The Tobacco Industry and Marketing Board (TIMB) has reported a y-o-y decline in tobacco prices since auctions started on February 19. Farmers have received on average $2.87/kg compared to a figure of $3.42/kg seen during the same period of 2013. Sales have so far generated $29m from 10.1 million kilograms of leaf, compared with $33.5m collected on 9.8 million kilograms in the first 13 days of selling last year.
“The quality has been low and we are seeing a lot of rejects. The contracted farmers are happy because their quality is okay since they receive technical assistance from the contractors, but most of the other farmers – some have a poor-quality crop and this is affecting prices,” said Boka Tobacco Auction Floors CEO, Rudo Boka.
WHY DO WE CARE? It appears likely that the target of $700m in tobacco receipts will not be met this year. This is certainly not good news considering that the country’s agriculture industry is seen as a bright spot for 2014 amid significant challenges in the mining sector. The fact that half of the country’s population is directly and indirectly dependent on tobacco production underscores the importance of growing the crop.
Analyst: Christie Viljoen