* Farmers seen selling up to 240 million kilograms this year, down 5%
* Tobacco exports have earned $178 million since January (Adds no dollar payments for farmers)
HARARE (Reuters) - Zimbabwean farmers are expected to sell up to 240 million kilograms of tobacco this year, a 5 percent dip from 2018 due to drought, an industry official said on Wednesday at the start of a selling season that could help ease a severe dollar shortage.
The opening of tobacco auctions traditionally leads to improved foreign exchange inflows in the southern African nation as buyers bring in dollars to purchase the crop.
In an official circular on Wednesday, the central bank said farmers would now be paid in the local transitional RTGS dollar currency, reversing a decision to pay them half their money in U.S. dollars.
The biggest farmers’ group said it was studying the notice.
That should not affect dollar flows into the country, as buyers will still import dollars to convert into local currency.
Tobacco, which is grown by more than 170,000 mostly small-scale farmers, is Zimbabwe’s second-biggest earner of foreign exchange after mining, and last year brought in $892 million.
Farmers are expected to produce between 220 and 240 million kg of the crop this year following a drought that hit yields in some areas. The lack of rain has also wilted other crops like the staple maize.
“Some of the crop was affected by drought but we are still conducting an assessment to see the actual extent of the damage,” said a Tobacco Industry and Marketing Board (TIMB) official who declined to be named.
Farmers had already harvested their crop by the time Cyclone Idai hit Mozambique and Zimbabwe last week, causing widespread devastation. One TIMB official said some farmers could have been affected post-harvest, but no figures were yet available.
Last year, tobacco farmers delivered 252 million kg, an all- time record. This season some 40,000 new farmers have taken up growing tobacco, TIMB chairwoman Monica Chinamasa said during the official opening of tobacco auctions in Harare.
Zimbabwe has been gripped by shortages of U.S. dollars, leading to a scarcity of fuel, food and medicines.
Last month Harare ditched a discredited 1:1 official U.S dollar with its quasi-currency bond note and electronic dollars and merged them into the RTGS dollar.
On the interbank market, one U.S. dollar bought 2.86 RTGS dollars. On the black market the rate was 3.9 per dollar.
Growing demand from China, the world’s biggest smoking nation, and funding from private tobacco companies have helped boost output, which had plunged in 2008.
Tobacco exports have already earned $178 million since January, with South Africa and China the top two importers, TIMB data showed. (Reporting by MacDonald Dzirutwe; Editing by David Holmes and Jan Harvey)