A total of 9.500.000 kg of tobacco worth US $15 million has been sold at the three auction floors since the start of the selling season four weeks ago. Prices range from US $1.75 a kg to US $1.95.
Ever since the government announced new incentives at the beginning of May, deliveries have significantly picked up. Under the new incentives, tobacco growers are entitled to a support price of Z $40,000 for every kg of tobacco that fetches US $1.50. Any crop that fetches below US$1.50 or above would attract a support price calculated pro-rata to the Z $40,000 per kg.
All three tobacco auction floors have started paying farmers the incentives after the Reserve Bank of Zimbabwe (RBZ) last week released $ 4 billion for the 54 million kg of the golden leaf delivered last year.
In Zimbabwe, tobacco output has fallen from an all-time high of 220 million kg in 2000 to a projected 80 million kg this year. However, according to Wilfanos Mashingaidze, the vice-president of the Zimbabwe Tobacco Growers Trust, growers were committed to increasing production. In order to ensure that tobacco growers return to the fields in the 2007/08 season, the Government and the RBZ have introduced special facilities on foreign currency retention.