Agrobusiness - Featured - Top Stories - April 8, 2021

Higher opening tobacco price meets ZTA expectations

The 2021 tobacco marketing season auction floors has opened yesterday with a higher price of US$4.30/kg that the US$4/kg of last year, tallying with Zimbabwe Tobbaco Association(ZTA) expectations of much firmer US$ prices this year.

The ZTA released its recent Crop and Market Report on which it noted that this year’s yields will be down but the quality of this season’s crop is better than that of 2020.

In the report, ZTA estimates that national average yields will be lower than last year at 1 400kg/ha giving a crop estimate of 180-185 million kilogrammes, lower than the anticipated 200 million kg.

“Much firmer US$ prices are expected and that should push the national average price significantly up on last season,” reads the report.

Speaking to BusinessMail, one prominent tobacco farmer Jeremiah Gwanzura, the opening price of US4.30 is a good and convincing opening market price which meets the expectations of ZTA.

“However, the tone should be continuous as we don’t want to distort the tobacco buying prices by a false start. Also, grower viability is under threat from the 60 percent foreign currency retention scheme that the government has offered for this year’s marketing season,” Gwanzura said.

In addition, economist Langton Mabhanga on the other hands commends the instant payment system for the tobacco system saying it is icing on the cake as it will enable farmers to adequately plan for the next season in time.

Mabhanga however, also mourns the 60 percent foreign currency retention together with farmers.

“The 60 percent foreign currency retention and 40 percent local currency is likely to affect the following season in terms of working capital as most tobacco inputs are now being purchased in foreign currency while farmers are only getting 60% of foreign currency, ” he said.

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