Tobacco sales dropped 51.5 per cent as of the 39th day of the 2019 tobacco selling season compared to the corresponding period from last year on account of depreciated quality yield and weaker prices, a latest Reserve Bank of Zimbabwe weekly report shows.
As of 17 May, total sales reflected a cumulative value of US$ 575. 8 million as compared to US$ 1.186 billion realized during the same period in 2018.
However, tobacco volumes sold recorded 353 401 kg against 429 966 kg traded last year during the time in review.
“Definitely the numbers are lower than they were last year. We have a combination of factors. The average price is lower because the quality hasn’t been as good, as you know there wasn’t adequate rainfall,” Boka Tobacco Floors managing director Chido Nyakudya recently told 263 Chat Business in an interview.
The average selling price of tobacco stood at US$ 1.63 per kg during the week in review, a 41 per cent decrease from the US$ 2.76 per kg.
The regulator, Tobacco Industry Marketing Board (TIMB) recently outlined that prices were lower due to the disgruntlement of merchants over the RBZ directive with regards to recovery of loans advanced to farmers.
The Central Bank directed tobacco growers to pay 70 per cent of the loan amounts they got from merchants in USD, with the remainder paid in RTGS dollars using the interbank market rate.
The dismal performance in tobacco receipts is expected to hit hard on the economy which is in dire need of foreign currency reserves for import cover of essential commodities such as fuel and electricity.
Owing to drought conditions experienced this farming season, the crop fared dismally as compared to the prior year and some critics of the Central Bank’s foreign currency retention scheme says most farmers decided to abandon the crop.
The foreign currency retention threshold for tobacco growers stands at 50 per cent.
Meanwhile, Finance and Economic Development Minister Mthuli Ncube said the government had stripped the 2 per cent electronic transfer tax at tobacco auction floors in a bid to cushion growers from the premium which had been set by auctioneers.