Tobacco farms under receivership
By Brian Hatyoka
A NUMBER of tobacco farms have been placed under receivership in Zambia because of diminishing returns in the industry arising from increased production costs and effects of climate, Tobacco Association of Zambia (TAZ) president, Albert Van Wyk, has said.
Mr Van Wyk said the industry was hoping for a substantial increase in the global price of the crop in order to help boost the industry.
He said the erratic power supply and flooding has led to a huge increase in production costs in the sector this season and induced reductions in crop yields.
Mr Van Wyk said last year Zambia produced 16 million kilogrammes of Virginia tobacco alone , this year production could be down to 12 million kilogrammes.
He said the industry would continue to shrink owing to the external factors that would continue to impact negatively on the sector.
“Farmers were forced to run diesel generators at a huge cost because the process of curing tobacco was heavily dependant on electricity,” said Mr. Van Wyk.
In response to a Press query, Mr Van Wyk said the weakening of the dollar was a major challenge to the industry
“The local tobacco industry’s performance could have been better but it is being hampered by exchange rate fluctuations,” he said.
The industry had experienced setbacks including poor floor prices in previous years as well as the soaring fuel, and fertiliser prices.
“As you have noted in the press there have been a number of tobacco farms that have been placed under receivership recently, ” he said.
The tobacco industry in Zambia has stagnated in the last two years due to a number of factors including financing and unsatisfactory floor prices.
In 2005 tobacco earned US$ 55, 584,918 while in 2006 this went down to $53, 199,012.
Tobacco Board of Zambia board secretary, Jonathan Chizuni, said the major challenge for the sector has continued to be limited investment in the industry and low profitability due to high production costs and unsatisfactory floor prices,” he said
Mr Chizuni acknowledged that tobacco production was a costly venture due to the high cost of inputs that include intensive labour, land preparation, seed and seedling production, tobacco fertilisers, chemicals, packaging materials, transportation as well as infrastructure.
Without investment support, local tobacco farmers are not able to increase production.
Industry watchers say it is imperative that tobacco floor prices improve to motivate farmers.
The ended year saw an improvement in the average price of tobacco but much more needs to be done.
The price of tobacco increased from $0.82 per kilogramme for burley to $1.01/kg in 2007 and from $1.82/kg for Virginia to $2.10/kg in 2007.
He said there was need for the tobacco industry in Zambia to create confidence in the international market by ensuring consistent and efficient supply of tobacco to the market.
