Gold, tobacco production plunges as power cuts effects wreak havoc

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By Alois Vinga

RECEIPTS from Zimbabwe’s top foreign currency earners tobacco and gold have plummeted, a local trade watcher has said.

Inter-Horizon Securities (IH Securities), in a survey, said gold has gone down 20% while tobacco earnings have plummeted 35%.

The survey, titled “The Zimbabwe Consumer Sector; Austerity for Prosperity”, says the agricultural sector, which employs 80% of the working population, largely comprising of small-scale farmers who contribute over 70% of tobacco output, supply 60% of the raw materials required by the industrial sector and contribute to 40% of total export earnings is in dire straits.

“Tobacco earnings reached record high levels in 2018, where 70% of the 252 million kgs output was registered by small-holder farmers.

“However, we anticipate tobacco earnings driven consumption to be subdued as tobacco earnings for 2019 have plunged 35% to US$445 million, after 80 days of trade, compared to US$685 million achieved last season,” the report reads in part.

It was also observed that the golden leaf’s deliveries have gone down by 4% to 227 million kgs from 235 million kgs delivered in the same period last year.

According to the report, the price being offered for the crop is 33% lower than last year at an average of US$1.96 per kg, down from US$2.92 per kg.

Apart from these factors, the survey observed that workers in the agriculture sector have only recorded a salary increment of 47% this year, against annual inflation of 176%, as the minimum monthly wage rose from $89 to $131 amidst negotiations by organisations to push the figure to $350.

The research also points out that in the first half of 2019, gold dipped to 10.8 tonnes from 13.6 tonnes recorded in the comparative period in 2018, due to critical power outages, caused by record low water levels at Kariba which has gone below 29% amid indications the power plant could be shut down next month.

“The mining sector contributes only 13% overall Gross Domestic Product. It plays a pivotal role in foreign currency generation as it generates over 50% of all foreign currency earnings and is a source of income to a substantial number of the working population through both formal and informal employment,” says the report.

The survey revealed there is growing migration of consumption from discretionary goods to basic goods given the rise in the cost of living urging consumer goods producers to target the poor most.