Year-on-year Tobacco Deliveries Down

THE tobacco-selling season has closed at just over 50 million kg and year-on-year deliveries to the country’s auction floors continue to decline.

 

Business reporter Bernard Mpofu speaks to Zimbabwe Tobacco Association president Andrew Ferreira on the future on golden and perennial problems associated with tobacco farmers.

Mpofu: Initial forecasts predicted tobacco deliveries to be 70 million kg, but statistics at the close of selling season indicate that the target will not be met. What went wrong?

Ferreira: Initial forecasts were based on seed sales, where commercial farmers use 5,5 grammes per hectare while small-scale farmers use 7,5 grammes. The difference is due to the economies of scale. This indicated that potentially, some 50 000 hectares could be planted. The nature of the season, difficulty in sourcing inputs (finance and physical) meant that, the target was never reached.

The excessive rain further compounded this especially in December, when yield was negatively affected.

Overall potential was again affected by power outages and the challenge of bringing coal from Hwange colliery-required for curing. The challenges of real value for tobacco have prompted farmers to hold back deliveries in the hope that the gap between inter-bank and markets rates narrow.

Mpofu: How much tobacco do you expect to be delivered during the mop up sales?

Ferreira: I believe as much as 5 million kg could be delivered during mop up. Tobacco Industry Marketing Board will have more reliable estimates, as farmers have to submit crop estimates to them.

Mpofu: What is your view on the quality of tobacco that was brought to the auctions floors during the selling season?

Ferreira: Overall the quality of this year’s crop was acceptable to the trade. The only reservation being the lack of volume.

There is demand for the Zimbabwean crop by cigarette manufacturers, however this is at a price and as growers, we cannot price ourselves out of the market by unfair marketing practices.

The playing field for buyers must be levelled and as industry, we have to get rid of special deals. There are some buyers who are allowed to use Zimbabwe dollars as payment and hence use the varying exchange rates to their benefit.

Mpofu: What is your take on the on-going inter-bank exchange rate in relation to the tobacco pricing system?

Ferreira: My opinion on the exchange rate can be best illustrated by example: a red mile curing plate made in Zimbabwe is costing $288 000. At the inter-bank rate this equates to US$2 400 when it should not cost US$65, which it did in May. A loaf of bread at the current inter-bank rate is US$13 or 4 kilograms of tobacco, when it should be a third of a kilogramme.

Mpofu: Could you please explain the reason why tobacco prices failed to match those in Malawi for example?

Ferreira: Information at hand suggests that we are receiving above regional prices. The early price distortions in Malawi were because of marketshare aspirations, which soon settled and more so, we must realise that Malawi is dominated by burley tobacco.

Mpofu: What preparations have you made so far for the next season and what challenges are farmers currently facing?

Ferreira: Preparations for the new season are well behind and farmers face a number of challenges. The most important being that, very few inputs are available locally. Those that are available are hugely expensive. Seed sales are marginally down on last year.

Many farmers are facing a new wave of eviction with violence and theft at levels rarely seen before.

Farmers are also asking, “Where is the finance for the new season coming from?”

Labour moral is at the lowest ever. Current viability does not allow in real terms for any increase in wages or benefits. This is not helped by the difficulty in sourcing cash.

The country is in a state of “political drift” which inspires no confidence. This only adds to the vicious inflationary spiral. Hopefully this is only temporary.

Mpofu: Can you furnish us with the hectarage and forecasts on costs for the next season? .

Ferreira: All things being equal, we might be able to plant 35 000ha to 45 000ha, so we have potential of getting up to 70 million kg.

Mpofu: Production continues to decline over the years and you cited a host of reasons for this trend. What should government do to reverse this trend?

Ferreira: A lot of things need to be done and these include:

A substantial Zimbabwe dollar bonus for US dollar earned, retrospective to balance the viability differential. One kilogramme of tobacco at US$3,00 does not even buy a loaf of bread.

The honouring of the 25% foreign currency account retention.

Concessionary funds like the Agricultural Support Productivity Enhancement Facility or similar packages to be put in place soon in order to kick-start land preparation. There is a two-week window of opportunity.

The dry land crop must be planted by October 20, especially with the tremendous increase in aphid population as indicated by the Tobacco Research Board.

Allowing contracting merchants to provide ration packs on the same criteria as other inputs.

Ensuring that anyone who grew last year is able to grow this year, with a moratorium on arbitrary evictions.

Providing a bonus and protection for any farmer who produces 10 hectares or more extra seedlings. This can be easily verified.

Mpofu: You have mentioned on numerous occasions that your sector is reeling from massive labour flights mainly to neighbouring countries. How best can staff retention be promoted?

Ferreira: Regional producers are paying an average of US$1 per day and local farmers cannot pay that much.

Unless some of the concerns raised above are met labour problems will continue.

 

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