Tobacco prices hit record highs
TOBACCO prices rose to record highs last week, as the highest-priced leaf fetched US$6,99 per kilogramme, which is the most ever paid at the contract floors.
Prices at auction floors also surged past the traditional ceiling of US$4,99, with the competition amongst buyers pushing the bidding price for the best leaf to US$5,05, the highest in 10 years.
Statistics from the Tobacco Industry and Marketing Board (TIMB) show that at the contract sales floor, the previous highest price was US$5,35 per kg, whilst US$4,99 per kg had been the best price at the auction floors in the past decade.
Average prices for both sales floors only hit the record of US$3,67 during the 2013 marketing season.
The average price recorded on Day 14 (Friday) was US$3,47 per kg, compared to $3 per kg paid last season.
This year’s overall output is expected to be around 265 million kilogrammes, slightly lower than the previous year’s record output of 296 million kg due to the El Niño weather phenomenon.
TIMB spokesperson Mrs Chelesani MoyoTsarwe said the soaring prices are being driven by fierce competition among the growing number of buyers, enhanced quality of the crop and a rise in demand.
“As a result of the El Niño conditions witnessed in Southern Africa starting late last year, the expected tobacco hectarage is lower compared to last year, yet there are more buyers this season in need of the crop,” she said.
“The demand and supply principle is being witnessed, with demand for the crop this year very high, whilst supply is lower than last year. More buyers have also been registered, meaning more players in the market, leading to competition on the auction floors, hence better prices being offered.”
On the contract floors, contractors who fear side marketing are reportedly also offering firmer prices and encouraging growers to deliver their crop timeously.
TIMB, Mrs Moyo-Tsarwe said, is enforcing laws to eliminate side marketing.
“To date, 92 convictions have been made following the violation of the Tobacco Industry and Marketing Act Chapter 18:2, which makes side marketing illegal. Buying tobacco without a licence, bartering and illegal selling of tobacco are also a violation of this Act,” she said.
Farmer organisations have urged the authorities to continue pushing for better prices, as the quality of local tobacco is considered one of the best in the world.
Zimbabwe National Farmers Union president Ms Monica Chinamasa said tobacco farmers deserve firm prices.
“Tobacco farming is energy-draining and requires a befitting reward at the sales floor. High prices are a reflection of very good quality tobacco. We are happy as growers that the market is appreciating good quality tobacco,” she said.
“It is a good reward to the farmers. As a rule, good tobacco sells itself. So, the authorities must keep their eyes open and maintain fairness in the marketplace.”
Tobacco Association of Zimbabwe president Mr George Seremwe, who also grows the cash crop, said: “This is what we have been advocating for a long time. We are just at the beginning; the price of tobacco has to go up so that the average price can hover around US$5,50 for us to realise the value of our labour. Remember, our tobacco is of high quality, even compared with top tobacco countries like Brazil, so the quality must determine the value.”
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