HomeBusiness DigestTobacco auctions in bad start

Tobacco auctions in bad start

Tobacco Industry Marketing Board (TIMB) has slammed tobacco auction floors for offering lower prices compared to contract buyers amid allegations of price collusion in the tobacco buying process.

Fidelity Mhlanga

At the official opening of the tobacco marketing season on Wednesday, TIMB chairperson Monica Chinamasa said the board was set to introduce electronic processes into selected tobacco marketing procedures to reduce human intervention and influence in auction floors during this years’ marketing season.

“My question to the buyers is does it mean that auction tobacco cannot fetch a price higher than US$4,99 while at contract sales,prices as high as US$6,20 per kg were witnessed in 2014? How else can you explain the US$4,99 ceiling price if it is not collusion?,” she queried.

Chinamasa said under the e-marketing system, the bidding process by buyers would involve the use of personal digital hand held gadgets through which a buyer would secretly bid for tobacco without the influence of other buyers.

“To improve the transparency in the pricing of tobacco, my board in consultation with the industry will this season be testing a new innovation in tobacco marketing,” she said.

She said the move would improve transparency in the pricing and reduce the current tendencies on the auction market characterised by seemingly overt collusion in the pricing of tobacco.

“These unscrupulous buyers, working in cahoots with member staff involved in the tobacco selling processes, sell the ill begotten tobacco sales at much higher prices when they present them for resale,” she added.

Chinamasa said e marketing would also encompass the use of what are known as Radio Frequency Identification (RFID) tags to track the movement of tobacco from the farms in order to reduce side marketing and theft of tobacco bales.

She also said that a new procedure for re-handling rejected defective bales was put in place where auction floors will automatically send the bales to certified rehandlers who will in turn re offer the bales on behalf of the growers.

Meanwhile, there was pandemonium on the first day of tobacco sales at Boka auction floor as farmers protested against poor prices.
Tobacco sales were halted for more than 90 minutes as farmers pushed for better prices.

The first bale was sold at US$3,50 per kg with the lowest fetching US$0,10 per kg.

Chinamasa said that TIMB would continue to train growers and carry out awareness campaigns to discourage this nesting scourge.

Government with effect from January 2015 has introduced a tobacco levy on tobacco growers at a rate of 1,5 US cents of each dollar of selling price to finance reforestation activities.

Guest of honour Industry minister Mike Bimha said the Ministry of Agriculture, Mechanisation and Irrigation Developments has received equipment worth US$38 million from the US$98 million loan facility from Brazil under the More Food Africa Zimbabwe Programme.

At Boka about 2 500 bales were delivered on the first day of sale.
A total 90 000 growers have registered to sell this season with 16 679 being new growers.

In its 2015 national budget, government projected a hectarage of 90 000 for tobacco, whose output is projected at 222 million kg however the industry’s projections are much lower with expectations of 190 million kg this year.

The sale at Boka auctions halted for more than 90 minutes as farmers registered disgruntlement over the tobacco price.
Tinashe Mangwiro, a farmer from Mvurwi, bemoaned the low prices at the auction floors.

“I worked for six months. I sold maize and cattle to buy inputs and now I am selling my tobacco at US$0,40 per kg,” he said.

“How will i pay the transporter, my workers and school fees arrears for my children.”

Mangwiro said due to erratic rains experienced this year he does not expect a bumper harvest from his two hectare farm.

Munyaradzi Hore a farmer from Centenary whose another tobacco fetched a highest price of US4.90 per kg before the sale was discontinued, said he was not happy with the pricing model threatening to withdraw two of his bales which fetched low prices.

“I wanted to sell at contract floor but I decided to sale here because I don’t have money. I will sell the rest of my produce at contract floors who open next week ,” he said.

Another farmer from Marondera said due to poor rainfall patterns this year he was expecting only 20 bales down from 28 bales he got last year from his one and half hectare land. Boka Chief executive Rudo Boka said protesting on the first day of the sale without factoring supply and demand issues was unjustified.

“Boka has no role on issues of prices, if you are not satisfied ask for arbitration,” she said.

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