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July 12, 2008

Zimbabwe expecting $250 million tobacco during current auction period

Zimbabwe three tobacco auction floors had received a total of 27,6 million kilogrammes of the golden leaf worth US$87,4 million at the end of July 8.

The country is expected to receive about 100 million kg of tobacco worth about US$250 million at the close of the marketing period.

Of the 27,6 million kg that have been sold, 17,4 million kg were sold through contract farming while 10,1 million kg had been sold through the auction system, statistics provided by the Tobacco Industry and Marketing Board (TIMB) showed.

In Zimbabwe, contract farming is becoming the most popular form of marketing agricultural products because of the upfront payments provided by companies contracting crop growers.
Contractors were recently moving from one house to another to deliver cash for cotton grown by contracted farmers in Hurungwe. This marked a shift from a decade-old arrangement under which farmers waited for more than two months to receive payments for their sales.

The TIMB statistics indicated that by July 8, Barley Marketing Zimbabwe had received US$10,8 million worth of tobacco, Tobacco Sales Floor had received tobacco worth US$10,3 million while ZITAC had collected US$12 million worth of the golden leaf. The remainder of the crop worth US$54,2 million had been sold through the contract farming system.

TIMB figures showed that 331 812 bales of tobacco had gone under the hammer during this period.

When the floors opened for sales in May this year, farmers almost staged an ugly riot over poor prices and there was no activity for days. Since then, after the sales resumed and stopped only to restart again, just over 26 million kilogrammes have been delivered at the country’s three auction floors. Overall, a mere 75 million kg is expected from farmers by the close of sales later this year compared to a seasonal flow of well over 200 million kg before the year 2000.

Financial Gazette

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