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February 28, 2011

Entry of Chinese buyers push Zimbabwe tobacco prices up, breaks cartels

The entry of Chinese buyers has pushed up the prices of tobacco on auction here as it spurs competition and breaks cartels which used to control the sector, says Zimbabwe Tobacco Industry and Marketing Board (TIMB) chief executive officer Andrew Matibiri.

Presenting oral evidence before the Parliamentary Portfolio Committee on Agriculture, Water, Lands and Resettlement, he said prices of tobacco continued to firm at the auction floors, largely propelled by growing Chinese demand.

Matibiri said the Asian economic giant had been a boon to the tobacco sector, consuming about 40 per cent of the total output last year. "Of the tobacco sold, 40 per cent is going to China, another 40 (per cent) to Europe and the remainder to other parts of the world," he said.

Before the arrival of the Chinese, 2.99 USD per kilogramme was the ceiling," he added.

Tobacco is presently fetching an average price of 3.57 USD per kg. China is purchasing the crop here through the China Tobacco Company, represented in Zimbabwe by Tian Ze.

"Farmers are responding positively and the prices have been favourable mostly attributable to the presence of the Chinese," Matibiri said.

Previously a preserve of White minority farmers, tobacco farming has fast become a favourite of the new indigenous farmers who are beneficiaries of Zimbabwe's land reform programme.

About 60,000 farmers are expected to deliver their crop for sale at the two auction floors this year.

Matibiri said prospects were high that prices would continue to firm. "We are still in the early days in the marketing season and we expect prices to rise as we get to the upper leaves," he added.

Since the marketing season opened last week, tobacco worth more than US$175 million has been exported.

New Ziana

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