Zim To Get Forex Boost From Tobacco Sales Despite Poor Quality Crops

Source from:  Fin24 03/11/2018

Zimbabwe is expecting a foreign currency boost from tobacco sales, with the 2018 auctioning season starting on March 21.

"Growers shall be paid a maximum of $300 per day through banks stationed at the auction floors. The balance shall be transferred into the growers' bank account or mobile wallet," said John Mangudya, governor of the Reserve Bank of Zimbabwe.

Tobacco farmers cannot be paid all their proceeds in hard cash owing to cash shortages in Zimbabwe. However, sources in the country said merchants have provided enough foreign currency for the purchase of tobacco for this season.

The Tobacco Industry and Marketing Board (TIMB) says about 23 tobacco merchant companies have registered to buy tobacco this year, with the majority of these using foreign funds and the central bank licensing a few local merchants.

"We have registered 23 contractors. From the 23, the bulk of them are those that are sourcing their monies from outside the country.

"Then we have a few indigenous companies that have been given permission by the RBZ to use money that is within Zimbabwe, but the bulk of the money is coming from outside Zimbabwe," said Usheunesu Moyo, spokesperson for the TIMB.

The TIMB has revealed that it expects a tobacco crop of about 200 million kilograms this year, although quality is expected to be poor owing to late heavy rains and crop pest outbreaks.

"The bulk of the crop comes from the rain-fed crop, and from that we are expecting an output of about 1 700kg per hectare," said Moyo.

In an interview with Fin24, he put the general yield at about 2 000kg per hectare, with about 100 000 hectares under production in Zimbabwe.

Tobacco is a major earner of foreign exchange for the economy, which is struggling to put a liquidity crunch under control. The Reserve Bank of Zimbabwe has increased the incentive for tobacco farmers from 5% to 12.5%.

"The Reserve Bank has increased the Tobacco Finance Facility from $28 million in 2017 to $70 million for the 2018 planting season. The export incentive for the tobacco growers was increased and this amount shall continue to be paid through the respective growers' bank accounts or mobile service,' said Mangudya.

There are three auction floors for tobacco in Harare. This season, two of the tobacco auction companies will open satellite floors in Manicaland, Mashonaland West and Mashonaland Central provinces, which are among the major tobacco growing areas in the country.

In 2017, Zimbabwe earned about $560m in tobacco sales, selling 188 million kilograms of the tobacco leaf. The country had projected a target of 200 million kilograms for the 2017 season.  Enditem