Source: TIMB guarantees tobacco harvest will find market – herald
Martin Kadzere
THE Tobacco Industry and Marketing Board (TIMB) has provided a firm guarantee that the projected record 400 million kilogramme tobacco harvest will be fully absorbed by international off-takers, effectively neutralising market anxieties over a global supply glut.
TIMB chief executive officer Mr Emmanuel Matsvaire affirmed that all contractual obligations will be met, ensuring merchants do not prematurely exit the market upon meeting their procurement targets.
According to TIMB data, the Tobacco Leaf Exporters Association, representing international buyers, has committed to purchase 275 million kilogrammes; while the Zimbabwe Association of Tobacco Merchants, which represents indigenous players, has pledged to buy 100 million kg.
Production for this season is projected to reach a peak of between 380 million kg and 400 million kg, a significant increase from the previous record of 354 million kg produced last year.
By securing these commitments, analysts say merchants are shielding local farmers from a potential mid-season market collapse similar to that seen in Malawi last year, where the government there was forced to buy the crop after buyers abruptly exited the market upon reaching their targets.
“We will have all the tobacco purchased,” Mr Matsvaire told The Sunday Mail Business in an interview.
The buffer stock cooling
Market analysts attribute the current global oversupply to a post-pandemic correction.
Following the Covid-19 pandemic, crippled supply chains led to a dangerous depletion of tobacco “buffer stocks”.
Traditionally, global tobacco firms maintain at least 18 months of inventory to buffer against supply chain disruptions.
However, during the pandemic-induced lockdowns, severe shipping bottlenecks forced major cigarette producers to draw down their stocks. This inventory depletion was compounded by a surge in cigarette consumption.
According to the World Health Organisation, stresses of the lockdown period triggered a notable increase in smoking rates as consumers turned to tobacco as a primary stress-relief mechanism.
While many health-conscious individuals attempted to quit during the pandemic, a significant portion of the global smoking population increased their intake due to both psychological and structural factors.
Lockdowns caused a surge in mental distress, anxiety, depression and boredom, with studies in countries like Italy and the United Kingdom showing that between 25 percent and 30 percent of smokers increased their daily cigarette consumption. The shift to remote work further catalysed this trend; without the restrictions of smoke-free office environments, many “social” or occasional smokers transitioned to more frequent, heavy smoking while at home.
After the pandemic subsided, cigarette companies aggressively purchased tobacco to refill these reserves.
In Zimbabwe, this triggered a surge in prices and incentivised both existing growers and new players to ramp up production. However, with global warehouses now at capacity, a “temporary cooling of demand” has set in, dragging average prices down by approximately 18 percent this year.
Providing a critical counterweight to this trend are emerging markets such as Indonesia, which has aggressively increased its uptake of the local leaf, injecting much-needed competition into the auction floors.
“Though fragmented, we still have markets for our tobacco,” said Mr Matsvaire.
The El Niño paradox
While oversupply typically spells disaster for prices, a looming climate threat may ironically provide a financial reprieve for Zimbabwean tobacco farmers. El Niño is a climate phenomenon triggered by the warming of Pacific Ocean waters, which traditionally signals severe drought and erratic rainfall for Southern Africa. Industry experts suggest that while contractors might try to keep prices low after fulfilling orders, the threat of an El Niño-induced production slump next year may force a shift in strategy.
“Anticipating a sharp decline in production next year due to El Niño-induced dry spells, international tobacco companies are expected to begin front-loading their purchases to secure adequate inventory,” Dr Takesure Sangano, an agricultural policy analyst, said in an interview.
This strategic stockpiling is expected to act as a price anchor.
“As merchants realise that next year’s crop may be significantly smaller, aggressive competition to lock in current quality leaf is likely to sustain — or even drive up — prices in the latter half of the season,” said Mr Sangano.
Empowering the market-literate farmer
There is a growing consensus that for tobacco to remain a viable pillar of the economy, farmers require a significantly deeper level of market literacy.
To bridge the current knowledge gap, analysts say a robust and synchronised information dissemination strategy is required. As the industry regulator, TIMB should spearhead data-driven outreach programmes that translate complex global trends into actionable insights for the local grower.
Simultaneously, farmer associations must evolve beyond traditional advocacy to become centres of excellence for economic education. In this digital age, the focus must shift towards information as a vital production input.
Utilising mobile platforms to push real-time “market alerts” and weather-indexed production advice ensures that even those in the most remote areas can make informed, data-backed decisions.
The post TIMB guarantees tobacco harvest will find market appeared first on Zimbabwe Situation.