 million kilogrammes,” ZTA said, adding that the Tobacco Industry Marketing Board (TIMB) and Agritex are finalising their crop assessment for more accurate figures.

Last year, Zimbabwe generated about US$748 million from 184 million kilogrammes of tobacco exported to countries such as China, South Africa, Indonesia, Belgium and theUnited Arab Emirates.

“Though yields will be down, the quality of this season’s crop is better than 2020. While disease affected, thinner crops may not be acceptable by all buyers, there remains a strong demand. Much firmer USD (United States dollar) prices are expected that should push the national average price significantly up on last season,” the report reads in part.

ZTA said seed sales reflected a 27% increase at 940kgs sold. This could have potentially planted close to 150 000 hectares, it said.

The association said the number of registered growers has remained static at 146 000 with minimal new entrants.

“Auditing of contractors submissions is still underway, but it could be estimated that 124 000 hectares were put under contract plus a further 5% of crop under auction; implying total hectares planted could be close to 130 000,” it said.

ZTA said the payment modalities announced by the central bank will not improve growers’ viability this season. It said the stagnant growth this season reflects this.

“Every season growers find themselves with little profit or in debt with their contractor. This debt is in USD and carried forward to the next season, with more USD loans and debt added. 90% of growers are now 100% USD borrowed from their contractor, implying no new USD comes into the country until USD loans are repaid,” it said.

“So while on paper tobacco sales may earn US$500–US$600 million per season, real inflows are about a quarter of this. Roll out of diversification cropping programmes for tobacco growers remain paramount so that their general livelihoods are protected, as tobacco viability diminishes each season.
“Tobacco growing currently is not an attractive crop to venture/expand into and such growth will remain subdued,” it said.

ZTA said the pricing of contract tobacco (95% of national production) cannot continue to be based on the minimum of tobacco prices paid on the auction floors (5% of national production).

This is outdated legislation that needs to be speedily changed by the authorities, it said.

The association said the announcement of the opening of the auction and contract selling floors as announced by the TIMB was done without consulting growers.

The auction floors for the 2021 marketing season are set to be opened on 7 April.

“This is a first. It is disheartening to note that despite growers’ bodies formally writing to the TIMB requesting for time to finalise payment modalities, the board proceeded to engage with the honourable Minister of Lands, Agriculture, Water, Fisheries and Rural Resettlement knowing full well growers, the primary producers, had not submitted any input into the date,” it said.

“This lack of consultation by the regulatory body on such an important issue is very concerning.”

ZTA said it appreciates that for the purpose of forex retention levels, tobacco growers will now enjoy the same level as other exporters, that is 60% in foreign currency payable into growers’ foreign currency accounts and 40% converted at the prevailing auction rate on the day of sale payable into local currency growers’ account, both amounts payable net of foreign currency denominated loans.

However, it said the 60% falls short of its foreign currency-denominated cost of production component which reflects a minimum of 70%.

Compounded by this shortfall is that 40% of sales proceeds will be paid at the official rate of $84: USD versus re-tooling rates above $100: USD.

“Growers’ viability will not improve with the retention levels announced and we plead with the authorities to review the foreign currency retention level before the start of the selling season.

Improving growers’ viability is paramount in ensuring the targeted growth in the sector is achieved and the country realizes improved foreign currency inflows,” it said.

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