Required Report - public distribution

**Date:** 5/24/2004

**GAIN Report Number:** RH4003

RH4003

**Zimbabwe**

**Tobacco and Products**

**Annual**

**2004**

**Approved by:**

![](media/image1.wmf)Scott Reynolds

U.S. Embassy, South Africa

**Prepared by:**

Herman Germishuis

**Report Highlights:**

Zimbabwe, once the world's second biggest tobacco exporter is currently
selling its smallest crop in 33 years allowing competitors like Brazil,
China and India to gain market share. Total 2004 production is estimated
at 60,750 tons compared to the record 245,148 tons produced in 2000.
Exports could still exceed 60,000 tons compared to the 143,000 tons
exported two years ago. The cutback in production is mainly due to the
land reform program.

Includes PSD Changes: Yes

Includes Trade Matrix: Yes

Unscheduled Report

Pretoria \[SF1\]

\[RH\]

**Summary**

Zimbabwe, once the world's second biggest tobacco exporter, is currently
selling its smallest crop in 33 years. The decline is the direct result
of an agrarian reform program through which the government seized land
from white commercial growers for redistribution. The main product is
flue-cured tobacco. Zimbabwe's flue cured leaf, used to flavour brands
such as Camel and Marlboro, competes with US leaf for flavour. Zimbabwe
used to account for about 20% of global exports of flue-cured tobacco,
which is used for blending with cheaper leaf. Until a few years ago, 8%
of the tobacco in a western-style cigarette would have come from
Zimbabwe. Total production in 2004 is estimated at 60,750 Mt., down from
84,022 in 2003 and 169,844 in 2002. The record crop of 245,148 Mt. was
produced in 2000. It was shortly after this crop that the agrarian
reform started.

During the summer of 2003/04 Zimbabwe experienced average rainfall.
After good rains in mid-November, a hot dry spell was experienced till
late December. Three weeks of good rains in early January were followed
by another hot dry spell till late February. A final wet spell was
experienced in March, which was of little assistance to the tobacco
crops but did assist in filling storage dams. The proportion of
irrigated tobacco is declining, as much of the equipment and expertise
was lost in the agrarian reform program.

Flue Cured production for 2004 is estimated at 60,000 Mt., down from
81,806 Mt. in 2003 and 165,835 Mt. in 2002. The prolonged dry spell in
the second half of the season is expected to produce similar styles as
in 2002. The average price paid to producers in 2003 was US\$2.25/kg,
compared to US\$2.27 in 2002 and US\$1.74 in 2001. For the 2004 crop the
auction floors opened on 30 March 2004.

Burley production in 2004 is estimated at 750 Mt., down from 2,184 Mt.
in 2003, and 3,988 Mt. in 2002. The average price paid to producers in
2003 was US\$1.25/kg, compared to US\$1.30 in 2002 and US\$0.99 in 2001.
The auction floor in Mutare has been closed and the remaining auction
floor in Harare opened on 27 April 2004.

Cigarette production showed another small reduction in 2003 when
compared to 2002 due to the economic circumstances prevailing in
Zimbabwe but is expected to show considerable gains in 2004 as new
regional markets are developed and a third manufacturer starts
production.

The marketing year used throughout this report is the year in which the
crop is sold. For example, MY 2004 refer to the crop planted during 2003
and sold during 2004.

Exchange rate:

The Reserve Bank of Zimbabwe (RBZ) requires that 25% of all foreign
currency is surrendered at US\$1.00 = ZW\$824.00 with the remainder
being auctioned. This blend of exchange rates is used to determine the
daily exchange rate used on the auction floors to convert the US dollar
value to Zimbabwe dollars.

May 3, 2004 US\$1.00 = Z\$55.10 (Official GOZ rate)

US\$1.00 = Z\$5 200.00 (Exporters rate)

US\$1.00 = Z\$5 125.00 (RBZ auction rate)

In order to more equitably distribute the limited foreign currency
available and to stabilise the exchange rate, the Reserve Bank of
Zimbabwe introduced foreign currency auctions in January 2004. The rate
started at US1.00 = ZW\$3,800 but has already risen to US1.00 =
ZW\$5,100. Due to the extreme shortage of foreign currency, the parallel
market still flourishes.

