Zimbabwe projects tobacco auction will boost liquidity

As tobacco farmers in Zimbabwe record sales at an auction held in the country, the government looks forward to a 5.8 percent increase in tobacco output this year.

According to the Tobacco Industry and Marketing Board, tobacco production in the country should increase from 189 million kg to 200 million kg in 2018.

Zimbabwe is the largest grower of tobacco in Africa, and the 6th largest grower in the world. However, the country’s economy has been struggling and hopes to improve its liquidity this auction season as there is an influx of cash during the season.

In 2005, a contract system was introduced to Zimbabwe whereby tobacco buyers would contract tobacco farmers to buy their entire crop at the end of the season and in return, the buyer would supply the farmer with all necessary inputs, including seed and fertilizer.

From 2013 till date, several companies have financed the country farmers in their tobacco production, helping them boost production. Since the inception of the contract system of agriculture in the country, tobacco production recovered.

In a statement, Zimbabwe’s Vice President, Constantino Chiwenga noted that “government appreciates the coming on board of the tobacco contracting companies where they financed 82 percent of the crop in the 2017/18 agricultural season.”

He added that the government was extending the tobacco funding model to other crops like wheat and soybean, whose production has remained depressed because farmers lack money to buy seed, fertilizer and pesticides.

Zimbabwe exports its tobacco mostly to China, South Africa and Belgium, earning the country $1.2 billion between May 2016 and December 2017. In 2015, Zimbabwe exported 54 percent of its tobacco produce to China alone.