Zimbabwe: Tobacco Growers Push for Floors to Open Early

Source from:  Zimbabwe Independent (Harare) February 16, 2007 02/26/2007

GROWERS of tobacco are pushing for an early opening of the tobacco auction floors, fearing rampant inflation could wipe off profits should the harvested crop stay in the barns for too long. Growers who spoke to businessdigest said they crop had been harvested between November and December last year. As a result, they said it was illogical to keep the harvested tobacco until the opening of floors in April because of rising interest rates on loans secured to finance tobacco growing. Most of the tobacco crop is irrigated. The growers said input costs had soared unabated, with the cost of fertiliser and chemicals having gone up 75% since December. They fear surging input costs could curtail preparations for the next season if they failed to buy the inputs early. Zimbabwe Tobacco Growers Association (ZTGA) president Julius Ngorima said stakeholders had agreed to have floors opened early because of the rate at which the local currency was losing value and the continuous increase of inputs. "Once a farmer harvests his crop, the next thing they want is to sell their crop, to prepare for the next farming season," Ngorima said. "They need money to pay back loans whose interest is rising. Input costs are rising weekly and so will be preparation of the land for the next season," Ngorima said. About 13 300 hectares of irrigated tobacco has been harvested so far. Seedlings for irrigated tobacco are normally planted in June. Transplanting is done in September, while harvesting in carried out in December. The Tobacco Industry Marketing Board has already agreed to an early opening of the tobacco auction floors. Floors will open March 14, TIMB said. Bookings for delivery are expected a week before floors open. The early opening of the auction floors comes at a time when the central bank was proposing zero balance foreign currency accounts for tobacco growers with local banks. Negotiations between tobacco growers and the bankers are said to have already commenced. The zero balance foreign currency accounts will allow growers, who are now expected to retain 15% of their earnings in foreign currency, to open the accounts without a deposit. TIMB deputy general manager Godfrey Buka said growers wanted to sell their crop early so that they could pay off their debts in time before accruing interest. "Growers as well as merchants want to recover their money now before it is eroded by hyper-inflation," said Buka. According to ZTGA a total of 40 000 hectares of tobacco was planted this season, out of the targeted 80 000 hectares. The low hectarage was due to the shortage of essential inputs such as fertiliser and diesel for tillage equipment. Tobacco production in Zimbabwe has declined by a total of 170,63 million kg between 2000 and 2006, from an all-time high of 236,13 million kg recorded in 2000 to 55,5 million kg last year. The average price last year was US$1,99 per kg. Ngorima said a significant number of farmers had prepared seed beds for transplanting, but the shortage of inputs and financial resources had restricted them from planting more tobacco during the season. He said it was unlikely the 70 million kg target would be achieved during the current season. Enditem