Zesa Earns Us$8,5m From Tobacco

Source from:  The Herald (Harare) October 19, 2005  10/20/2005

ZESA Holdings, one of the country's largest tobacco contractors in the past season, has earned itself US$8,5 million from the golden leaf. The power utility diversified into tobacco contract farming with the aim of boosting its foreign currency coffers to meet its ballooning electricity import bill. Zesa Holdings has the distinction of being the only contractor active in tobacco whose core business is not farming oriented. Other contractors have an established track record as buyers, processors or sellers of the golden leaf. The power utility sold a total of 4,548 million kilogrammes valued at US$8,504 million, which translates to an average price of US$1,86 per kg. This is significantly higher than the average US$1,60 per kg obtained at the auction floors. A total of 28,3 million kg of tobacco went under the hammer at the three auction floors, equating to about a third of the 74 million kg sold during the 2005 selling season. At 4,5 million kg, Zesa Holdings accounted for more than a sixth of the total tobacco sold on the auction floors and under the contract system. As a contractor, the power utility assumes the dual role of auction floor and merchant, buying the crop and then exporting it. Now in its second season, the contract growing system is a concept borrowed from Brazil to boost production, which has taken a slump in recent years. Enditem