+------------------+----------+-------+-------+-------+-------+------+
| **Country**      | **Zi     |       |       |       |       |      |
|                  | mbabwe** |       |       |       |       |      |
+------------------+----------+-------+-------+-------+-------+------+
| **Commodity**    | **To     | ##    |       |       |       |      |
|                  | bacco,** | ####  |       |       |       |      |
|                  |          | Total |       |       |       |      |
+------------------+----------+-------+-------+-------+-------+------+
| Hectares         | 2002     | Re    | 2003  | Est   | 2004  | Fore |
|                  |          | vised |       | imate |       | cast |
+------------------+----------+-------+-------+-------+-------+------+
| Metric tons      | USDA     | Post  | USDA  | Post  | USDA  | Post |
|                  | \[Old\]  | \[    | \[    | \[    | \[    | N    |
|                  |          | New\] | Old\] | New\] | Old\] | ew\] |
+------------------+----------+-------+-------+-------+-------+------+
| **Market Year    |          | 01    |       | 01    |       | 01/  |
| Begin**          |          | /2002 |       | /2003 |       | 2004 |
+------------------+----------+-------+-------+-------+-------+------+
| Area Planted     | 78491    | 78195 | 59894 | 52604 | 0     | 3    |
|                  |          |       |       |       |       | 3300 |
+------------------+----------+-------+-------+-------+-------+------+
| Beginning Stocks | 132163   | 57084 | 1     | 55575 | 1     | 2    |
|                  |          |       | 42530 |       | 29088 | 2376 |
+------------------+----------+-------+-------+-------+-------+------+
| Farm Sales       | 170115   | 1     | 88021 | 84022 | 0     | 6    |
| Weight Prod      |          | 69844 |       |       |       | 0750 |
+------------------+----------+-------+-------+-------+-------+------+
| Dry Weight       | 146124   | 1     | 75623 | 72264 | 0     | 5    |
| Production       |          | 46124 |       |       |       | 2348 |
+------------------+----------+-------+-------+-------+-------+------+
| U.S. Leaf        | 0        | 0     | 0     | 0     | 0     | 0    |
| Imports          |          |       |       |       |       |      |
+------------------+----------+-------+-------+-------+-------+------+
| Other Foreign    | 10000    | 60    | 5000  | 40    | 0     | 35   |
| Imports          |          |       |       |       |       |      |
+------------------+----------+-------+-------+-------+-------+------+
| TOTAL Imports    | 10000    | 60    | 5000  | 40    | 0     | 35   |
+------------------+----------+-------+-------+-------+-------+------+
| TOTAL SUPPLY     | 288287   | 2     | 2     | 1     | 1     | 7    |
|                  |          | 03268 | 23153 | 27879 | 29088 | 4759 |
+------------------+----------+-------+-------+-------+-------+------+
| Exports          | 141570   | 1     | 90000 | 1     | 0     | 6    |
|                  |          | 43487 |       | 01836 |       | 1500 |
+------------------+----------+-------+-------+-------+-------+------+
| Dom. Leaf        | 4147     | 4146  | 4030  | 3627  | 0     | 3097 |
| Consumption      |          |       |       |       |       |      |
+------------------+----------+-------+-------+-------+-------+------+
| U.S. Leaf Dom.   | 0        | 0     | 0     | 0     | 0     | 0    |
| Consum.          |          |       |       |       |       |      |
+------------------+----------+-------+-------+-------+-------+------+
| Other Foreign    | 40       | 60    | 35    | 40    | 0     | 35   |
| Consump.         |          |       |       |       |       |      |
+------------------+----------+-------+-------+-------+-------+------+
| TOTAL Dom.       | 4187     | 4206  | 4065  | 3667  | 0     | 3132 |
| Consumption      |          |       |       |       |       |      |
+------------------+----------+-------+-------+-------+-------+------+
| TOTAL            | 145757   | 1     | 94065 | 1     | 0     | 6    |
| Disappearance    |          | 47693 |       | 05503 |       | 4632 |
+------------------+----------+-------+-------+-------+-------+------+
| Ending Stocks    | 142530   | 55575 | 1     | 22376 | 0     | 1    |
|                  |          |       | 29088 |       |       | 0127 |
+------------------+----------+-------+-------+-------+-------+------+
| TOTAL            | 288287   | 2     | 2     | 1     | 0     | 7    |
| DISTRIBUTION     |          | 03268 | 23153 | 27879 |       | 4759 |
+------------------+----------+-------+-------+-------+-------+------+

**Production**

Production table:

  ------------ --------- --------- --------- --------- ------------ ---------
                         AREA      Ha.                 PRODUCTION   Mt.

