Zimbabwe: Tobacco Prices Expected to Be Firm

Source from:  The Herald (Harare) June 20, 2006 06/21/2006

ZIMBABWE is this year expected to record firmer tobacco prices than last year largely due to the high quality crop on offer. Industry players predict prices to average US$2 per kilogramme this season, up from a seasonal average price of US$1,61 last year. Tobacco production is expected to decline from 73 million kg last year to 50 million kg this year due to excess rains, late disbursement of funds as well as rising production costs. To date, 16,7 million kg of flue-cured tobacco have been sold at US$1,85 cents per kg, with 60 percent of the crop having been sold through the auction floors and 40 percent via seven contractors. Outgoing Zimbabwe Tobacco Association president, James de la Fargue, told growers attending the Association's 46 th annual congress on Thursday that prices would be firmer this year due to the high quality crop and consistent support from some merchants, among other factors. "The weather was kinder in 2005/2006, with a late start to rains allowing better root development, but once it started, it continued unrelenting through to the end of March. "Excess rains come with leeching, disease and faster ripening-this combination and tighter rotations has meant a lower yielding but good quality crop "With continued support notably from China and BAT, we have seen US$ prices firm in most qualities and we will average over US$2 this year," de la Fargue said. The outgoing president said the country's tobacco industry was resilient, adding that growers needed to remain positive and confident for production to recover. He chronicled the historical fluctuating production patterns of tobacco from the colonial era, post independence Zimbabwe and the post land reform era, which he all said revealed the resilience of the tobacco industry. The last time the country produced below 50 million kg was in 1953 before production shot to 147 million kg in 1964, only to come down again to 52 million kg by 1968. By mid 70s, production was back to over 100 million kg and continued to rise after independence to reach its peak in 2000 at 237 million kg. Production had now plummeted to an all time low of 50 million kg in 2006. De la Fargue said these phases show the resilience of the tobacco industry and its ability to recover, as well as the importance of good timing, favourable economic fundamentals, adequate funding and maintaining grower confidence for tobacco production to prosper. He urged tobacco growers to take advantage of the misfortunes happening in other competing grower countries to boost production and assist Zimbabwe increase and reclaim its lost market share. "Markets have gone against us over the last five years as other countries have taken up the production we lost. "The last year has however seen a small window of opportunity as Brazil and Zambia suffer from revalued currencies, North America and Europe remove subsidies and reduce production and a small crop size in China," he said. Meanwhile, the ZTA now has Andrew Ferreira as its new president following the expiry of de la Fargue's two-year term on Thursday. Ferreira had been the ZTA's vice-president, a position which has been taken over by Graeme Chadwick from Headlands. Enditem