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Zimbabwe tobacco sales reach 88% of national target
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A notable shift in Zimbabwe's tobacco marketing landscape is unfolding, with auction prices surpassing contract prices for 24 consecutive days, signaling potential cracks in the long-dominant contract farming model.
Data released by the Tobacco Industry and Marketing Board (TIMB) shows that from day 38 to day 61 of the 2025 marketing season, the average auction price has consistently outperformed that of contract sales. The price gap, which started at just US$0.01, has widened to US$0.25 per kilogram, raising eyebrows across the sector.
Zimbabwe Tobacco Growers Association (ZTGA) chairman Mr George Seremwe said the figures highlight a deeper problem with the contract system, which he believes is no longer serving the long-term interests of smallholder farmers.
"We continually think contracting is the solution to the plight of smallholder farmers, yet the markup they put on the cost of production is not advantageous," Seremwe said. "In the long-term, as a country, we should return to the auction system. Numbers do not lie."
He accused contractors of manipulating the system by offering high prices for only a few bales, while the bulk of the harvest receives lower rates. Seremwe urged the Reserve Bank of Zimbabwe (RBZ) and Ministry of Finance to actively fund smallholder tobacco producers and reconsider auction financing schemes, including the previously scrapped TIMB Tobacco Input Credit Scheme (TICS).
However, not all stakeholders agree. Tobacco Farmers Union Trust (TFUT) president Mr Edward Dune expressed skepticism over the significance of the trend, warning that the high auction prices may not represent a genuine market shift.
"Auction floor buyers happen to be the same merchants who are contracting farmers. Their dominance in offering prices that eclipse contract ones is puzzling," Dune noted. "It may also reflect cartel activity aimed at confusing the market rather than empowering smallholder farmers."
Dr Shadreck Makombe, president of the Zimbabwe Commercial Farmers Union (ZCFU), also tempered expectations, stating that while auction prices are currently higher, the majority of farmers are unlikely to shift toward self-financing in the short term due to existing financial constraints.
Meanwhile, the government continues to push forward with the Tobacco Value Chain Transformation Plan (TVCTP), launched in 2021 with the goal of turning the industry into a US$5 billion sector by 2025. Central to this plan is the localisation of tobacco financing, which has historically depended on offshore funding sources.
As part of this reform, the RBZ last year amended the Exchange Control (Tobacco Finance) Order (Statutory Instrument 61 of 2004), allowing merchants to raise funds locally for production. Under the revised framework, restrictions on the use of locally sourced funds were lifted, but stakeholders say real-world impacts have yet to materialise.
Despite this policy change, significant progress in localising tobacco production financing has remained limited. Farmers and union leaders are now calling for tangible action to boost domestic funding access and reduce reliance on foreign contractors.
As the 2025 marketing season enters its final weeks, the sustained rise of auction prices may rekindle debate about the future structure of Zimbabwe's tobacco financing and marketing systems—an issue with far-reaching implications for the country's top agricultural export.
Data released by the Tobacco Industry and Marketing Board (TIMB) shows that from day 38 to day 61 of the 2025 marketing season, the average auction price has consistently outperformed that of contract sales. The price gap, which started at just US$0.01, has widened to US$0.25 per kilogram, raising eyebrows across the sector.
Zimbabwe Tobacco Growers Association (ZTGA) chairman Mr George Seremwe said the figures highlight a deeper problem with the contract system, which he believes is no longer serving the long-term interests of smallholder farmers.
"We continually think contracting is the solution to the plight of smallholder farmers, yet the markup they put on the cost of production is not advantageous," Seremwe said. "In the long-term, as a country, we should return to the auction system. Numbers do not lie."
He accused contractors of manipulating the system by offering high prices for only a few bales, while the bulk of the harvest receives lower rates. Seremwe urged the Reserve Bank of Zimbabwe (RBZ) and Ministry of Finance to actively fund smallholder tobacco producers and reconsider auction financing schemes, including the previously scrapped TIMB Tobacco Input Credit Scheme (TICS).
However, not all stakeholders agree. Tobacco Farmers Union Trust (TFUT) president Mr Edward Dune expressed skepticism over the significance of the trend, warning that the high auction prices may not represent a genuine market shift.
Dr Shadreck Makombe, president of the Zimbabwe Commercial Farmers Union (ZCFU), also tempered expectations, stating that while auction prices are currently higher, the majority of farmers are unlikely to shift toward self-financing in the short term due to existing financial constraints.
Meanwhile, the government continues to push forward with the Tobacco Value Chain Transformation Plan (TVCTP), launched in 2021 with the goal of turning the industry into a US$5 billion sector by 2025. Central to this plan is the localisation of tobacco financing, which has historically depended on offshore funding sources.
As part of this reform, the RBZ last year amended the Exchange Control (Tobacco Finance) Order (Statutory Instrument 61 of 2004), allowing merchants to raise funds locally for production. Under the revised framework, restrictions on the use of locally sourced funds were lifted, but stakeholders say real-world impacts have yet to materialise.
Despite this policy change, significant progress in localising tobacco production financing has remained limited. Farmers and union leaders are now calling for tangible action to boost domestic funding access and reduce reliance on foreign contractors.
As the 2025 marketing season enters its final weeks, the sustained rise of auction prices may rekindle debate about the future structure of Zimbabwe's tobacco financing and marketing systems—an issue with far-reaching implications for the country's top agricultural export.
Source - The Chronicle