               2002      2003      2004      2002      2003         2004

  Flue-cured   74,295    49,571    32,000    165,835   81,806       60,000

  Burley       3,500     2,643     850       3,988     2,184        700

  Other        400       390       450       21        32           50

  TOTAL        78,195    52,604    33,300    169,844   84,022       60,750
  ------------ --------- --------- --------- --------- ------------ ---------

The continued reduction in the area planted is a direct result of the
agrarian reform process. This trend is likely to stabilise at current
levels and future reductions will be relatively small. No major
expansion in plantings can be expected until political and economic
stability returns.

Average prices received over the past few seasons were:

  ----------------- ----------------- ----------------- -----------------
  US\$/kg.          2001              2002              2003

  Flue cured        1.74              2.27              2.25

  Burley            0.99              1.30              1.25
  ----------------- ----------------- ----------------- -----------------

During 2003, the GOZ announced that the exchange rate to be used on the
auction floors was US\$1 = ZW\$824. There was considerable grower
pressure for an upward revision, but this was resisted. For 2004,
following the introduction of the auction system for the sale of foreign
currency, GOZ has announced that the exchange rate to be used will be a
blend

arrived at as follows: 25% of the value will be at US\$1 = ZW\$824 and
the remaining 75% will be the average auction value of the US\$ at the
previous day's Reserve Bank of Zimbabwe (RBZ) auctions. This arrangement
benefits farmers.

**Commodity Outlook, Consumption**

In Zimbabwe, with more than 97% of total tobacco production exported,
domestic consumption has little or no influence on production.
Zimbabwe\'s ability to sell its tobacco on world markets is the major
factor determining production.

**Commodity Outlook, Trade**

The only tobacco imported is for blending for the manufacturing of
export cigarettes. Apparently some South African tobacco is sent to
Zimbabwe for processing.

Exports are the main activity. It appears that the government has sold
forward about 35,000 tons of the 2004 crop to get foreign exchange and
avoid IMF expulsion.

+----------------------+----------------+-----------------+-----------+
| **EXPORTS**          |                |                 |           |
+----------------------+----------------+-----------------+-----------+
| **Country**          | Zimbabwe       |                 |           |
+----------------------+----------------+-----------------+-----------+
| **Commodity**        | Tobacco,       | ######## Total  |           |
+----------------------+----------------+-----------------+-----------+
| Time Period          | CY             | Units:          | Mt.       |
+----------------------+----------------+-----------------+-----------+
| Exports for:         | 2002           |                 | **2003**  |
+----------------------+----------------+-----------------+-----------+
| U.S.                 |                | U.S.            |           |
+----------------------+----------------+-----------------+-----------+
| Others               |                | Others          |           |
+----------------------+----------------+-----------------+-----------+
| Far East             | 40856          | UK              | 20356     |
+----------------------+----------------+-----------------+-----------+
| UK                   | 28481          | Germany         | 11157     |
+----------------------+----------------+-----------------+-----------+
| Germany              | 15554          | Denmark         | 3020      |
+----------------------+----------------+-----------------+-----------+
| Africa               | 12475          | Netherlands     | 2700      |
+----------------------+----------------+-----------------+-----------+
| Non EU Europe        | 7551           | Rest of EU      | 11801     |
+----------------------+----------------+-----------------+-----------+
| Belgium              | 6512           | Rest of Europe  | 10837     |
+----------------------+----------------+-----------------+-----------+
| Oceania              | 5922           | Far East        | 19724     |
+----------------------+----------------+-----------------+-----------+
| Middle East          | 3921           | Africa          | 11314     |
+----------------------+----------------+-----------------+-----------+
| Netherlands          | 2677           | Middle East     | 6324      |
+----------------------+----------------+-----------------+-----------+
| Americas             | 1864           | Americas        | 1434      |
+----------------------+----------------+-----------------+-----------+
| Total for Others     | 125813         |                 | 98667     |
+----------------------+----------------+-----------------+-----------+
| Others not Listed    | 17674          |                 | 3169      |
+----------------------+----------------+-----------------+-----------+
| Grand Total          | 143487         |                 | 101836    |
+----------------------+----------------+-----------------+-----------+

**Commodity Outlook, Policy**

The Government of Zimbabwe does not control any aspect of tobacco
production in Zimbabwe, but is actively considering ways and means of
assisting the new farmers to increase production in order to increase
foreign currency earnings.

