Tobacco sales down 21,01% due to El Niño
ZIMBABWE’S tobacco volumes have declined by 21,01% to 116,4 million kilogrammes as of Wednesday last week compared to the same period last year due to the El Niño-induced drought, official data showed.
Data obtained from the Tobacco Industry and Marketing Board indicated that, in terms of value, tobacco sales fell by 5,98% to US$415,2 million, despite average price per kg increasing by 19,03% to US$3,57.
A total of 109,7 million kg of tobacco worth US$390,2 million were sold on the contract floors. In contrast, 6,7 million kg of tobacco worth US$25 million were delivered on the auction floors.
This year the country expects to produce 235 million kg of tobacco from a record harvest of 296 million last year.
“Indeed, average price for tobacco has gone up, but we have a decline in the targeted yields because of the El Niño, that is the drought, which has affected most of the areas,” Zimbabwe Tobacco Growers Association president George Seremwe told Standardbusiness.
“The cost of production last season was quite high and that discouraged quite a lot of farmers to uptake the growing of tobacco because it was not making sense.
“There were no profits and it has affected the targeted yields that are the kilogrammes which should be produced by the country.
“That is what has caused the decline. The impact it has caused on the country at large is quite big.
“Tobacco contributed quite a lot of money in foreign currency inflows into the country. That will be felt for sure.”
Economic analyst Victor Nyoni said the decline in tobacco sales will impact foreign currency mobilisation.
“Tobacco is a key contributor to our GDP [gross domestic product]. You may talk about nearly 10% or just about 10% contribution to GDP,” Nyoni said.
“From other literature, tobacco accounts for about, if not more, than 50%, of all the agricultural exports.
“One can see the earnings that the country gets from that angle.
“It means that it is a forex earner, when now you have a drop in the cells it means that we may struggle in mobilising forex in the manner that we have done in the previous years and therefore that has a trickle-down effect.
“The industry needs forex; we need to meet the purposes of forex in general. All of those things will be affected.”
Nyoni also attributed the drop in production to the delay in the monetary policy statement announcement as the market took a wait and see attitude.
“If we fail to earn that forex, if we fail to sell as much as we should, we are then obviously going to have challenges,” he added.
“We are happy that the price is seemingly reasonable, but if we are not going to achieve the level of sales that will increase revenues and indeed increase our GDP, it is of no use.”
The tobacco selling season is one of the few times that the government receives foreign currency, but farmers complain that they lose out because their input and labour costs are paid for in foreign currency.