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Edgar Vhera-Agriculture Specialist Writer

THE 2024 tobacco auction marketing season ended on a high note last week with farmers earning an average price US$0,13 higher than that for contract farmers for every kilogramme sold.

The Tobacco Industry and Marketing Board (TIMB) set August 29 as the final auction clean up sale after the official closure date of August 22 to allow growers to participate in a mop-up sale.

Contract sales will continue to until all contracted tobacco has been delivered to contractors.

Statistics from the TIMB show that auction farmers had grossed US$49 279 146 from the sale of 13 885 298 kilogrammes of leaf, which is less than 6 percent of the total crop, the rest being contracted, but which largely settles the prices that are used throughout the industry.

The average price which started at US$3,09 per kilogramme by day 1 peaked to US$3,77 by day 33 before settling for average price of US$3,55 on the final day.

The final day price was US$0,13 higher that the US$3,42 per kilogramme under the contract system. Self-financing growers account for six percent of all sales, both in volume and value.

Zimbabwe Tobacco Growers Association (ZTGA) chairman Mr George Seremwe said current pointers were showing that the percentage of free-grown tobacco, that is self-financed rather than contracted, was going to increase in the coming season.

“The arrangement where the auction system paid a better price than the contract will definitely result in an increase in the production of free-grown tobacco as growers were left with money to procure inputs freely from cheap sources.

“This contrasts sharply with some contractors who are adding their premium on input prices thereby increasing the cost of production,” he said.

Mr Seremwe said overall, the coming season should see a huge jump in tobacco production judging by the increase in seed sales, average tobacco price and smooth trading on the market this year.

“The Government capped it all by introducing the Tobacco Special Economic Zone focused on tobacco sales and processing to support production,” said Mr Seremwe.

Tobacco Farmer Talk group administrator Mr Phineas Mukomberanwa concurred saying the auction system was likely to continue with better prices as compared to the contracting system.

“As long as contracting companies continue with the prerogative to determine prices, auction prices will always be higher than contract. Contracting companies set the price at which they want to buy their tobacco, whereas at auction prices are determined by the market,” he said.

Mr Mukomberanwa said that the competitive bidding at auction ensured that prices would be higher than at the contract floors.

“As to whether we will see more growers moving to auction, already a large number of growers are growing tobacco on their own and should be selling to the auction, but there is a psychological thinking that contract pays more than auction. As a result, growers end up at contract even when they are self-financed. So, I don’t think we are likely to see much change in terms of farmers moving to sell at the auctions,” said Mr Mukomberanwa.

Tobacco Farmers Union Trust vice president Mr Edward Dune advised farmers to produce quality leaf in the coming season if they were to stay afloat.

“Given the tobacco pricing matrix over the years, coupled with the positive effects of a La Nina rainfall season, farmers will have no choice but do anything possible to get good quality leaf that will fetch high prices.

“Farmers are therefore, advised to avoid short cuts when it comes to good agronomic practices that guarantee good leaf quality in order to fetch competitive prices and remain viable in tobacco production,” said Mr Dune.