**Marketing**

Government does not control tobacco marketing. The Tobacco Industry
Marketing Board (TIMB) merely acts as an arbiter to resolve disputes
between growers and merchants and to oversee the orderly marketing of
all the tobacco crops.

+-----------------+---------+----------+-------+------+-------+------+
| **Country**     | **Zim   |          |       |      |       |      |
|                 | babwe** |          |       |      |       |      |
+-----------------+---------+----------+-------+------+-------+------+
| **Commodity**   | **Tob   | ##       |       |      |       |      |
|                 | acco,** | ##### Fl |       |      |       |      |
|                 |         | ue cured |       |      |       |      |
+-----------------+---------+----------+-------+------+-------+------+
| Hectares        | 2002    | Revised  | 2003  | Esti | 2004  | Fore |
|                 |         |          |       | mate |       | cast |
+-----------------+---------+----------+-------+------+-------+------+
| Metric tons     | USDA    | Post     | USDA  | Post | USDA  | Post |
|                 | \[Old\] | \[New\]  | \[    | \[N  | \[    |      |
|                 |         |          | Old\] | ew\] | Old\] | \[N  |
|                 |         |          |       |      |       | ew\] |
+-----------------+---------+----------+-------+------+-------+------+
| **Market Year   |         | 01/2002  |       | 01/  |       | 01/  |
| Begin**         |         |          |       | 2003 |       | 2004 |
+-----------------+---------+----------+-------+------+-------+------+
| Area Planted    | 0       | 74295    | 0     | 4    | 0     | 3    |
|                 |         |          |       | 9571 |       | 2000 |
+-----------------+---------+----------+-------+------+-------+------+
| Beginning       | 0       | 53309    | 0     | 5    | 0     | 1    |
| Stocks          |         |          |       | 1888 |       | 8443 |
+-----------------+---------+----------+-------+------+-------+------+
| Farm Sales      | 0       | 165835   | 0     | 8    | 0     | 6    |
| Weight Prod     |         |          |       | 1806 |       | 0000 |
+-----------------+---------+----------+-------+------+-------+------+
| Dry Weight      | 0       | 143116   | 0     | 7    | 0     | 5    |
| Production      |         |          |       | 0599 |       | 1780 |
+-----------------+---------+----------+-------+------+-------+------+
| U.S. Leaf       | 0       | 0        | 0     | 0    | 0     | 0    |
| Imports         |         |          |       |      |       |      |
+-----------------+---------+----------+-------+------+-------+------+
| Other Foreign   | 0       | 0        | 0     | 0    | 0     | 0    |
| Imports         |         |          |       |      |       |      |
+-----------------+---------+----------+-------+------+-------+------+
| TOTAL Imports   | 0       | 0        | 0     | 0    | 0     | 0    |
+-----------------+---------+----------+-------+------+-------+------+
| TOTAL SUPPLY    | 0       | 196425   | 0     | 12   | 0     | 7    |
|                 |         |          |       | 2487 |       | 0223 |
+-----------------+---------+----------+-------+------+-------+------+
| Exports         | 0       | 140537   | 0     | 10   | 0     | 6    |
|                 |         |          |       | 0544 |       | 0000 |
+-----------------+---------+----------+-------+------+-------+------+
| Dom. Leaf       | 0       | 4000     | 0     | 3500 | 0     | 3000 |
| Consumption     |         |          |       |      |       |      |
+-----------------+---------+----------+-------+------+-------+------+
| U.S. Leaf Dom.  | 0       | 0        | 0     | 0    | 0     | 0    |
| Consum.         |         |          |       |      |       |      |
+-----------------+---------+----------+-------+------+-------+------+
| Other Foreign   | 0       | 0        | 0     | 0    | 0     | 0    |
| Consump.        |         |          |       |      |       |      |
+-----------------+---------+----------+-------+------+-------+------+
| TOTAL Dom.      | 0       | 4000     | 0     | 3500 | 0     | 3000 |
| Consumption     |         |          |       |      |       |      |
+-----------------+---------+----------+-------+------+-------+------+
| TOTAL           | 0       | 144537   | 0     | 10   | 0     | 6    |
| Disappearance   |         |          |       | 4044 |       | 3000 |
+-----------------+---------+----------+-------+------+-------+------+
| Ending Stocks   | 0       | 51888    | 0     | 1    | 0     | 7223 |
|                 |         |          |       | 8443 |       |      |
+-----------------+---------+----------+-------+------+-------+------+
| TOTAL           | 0       | 196425   | 0     | 12   | 0     | 7    |
| DISTRIBUTION    |         |          |       | 2487 |       | 0223 |
+-----------------+---------+----------+-------+------+-------+------+

