With auction floors due to open in two months, Zimbabwe’s tobacco farmers, after receiving a battering last year in which they were only saved by the depreciation of the Zimbabwe dollar, are anxiously waiting to see how the crop will fare this year largely because of the devaluation of the Brazil currency which some fear could result in even lower prices than last year.
According to the latest results from TSL Holdings, which owns the country’s biggest tobacco auction floors, The Tobacco Sales Floor, last year the average price for tobacco was US$1.73 down from US$2.33 the previous year.
Not only is the volume of the crop down by an estimated 13 percent from 216 million kgs to 188 million kgs but the quality of the crop is also likely to be a problem.
The incessant rains have resulted in a “light” crop but reports say half of the early crop that was grown under irrigation is good quality.
Devaluation, though bringing in good prices in Zimbabwe dollar terms, also pushed up production costs by 67 percent at a time when interest rates were as high as 50 percent.