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No Pricing System For Tobacco

ZIMBABWE’s tobacco auction floors opened last week after protracted squabbles between the farmers and government over price and exchange rates to be used.

Even as the auction continues at the floors this week farmers were still grumbling that they have been short-changed by the government.

Business reporter, Bernard Mpofu spoke to the president of the Zimbabwe Association of Tobacco Growers (ZATG), Douglas Mahiya, about the problems in the sector.

The ZATG represents indigenous tobacco farmers who took over land from evicted white commercial farmers in the land reform programme.

Mpofu: Why is it that every year we have this stand-off between tobacco farmers and the government over pricing. I mean every year the two parties have to fight before the floors are opened.

Mahiya: The problem is that there is no clear pricing system that we can stick to. There is no clear-cut communication structure between the farmers and the authorities that set the price. There is no permanent link between the two.

As farmers we don’t want to make our representations to the responsible authorities before the selling season starts because we are aware that by the time we get to the floors things would have changed because of inflation.

We want a price that takes into account inflation figures. How can a kilogramme of tobacco cost less that a bottle of soft drink? Why should gold producers be treated differently from us tobacco farmers?

Mpofu: But the argument has always been that you farmers get subsidised inputs and there is no way you can demand a market price for your crop.

Mahiya: The issue is about inflation. Everyone is being affected by inflation. You must also realise that there is nothing like free inputs for us tobacco farmers.

The whole of last year we could not get Compound C fertiliser from the formal market. We had to scrounge on the black market where the prices are high. Why then should government deny us a market price?

The National Incomes and Pricing Commission is also a problem because they are setting prices of commodities that are not available in the shops. In the end it is us the farmers who suffer. By inputs I don’t mean fertiliser only but also food for workers . Workers need sugar and mealie meal which can be bought on the parallel market.

Mpofu: But the fact is that you farmers still get soft loans from the banks at 20% per annum when inflation is around 165 000%.

Mahiya: That is true but you must look at how much that money is worth. For example I know of farmers that got $25 billion for 25 hectares of tobacco. That money is not even enough. The other problem is that the money comes very late when it has already been eroded by inflation.

Mpofu: How much does it cost to produce a kilogramme of tobacco?

Mahiya: When farmers got the loans it was costing $30 billion per hectare. Now it is about $170 billion. These are just rough estimates. If the government wants to peg a price they must provide full loans that cover the costs of production. At the moment we are just not getting enough money even though it comes as cheap loans. The industry is hugely under-capitalised.

Mpofu: But again you still get equipment under the farm mechanisation programme where you have very concessionary payment terms.

Mahiya: That is not true. The people who are distributing the equipment don’t know much about the industry. We the genuine farmers are not benefiting at all. Most of the equipment is not getting to the intended beneficiaries. How can a mere government official sitting in some office know what the farmers here really want? There has been no survey to establish what the tobacco farmers want.

This process must be done through unions because we know what
each member needs to increase production. Without the unions government officials cannot target correctly.

Mpofu: Have you ever raised the issue of the disparity between the prices of tobacco in Zimbabwe and other regional countries like Malawi with government?

Mahiya: Yes there is a big difference. When the auction floors in Malawi opened the price was US$11 per kilogramme. Now it is ranging between US$7 and US$11. In Zimbabwe farmers are getting US$4. Our argument is that the Zimbabwean farmer works very hard under very difficult conditions but he gets little in return.

Mpofu: What is the situation at the floors now?

Mahiya: Farmers have started delivering but they are doing so in protest. We need the money to start preparing for the next season. We need to start preparing the seed beds. We have no choice but to deliver the tobacco to the floors.

Mpofu: What do you think should be the ideal price of tobacco?

Mahiya: It’s not what I think should be the price but rather what other farmers in region are getting. If others are getting between US$7 and US$11 then we must be able to get the same. We also need a good support price — a progressive pricing mechanism.

Mpofu: Could the slump in tobacco production have something to do with these perennial pricing wars.Mahiya: Of course. You will notice that last year we produced 100 000 000 kgs but this year the production has gone down to 70 000 000 kgs. It might get worse if the pricing problems continue.

Mpofu: After so many years of fighting nothing has really changed in the pricing system. It’s still the same. Do you sometimes feel that the government just does not care about the problems in your sector?

Mahiya: No, the government cares but the problem is with some people in the government. There are people who are not doing what they should be doing. There are people who are feeding government with false information about our concerns. Government is therefore making wrong decisions because it is being fed false information.

Mpofu: Who are these people who are feeding government with lies?

Mahiya: There is no need for names now but you should know that these are people who are responsible for giving information and advice to government.

Mpofu: Some of your members say that they have not been paid their bonuses for last year’s production. Is this true?

Mahiya: Part of the money was paid but we are still owed. If we had got those bonuses in time everything would have been better because we would have managed to produce more.

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