Bloomberg News

Zimbabwe Considering Applications to Start Tobacco Auctions

July 06, 2011

(Updates with comment from board in second paragraph.)

July 6 (Bloomberg) -- Zimbabwe is considering at least 20 applications from companies wanting to start tobacco sales in the country as existing auction houses battle to cope with rising supplies from farmers.

“We are reviewing the applications,” said Andrew Matibiri, chief executive officer of the Tobacco Industry and Marketing Board, which oversees the industry, by phone today from the capital, Harare. Zimbabwe currently has three auction floors, he said.

The southern African nation is trying to boost tobacco output, still below peak levels of about 236 million kilograms (520 million pounds) achieved in 2000, before President Robert Mugabe’s Zimbabwe African National Union-Front party sponsored often-violent seizures of most white-owned farms.

Production slipped to as low as 58.6 million kilograms in 2009, reflecting the political and economic crisis that peaked during 2008. Output of the leaf may rise to about 170 million kilograms this season as more farmers grow the crop and as the nation’s “economic environment” improves, Matibiri said in an interview on Feb. 16.

“We have sold 120.9 million kilograms so far and judging by these figures it looks like we will end the season at around 145 million kilograms,” he said today. The quality of the leaf so far this season has “been really good.”

Zimbabwe has earned $331 million from tobacco sales so far this season, up from about $276 million at the same point last year, Matibiri said.

Zimbabwe is the world’s sixth-largest exporter of the flue- cured variety of the leaf, which is also known as Virginia tobacco. It lags behind Brazil, India, the U.S., Argentina and Tanzania, according to the website of Universal Corp., the world’s biggest tobacco-leaf merchant.

--Editors: Alastair Reed, John Deane.


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