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Tabacco Farmers Withhold Crop

TOBACCO farmers say they will not deliver their crop to the auction floors until government has made a commitment to meet their current demands and pay the outstanding bonuses they are owed from last year.

Government was this week forced to reschedule the opening of the selling season after talks over prices collapsed.

The floors were supposed to be opened on Monday.

Farmers yesterday told businessdigest that they will only deliver the tobacco when there is a clear commitment from government to meet their demands.

The farmers are particularly unhappy that the Reserve Bank of Zimbabwe (RBZ) failed to deliver on its promise last year to pay the bonuses.

Last year the Reserve Bank pledged a support price for tobacco growers that would see them receiving 20% of the foreign currency earned from sales into their foreign currency accounts by October 31.

The Tobacco Industry Marketing Board (TIMB) wrote a letter to industry players on Tuesday informing of the postponement.

The letter said the postponement was indefinite. 

Zimbabwe Tobacco Association (ZTA) president Andrew Ferreira told this paper that government had not responded to submissions brought forward by tobacco stakeholders last month.

“We submitted our proposals through TIMB four weeks ago asking government to review the tobacco buying package,” Ferreira said.

Although he remained optimistic that the government would honour its commitment he said escalating production costs had necessitated the calls by the industry players to call for an urgent review in the pricing system of the golden leaf.

“Our cost of production is now changing everyday and we ask that there is some recognition to hyperinflation hence we asked for a review of the 25% foreign currency retention because we have not received last year’s foreign currency payment in full.”

The ZTA chief said there was need for government to review the exchange rate against the United States dollar which is officially trading at $30 000.

The Old Mutual Implied Rate pegged the greenback at $123 967 351 against the Zimbabwe dollar.

“Last year for every kilogramme farmers received about $190 000 for every US dollar at the start of last season and it was fine.

But we cannot viably produce when we are still having last year’s package in this environment of hyperinflation,” Ferreira said.

Ferreira said the selling package introduced by the central bank last October can only cover transport costs incurred by the farmers.

He said with fuel costing $120 million per litre yesterday, a farmer in Karoi, which is about 200 km from Harare, would require $24 billion for transport alone.

To transport a wagon of coal to Marondera from Hwange Colliery, the ZTA chief said a tobacco grower would require about $3,9 billion.

“If you sell tobacco under the current package you can’t even recover your transport costs, it is ridiculous,” Ferreira said.

Apart from escalating costs in transport he said the price of a single tobacco paper roll enough to pack 65 bales of tobacco had also shot up to $8 billion.                                                          

Meanwhile the ZTA anticipates that between 70-75 million kg of the golden leaf will be put under the hammer at the auction floors.

Last year about 73 kg of tobacco was sold.

By Bernard Mpofu

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