**Production**

Flue-cured tobacco is generally produced in the better rainfall areas
North and East of Harare where sandier soils predominate. The northern
parts of the tobacco areas generally produce a fast ripening, high
nicotine style of tobacco favoured by the Virginia cigarette
manufacturer. These areas are generally below 4,000 ft altitude and are
more dependent on the Inter Tropical Convergent Zone for their rainfall.
Nearer to, and East of, Harare a thicker, slower growing style of
tobacco with slightly lower nicotine content is produced. The latter
style is more sought after for blended cigarettes. With the removal of
nearly all the large commercial farmers, the irrigated proportion of the
crop is expected to decline in the future.

The reduction in area planted during the last year is a direct result of
the agrarian reform process in the country. The increase in the
proportion of the crop being planted early in 2003 is a direct result of
the few remaining large producers using their limited irrigation
facilities to the maximum to optimise production. With nearly all of
these large producers being evicted from their farms, the irrigated crop
is expected to show a dramatic decline in 2005.

The following table shows the changes taking place in planting dates
during the last five seasons.

  ----------- ----------- ----------- ----------- ----------- -----------
  \% of the   2000        2001        2002        2003        2004
  crop                                                        

  Early       38          38          33          44          40

  Main        61          61          66          55          50

  Late        1           1           1           1           10
  ----------- ----------- ----------- ----------- ----------- -----------

The early crop is planted and grown under full irrigation. In previous
years, there was a trend to plant this crop in the latter half of
September in order to improve the quality of the top of the plant to
give it a more natural growth. However, the few remaining growers with
irrigation tended to grow their crop within the first week of September
in order to maximise yields knowing that this could well be their last
tobacco crop. The main crop is generally grown under dry land conditions
and is planted from late October onwards depending on the onset of the
rains. Where possible, water is used to assist in planting this crop.
The increase in the plantings of the late crop has been due to the
increase of peasant growers who are more dependent on the rains to grow
their crop.

All the curing systems throughout the industry are either coal or wood
fired. Growers who use coal had great difficulty in sourcing adequate
coal due to the almost non-functioning of the National Railways of
Zimbabwe and very low production by the sole coal producer. A large
number of the new farmers merely cut whatever trees they could find in
order to source fuel for their barns. This significantly increased the
deforestation going on in the country. Supply of fertiliser and crop
chemicals was intermittent due to foreign currency shortages but was
generally adequate to meet needs.

National yield in 2003 was 2,000kg/ha, down from 2,213kg/ha in 2002 and
2,264kg/ha in 2001. The downward trend in yield is due to the change in
growing technique of the new growers. The yield in 2003 is the lowest
since 1987, with the exception of MY 1997 when the country experienced
an exceptionally wet year. Yield of the early irrigated crop planted in
early September can exceed 3 600kg/ha while the yield of the main dry
land crop will vary between districts with the slow ripening areas
expecting 2,500kg/ha while the late planted crop is between 1,500 and
2,000kg/ha.

