Zimbabwe is likely to produce 205 million kilograms of tobacco this year, slightly more than 2016, with sales of its main export likely to improve dollar supplies in the cash-strapped economy, an industry official said on Wednesday (March 15).
Marking the start of annual tobacco auctions in Harare, Tobacco Industry and Marketing Board spokesman Isheunesu Moyo said output would climb from 202 million kgs in 2016 after more farmers grew the crop.
"This season we have mobilised 700 million to buy tobacco from the farmers. Last season farmers benefited from about 585 to 600 million from the sale of tobacco. We expect it to be a better year in terms of output, last season we sold about 202.2 million Kgs and this season we expect more because we have better quality this year and when you have better quality the likelihood is that you are also going to have more in terms of output," said Moyo.
Tobacco is Zimbabwe's biggest export earner, bringing in more revenue than gold and platinum.
Zimbabwe exports the bulk of its tobacco to China, which has become the largest investor in the Southern African country.
Zimbabwe is desperately short of dollars due to its moribund economy, although traditionally liquidity improves during the tobacco-selling season as cash is brought into the country.
Moyo said tobacco buyers had borrowed $700 moffshore to purchase the crop from farmers.
Billion dollar market
The merchants process the leaf before exporting it.
Tobacco farmers will be allowed to withdraw $1,000 from banks per day to allow them purchase farming inputs for next season.
Cash shortages in the last 12 months have forced banks to impose daily maximum withdrawal for most Zimbabweans of sometimes as little as $50 per day.
"As indigenous buyers we are looking forward to capacitating the market, it's a huge market its a billion dollar market and we need to have a share of that. We are going to work with other big players so that as locals we benefit, international buyers they benefit, our farmers they benefit from competitive prices," said Bright Matonga, a buyer.
"Today I brought in 2,500kgs I'm expecting an average price of US $3.50 with the highest price being maybe US$4.99 I am expecting quick processing of our sales sheets so that we can access our cash easily from the banks," said Constantine Garikai, a farmer.
President Robert Mugabe's government blames the shortages on the illegal export of U.S. dollars, weak commodity prices and falling remittances from Zimbabweans in the diaspora.