ZIMBABWE has started enjoying the fruits of a successful agricultural season with the tobacco sector injecting more than half of the projected US$600 million into the economy.
This has already improved the foreign currency liquidity in the country.
Reserve Bank of Zimbabwe Governor, Dr John Mangudya, told The Manica Post on Wednesday that the tobacco industry, the third foreign currency earner after gold and platinum, is on course to inject at least US$600 into the economy, thereby boosting the country’s productivity.
Statistics from the Tobacco Industry and Marketing Board (TIMB) show that the golden leaf had injected US$350m by the 37th day of the marketing season after 127 million kilogrammes were auctioned.
During the same time last year, the sector had generated US$221 million.
TIMB statistics also show a remarkable improvement in prices during the review period, with average prices for both contracted and auction floor sales rising 16 percent to US$2.69 per kg.
The average price was US$2.32 per kg during the same period in 2020.
However, the average price for tobacco delivered to the auction floors, at US$2.76 per kg, was higher than that of the golden leaf grown under contract, which averaged US$2.69.
Dr Mangudya said from the US$350 generated from tobacco sales, 33 percent has been used to offset the contractors.
About 95 percent of the country’s tobacco is contracted.
“About 33 percent has gone to offset the contractors who financed the production of tobacco; 41 percent has gone to the farmers as part of their 60 percent foreign currency retention while 26 percent has gone to support the foreign currency auction system.
“We are expecting tobacco sales to inject at least US$600m into the economy this season. Already US$350 has been injected into the economy from the 127m kgs sold at day 37 of the auction. Only half of the projected output has been sold, meaning the tobacco sector is on course to inject at least US$600m into the economy,” said Dr Mangudya.
Dr Mangudya said the tobacco sector is performing above expectation at a time when the country is expecting a bumper harvest of maize, traditional grains and soya bean, which will significantly cut the country’s import bill.
“Tobacco is the third highest foreign currency earner after gold and platinum, and because of its significance, it will have a huge impact on the economy between April and August. This impact is crucial to the stabilisation of prices, the exchange rate and productivity.
“The golden leaf has increased foreign currency liquidity in the country and has also improved the welfare of the farmers as 60 percent of the foreign currency component goes directly to the producer while part of it will go towards servicing the contractors’ debt,” said Dr Mangudya.
Meanwhile, at least 9 000 metric tonnes of maize have been delivered to the Grain Marketing Board since the beginning of the grain intake season in April.
The grain utility is working tirelessly to establish more buying points in anticipation of increased deliveries.
GMB depots are open daily, including on weekends, to facilitate uninterrupted grain deliveries.
Manicaland had 253 000 hectares under maize, most of it under the Pfumvudza and Command Agriculture programmes, with a projected harvest of 250 000 metric tonnes.
Zimbabwe is expecting to produce between 2.5 million and 2.8 million tonnes of maize as well as 360 000 tonnes of traditional grains, the largest yield since the land reform programme in 2000.
About two million tonnes of cereals, including 1.8 million tonnes of maize and 200 000 tonnes of traditional grains are expected to be delivered to GMB this season.
GMB is paying $32 000 for a tonne of maize, $48 000 for a tonne of soya bean and $38 000 for traditional grains.
Treasury has set aside $60 billion for the timely payment of farmers by the GMB.
“The country is poised to be self-sufficient in terms of grain, which will drastically reduce the import bill. The saved foreign currency will then be used to boost local production.
“The savings from grain imports and the foreign currency coming from tobacco will boost the economy and put inflation under control,” said Dr Mangudya.