Crop Quality

The crop styles over the previous 5 years is shown in the following
table:

  ----------- ----------- ----------- ----------- ----------- -----------
  STYLE %     1999        2000        2001        2002        2003

  Ripe        13          13          20          11          10
  spotted                                                     

  Standard    56          55          50          55          43

  Droughted   9           13          10          13          19

  Green       22          19          20          21          28
  ----------- ----------- ----------- ----------- ----------- -----------

The table clearly shows the decline in quality in 2003 due to the
prolonged dry spells early in the season followed by the exceptionally
wet second half.

**Commodity Outlook, Consumption**

Zimbabwe is unique amongst the world producers in that the vast majority
of production is exported and domestic consumption has little or no
influence on overall production trends. The future of the tobacco
industry depends on its ability to remain competitive in the world
markets. The industry does not receive assistance or subsidy from the
GOZ.

**Commodity Outlook, Trade**

The port of Beira in neighbouring Mozambique retains its importance for
tobacco exports and nearly one third of exports are routed through this
port. It is capable of handling up to 60% of Zimbabwe production but
difficulties are being experienced with the railways and at the port
itself. It is estimated that in excess of two thirds of exports went by
road because of the poor state of the Zimbabwean railways. The shortage
of containers within Zimbabwe is compelling exporters to containerise
the crop in South Africa.

  -------------------- ------------------ ------------------ ------------
  **Exports**                                                

  **Country**          Zimbabwe                              

  **Commodity**        Flue Cured         Tobacco            

  Time Period          Jan-Dec            Units:             Metric ton

  Exports for:         2002                                  **2003**

  U.S.                                    U.S.               1308

  Others                                  Others             

  EU                   67,620             U.K.               20796

  Far East             40,157             Germany            11326

  Africa               12310              France             3555

  Rest of Europe       7433               Denmark            2981

  Americas             1219               Netherlands        2700

  Middle East          3897               Rest of EU         8061

  Oceania              5922               Rest of Europe     9896

                                          Far East           19724

                                          Africa             11356

                                          Oceania            3079

  Total for Others     138558                                93474

  Others not Listed    1979                                  5762

  Grand Total          140537                                100544
  -------------------- ------------------ ------------------ ------------

**Stocks**

Stock levels immediately prior to the sales of 2004 were slightly down
on those of 2003 but is unlikely to have any influence on the prices
paid for the current crop. The policy is to keep stocks down to such a
level as not to impair storage available for the new crop.

**Policy**

With the agrarian reforms, smaller producers are delivering the major
portion of the crop. These growers have limited inputs and as a result,
the quality of the crop has declined. GOZ is encouraging the continued
production of flue-cured tobacco. There are still a few large producers
but most of these will have been evicted from their farms by the end of
2004.

**Marketing**

Daily wastage is a term used for the amount of tobacco that is offered
on auction more than once as either:

a\) The grower is dissatisfied with the price offered, or

b\) Presentation is substandard and buyers require it to be re-handled
before sale.

Daily wastage is used as a measure of the dissatisfaction of growers
with prices and in 1987 it reached an all time high of 31.75%. Daily
wastage in 2003 was 9.10%, up from 7.89% in 2002 and 6.85% in 2001.

During 2003, the Government allowed merchants to buy directly from the
growers. The GOZ also announced mid way through 2003 that they would
allow contract tobacco production. In

exchange for financial assistance in producing the crop, growers were
contracted to sell to the financiers. Once their contract had been
fulfilled, growers were then permitted to either continue supplying the
merchant direct or put the remainder of their crop on the auction
system. With the contract system, the crop is classified and growers are
paid the previous day's average for the grade of their crop. Further,
growers are permitted to sell directly to merchants at a negotiated
price. This has caused some disruption to orderly marketing of the crop.

