Latest figures from the Reserve Bank of Zimbabwe (RBZ) reflect that cumulative tobacco volumes have overtaken those realized last year, despite earlier fears of a lower yield this year following poor rainfall.
However, the price of the golden leaf has fallen short of that trading last year, resulting in lower revenue.
As of 9 August, the 99th day of the tobacco selling season, cumulative sales for tobacco had reached 249.17 kilograms, a 0.19 percent increase in quantities sold during the corresponding period last year but earnings were 31 percent lower as compared to 2018.
“Weekly cumulative tobacco sales stood at 249.17 kilograms as at 9th August 2019 or day 99 of the 2019 tobacco selling season. This was 0.19% higher than the quantity sold during the same period in 2018. The value of tobacco sold stood at US$501.52 million, reflecting a 31.05% decline from the comparable period in 2018,” said the Central bank.
Same time last year, total tobacco sales had reached US$ 727.34 million.
The bank says the slump has mainly been caused by a decline in tobacco prices at auction floors.
“The average price of the golden leaf at $2.01/kg, was lower compared to 2.92/kg realized during the same period in 2018. Tobacco prices have remained subdued since the beginning of the tobacco selling season,” stated the RBZ.
The tobacco selling season took off on a slow start, with farmers skeptical of a host of factors including very low prices and a new electronic payment method that entailed opening of Nostro Accounts to accommodate the widely unpopular foreign currency retention scheme.
“Before (interbank market) it was quite straight forward. If you got US 2.50 on the floor you would just multiply US$ 2.50 by the number of KGs that’s how much you got paid but now there is an element of exchange rate between the prices on the floor which are in USD but the farmer gets paid in RTGS. If they need to buy back their payment in USD they need to open a nostro account. They don’t know what the nostro account is,” Boka Tobacco Floor managing director, Chipo Nyakudya told 263Chat Business in an interview earlier this year.
Last year Zimbabwe produced record tobacco output of 252 million kgs and is already poised to surpass this milestone by close of selling season.
