Zimbabwe: Tobacco Production Costs Shoot to $1,4bn Per Hectare

Source from:  The Herald (Harare) June 26, 2006 06/27/2006

PRODUCTION costs for a hectare of tobacco for the forthcoming 2006/7 season have risen sharply from less than $200 million last season to $1,4 billion owing to rising inflation, farmers' groups have said. Farmers' Development Trust chief executive officer Mr Lovegot Tendengu said the cost of production per hectare was likely to increase further if such critical inputs as fertilizer and fuel were not made available to farmers consistently. "The cost will increase to $2 billion per hectare if farmers are forced to buy fuel and fertilizers from the parallel market, worse still if inflation continues to rise. "Input prices need to be checked for farmers to be able to produce the crop next season," he said. With a national target crop of 55 000 hectares, the tobacco industry will need between US$20 million and $25 million (about $15 trillion-$18 trillion) for inputs. The projected cost of production was set to rise further owing to the spiralling inflation which was now pegged at around 1 200 percent. Fuel prices went up from $200 000 a litre to about $600 000 a litre, a sharp rise which might adversely affect farming operations in the country. Labour costs and other input costs were also rising. Zimbabwe has the capacity to produce 250 million kg of flue-cured tobacco if farmers get adequate supplies of inputs on time. A record crop was produced in 2000 when Zimbabwe hit the 237 million kilogrammes mark. The Tobacco Industry and Marketing Board (TIMB) said the country had the potential to produce more tobacco if farmers get additional funding for inputs and infrastructure. "Rehabilitation of irrigation infrastructure as well as curing facilities that would cater for both the early irrigated and the dryland crop is critical for farmers to double their production using the same facilities," TIMB said. There was strong demand for lemon tobacco at the auction floors compared to other tobacco varieties. The highest price to date for lemon tobacco was US $3,12 ($312 000) per kilogramme. The prices had generally been firmer this year compared to the last season. Enditem