HARARE: Despite an expected reduction in tobacco output this year, Zimbabwe is expecting good quality tobacco leaf which should in turn attract higher prices, the industry regulator said on Wednesday.
Tobacco Industry and Marketing Board (TIMB) chief executive Meanwell Gudu said Wednesday the anticipated reduced volumes were likely to push demand and the selling price of the leaf upwards, state news agency New Ziana reported.
Zimbabwe’s tobacco hectarage for the current season declined by 11 percent, according to results of the first round crop and livestock survey for the 2021-2022 season.
“Due to anticipated reduced volumes in Zimbabwe this season, there will be more pressure on the demand side to take the crop, which should naturally increase prices upwards. This is likely to be experienced in the medium to filler grades,” Gudu said.
He said top-quality tobacco grades for premium brands are likely to remain unchanged at 3.5-5.40 U.S. dollars per kg.
“The high-end market for this grade has reached its ceiling in price increase. The major market for these grades is in China and there are no indications to change prices upwards,” he said.
Gudu said in spite of weather-related challenges facing the current farming season, the tobacco crop produced was top quality.
“We expect top-quality grades. The irrigated crop is medium to heavy-bodied, predominantly lemon in colour and reflecting a fair to good quality.
“The main dryland crop is medium-bodied in the commercial sector whilst being light to medium-bodied in the smallholder sector. The late dryland crop has poor stand due to prolonged dry spell which was experienced post-planting time towards the end of December,” he said.
Gudu said a slight drought in Brazil, a major competitor of Zimbabwe in the global tobacco market, would also help push up demand and prices for the local crop.
“Brazil is likely to be 80 million kilograms short of their usual production level because of drought. This creates less competition for us,” he said.
He, however, said hoarding of the golden leaf might be rampant in the 2022 selling season due to opening at the end of this month.
“Some kind of hoarding of tobacco is likely to happen that may influence prices to be better because of disruptions in logistics caused by COVID-19.
“Supply chains were disrupted from 2020 into 2021 due to shortage of vessels and closure of some shipping lines. Now that the world has lifted the COVID-19 restrictions and uncertainty in the possibilities of other waves, customers are likely going to grab this opportunity to stock up their tobacco, thereby increasing artificial demand,” Gudu said.
Tobacco is Zimbabwe’s second foreign currency earner after gold, with China and South Africa being the major buyers of the golden leaf.
Other top buyers of flue-cured tobacco from Zimbabwe are the United Arab Emirates, Indonesia and Belgium.
Last year, the country sold 186.6 million kg of tobacco leaf valued at 515.9 million U.S. dollars during the 2021 marketing season, up 16.8 percent in volume and 31 percent in value over the 2020 sales.