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February 19, 2012

Zimbabwe 2012 tobacco auction starts: good prices, more women farmers involved

Zimbabwe’s 2012 tobacco auction season began on February 15, with starting prices higher than those of 2011, and with more women farmers taking part.

Media reports said prices of flue-cured Virginia tobacco ranged from $1.70 to $4.77 a kilogramme, depending on quality. Most of the crop was old for between $3.25 and $4.55 a kg, compared to $3.50 to $4.50. The seasonal average price for 2011 was $2.75 a kg.

“It is rare to see such prices on the opening day as farmers try the market with poor

quality crop,” said an official of one of the four licensed auction companies. “We are expecting higher prices as the season continues.” He said his company had 1 600 bales of tobacco booked for sale for the opening day of the seasonal auction, compared to the 2011 figure of 500.

Although the starting prices look promising, there was some grumbling from farmers who said the prices they were offered for their crop did not cover their high production costs.

“Input costs, labor costs and the general management of tobacco demands that we get paid a price above US$5 per kg,” one farmer said.

An official of a farmers’ group said, “The quality this year is good but the price is questionable. We cannot say it’s a good price for such good grades; maybe it’s a fair price. It’s not exciting, it’s not encouraging; we expected prices above US$5 per kg.”

Industry insiders who the starting prices good instead encourage farmers to work on cultivation and post-harvest management to ensure their crop fetches prices in the higher ranges.

Flood and drought -caused production shortfalls in major growers Brazil and the US are expected to benefit farmers in firmer prices. Global market leader Brazil produced 750 million kg of tobacco in 2011, a figure predicted to go down by as much as 150 million kg in 2012. The US produces between 200 million and 300 million kg per year.

Zimbabwe is the world's sixth largest exporter of flue-cured Virginia tobacco after Brazil, India, the United States, Argentina and Tanzania.

Zimbabwe has also had a late starting and initially erratic rain season, but some tobacco sector insiders were still predicting a season total of 150 million kg. The output of 132 million kg for 2011 was almost double the pre-auction season estimate of 77 million kg.

11,000 hectares had been planted under irrigation by November 2011, compared to 13,000 the year before (out of a total of 65,000 hectares for tobacco). Late plantings by farmers waiting for rains which came late in the year could close the planting figures gap between the two years.

Zimbabwe’s best tobacco year to date was in 2000, just before the land reform process started, when 236 million kg were auctioned. The worst year was 2009, when only 59 million kg found their way to the auction markets.

The profile of Zimbabwe’s tobacco sector has changed significantly in recent years. Most of it was previously grown by large scale white farmers, who numbered about 4,000 until a decade ago, but are now thought to number less than 500 after the country’s decade old land reform drive. It is now mostly grown by black small scale farmers. The head of one auction company said 66,000 small scale farmers had registered as growers this season, with the Tobacco Industry Marketing Board (TIMB), compared to 52,000 in 2011.

Whereas buyers in previous years were mostly Western, Chinese buyers have recently become a major force. Some are also involved in financing farmers. More black-owned auction companies have been established in recent years to replace or join the sector’s once exclusively white-owned companies. The flood of new farmers to tobacco growing has in recent years found the auction companies struggling to cope with the numbers.

Another noticeable change in the tobacco sector in recent years has been the participation of many more women farmers.

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