+------------------+----------+-------+-------+-------+-------+-------+
| **Country**      | **Zi     |       |       |       |       |       |
|                  | mbabwe** |       |       |       |       |       |
+------------------+----------+-------+-------+-------+-------+-------+
| **Commodity**    | **To     | ###   |       |       |       |       |
|                  | bacco,** | ### B |       |       |       |       |
|                  |          | urley |       |       |       |       |
+------------------+----------+-------+-------+-------+-------+-------+
| Hectares         | 2002     | Re    | 2003  | Est   | 2004  | For   |
|                  |          | vised |       | imate |       | ecast |
+------------------+----------+-------+-------+-------+-------+-------+
| Metric tons      | USDA     | Post  | USDA  | Post  | USDA  | Post  |
|                  | \[Old\]  | \[    | \[    | \[    | \[    | \[    |
|                  |          | New\] | Old\] | New\] | Old\] | New\] |
+------------------+----------+-------+-------+-------+-------+-------+
| **Market Year    |          | 01    |       | 01    |       | 01    |
| Begin**          |          | /2002 |       | /2003 |       | /2004 |
+------------------+----------+-------+-------+-------+-------+-------+
| Area Planted     | 0        | 3500  | 0     | 2643  | 0     | 850   |
+------------------+----------+-------+-------+-------+-------+-------+
| Beginning Stocks | 0        | 3761  | 0     | 3687  | 0     | 3932  |
+------------------+----------+-------+-------+-------+-------+-------+
| Farm Sales       | 0        | 3988  | 0     | 2184  | 0     | 700   |
| Weight Prod      |          |       |       |       |       |       |
+------------------+----------+-------+-------+-------+-------+-------+
| Dry Weight       | 0        | 2991  | 0     | 1638  | 0     | 525   |
| Production       |          |       |       |       |       |       |
+------------------+----------+-------+-------+-------+-------+-------+
| U.S. Leaf        | 0        | 0     | 0     | 0     | 0     | 0     |
| Imports          |          |       |       |       |       |       |
+------------------+----------+-------+-------+-------+-------+-------+
| Other Foreign    | 0        | 0     | 0     | 0     | 0     | 0     |
| Imports          |          |       |       |       |       |       |
+------------------+----------+-------+-------+-------+-------+-------+
| TOTAL Imports    | 0        | 0     | 0     | 0     | 0     | 0     |
+------------------+----------+-------+-------+-------+-------+-------+
| TOTAL SUPPLY     | 0        | 6752  | 0     | 5325  | 0     | 4457  |
+------------------+----------+-------+-------+-------+-------+-------+
| Exports          | 0        | 2950  | 0     | 1293  | 0     | 1500  |
+------------------+----------+-------+-------+-------+-------+-------+
| Dom. Leaf        | 0        | 115   | 0     | 100   | 0     | 70    |
| Consumption      |          |       |       |       |       |       |
+------------------+----------+-------+-------+-------+-------+-------+
| U.S. Leaf Dom.   | 0        | 0     | 0     | 0     | 0     | 0     |
| Consum.          |          |       |       |       |       |       |
+------------------+----------+-------+-------+-------+-------+-------+
| Other Foreign    | 0        | 0     | 0     | 0     | 0     | 0     |
| Consump.         |          |       |       |       |       |       |
+------------------+----------+-------+-------+-------+-------+-------+
| TOTAL Dom.       | 0        | 115   | 0     | 100   | 0     | 70    |
| Consumption      |          |       |       |       |       |       |
+------------------+----------+-------+-------+-------+-------+-------+
| TOTAL            | 0        | 3065  | 0     | 1393  | 0     | 1570  |
| Disappearance    |          |       |       |       |       |       |
+------------------+----------+-------+-------+-------+-------+-------+
| Ending Stocks    | 0        | 3687  | 0     | 3932  | 0     | 2887  |
+------------------+----------+-------+-------+-------+-------+-------+
| TOTAL            | 0        | 6752  | 0     | 5325  | 0     | 4457  |
| DISTRIBUTION     |          |       |       |       |       |       |
+------------------+----------+-------+-------+-------+-------+-------+

**Production**

Burley tobacco is mainly grown in the north east of Zimbabwe (Centenary,
Chiweshe, Mount Darwin and Madziwa) and in the Eastern Highlands
(Nyamaropa, Burma Valley and Chipinge). These areas have better rainfall
and the longer periods of higher relative humidity needed to cure the
crop. Burley is now almost entirely grown by small farmers with only a
few large producers remaining. Since 2003 the crop is sold over only one
auction floor in Harare.

The decline in area planted in 2003 is again a direct reflection of the
agrarian reforms. In this sector, because of the preponderance of small
producers, the impact of the current viability problems has also
contributed to the downturn in production. With the almost complete
removal of the large farmers, the area planted in 2004 has declined
significantly again.

# Trade

+--------------------+-----------------+-----------------+------------+
| **Export**         |                 |                 |            |
+--------------------+-----------------+-----------------+------------+
| **Country**        | Zimbabwe        |                 |            |
+--------------------+-----------------+-----------------+------------+
| **Commodity**      | Tobacco,        | ######## Burley |            |
+--------------------+-----------------+-----------------+------------+
| Time Period        | Jan-Dec         | Units:          | Metric     |
|                    |                 |                 | tons       |
+--------------------+-----------------+-----------------+------------+
| Exports for:       | 2002            |                 | **2003**   |
+--------------------+-----------------+-----------------+------------+
| U.S.               |                 | U.S.            | 126        |
+--------------------+-----------------+-----------------+------------+
| Others             |                 | Others          |            |
+--------------------+-----------------+-----------------+------------+
| EU                 | 565             | Italy           | 94         |
+--------------------+-----------------+-----------------+------------+
| Far East           | 700             | Greece          | 91         |
+--------------------+-----------------+-----------------+------------+
| Americas           | 635             | France          | 91         |
+--------------------+-----------------+-----------------+------------+
| Africa             | 165             | Germany         | 79         |
+--------------------+-----------------+-----------------+------------+
| Rest of Europe     | 115             | Rest of EU      | 75         |
+--------------------+-----------------+-----------------+------------+
| Middle East        | 25              | Rest of Europe  | 320        |
+--------------------+-----------------+-----------------+------------+
|                    |                 | Africa          | 361        |
+--------------------+-----------------+-----------------+------------+
|                    |                 |                 |            |
+--------------------+-----------------+-----------------+------------+
|                    |                 |                 |            |
+--------------------+-----------------+-----------------+------------+
|                    |                 |                 |            |
+--------------------+-----------------+-----------------+------------+
| Total for Others   | 2205            |                 | 1111       |
+--------------------+-----------------+-----------------+------------+
| Others not Listed  | 745             |                 | 56         |
+--------------------+-----------------+-----------------+------------+
| Grand Total        | 2950            |                 | 1293       |
+--------------------+-----------------+-----------------+------------+

  ----------------- ---------------- --------- --------- ---------- --------- ----------
  **PSD Table**                                                               

  **Country**       **Zimbabwe**                                              

  **Commodity**     **Cigarettes**                                            

  Million pieces    2002             Revised   2003      Estimate   2004      Forecast

                    USDA \[Old\]     Post      USDA      Post       USDA      Post
                                     \[New\]   \[Old\]   \[New\]    \[Old\]   \[New\]

  **Market Year                      01/2002             01/2003              01/2004
  Begin**                                                                     

  Filter Production 3800             3500      3800      3000       0         4500

  Non-Filter        0                0         0         0          0         0
  Production                                                                  

  TOTAL Production  3800             3500      3800      3000       0         4500

  Imports           0                0         0         0          0         0

  TOTAL SUPPLY      3800             3500      3800      3000       0         4500

  Exports           2000             2000      2000      1200       0         3000

  Domestic          1800             1500      1800      1800       0         1500
  Consumption                                                                 

  TOTAL             3800             3500      3800      3000       0         4500
  DISTRIBUTION                                                                
  ----------------- ---------------- --------- --------- ---------- --------- ----------

# Production

Compared to 2002, production declined in 2003. However, production in
2004 is set to increase significantly to service newly developed export
markets.

With further liberalisation of the foreign currency markets, the
industry can now import inputs, such as filters, cigarette paper and
packaging materials required in cigarette manufacture. There are still
no international or non-filter cigarettes produced in Zimbabwe.
Following the merger of the two international parent companies of the
local processors (BAT), one factory was sold to a group of local
businessmen. A third manufacturer has started production and is expected
to increase production in 2004. The main competition to cigarettes is
raw tobacco used in 'roll your own' cigarettes. Manufacturers estimate
that these sales exceed the total sales of excisable products. Efforts
are continuing to develop a lower price brand for the lower end of the
market. Competition from raw leaf and health considerations are slowing
the process. The result may be the manufacture of a non-filter product.

The government does not discourage the production of tobacco products
but the anti smoking campaign has increased. The anti-smoking slogans on
the packaging is in line with world standards but has had very limited
impact on consumption. No effort is being made to limit the sale of raw
tobacco.