Zimbabwe: Farmers Refuse to Part With Tobacco

Source from:  Financial Gazette (Harare) 03/20/2007

Tobacco auction floors failed to open as planned yesterday as growers continued to press for the review of the fixed exchange rate, industry officials said. The selling season had been scheduled to begin early to expedite foreign currency inflows into the parched economy and cushion farmers against ravaging inflation, but this was deferred to a later date until intervention by the central bank. But the farmers have stuck to their guns. Analysts said the delay would certainly worsen the foreign currency crisis that has impaired the country's ability to import essential raw materials, spares, fuel and electricity. Tobacco auction floors normally open during the last week of April, but the government had pushed for an early start, a sign that the foreign currency situation could be worsening. The tobacco industry is demanding a review of the exchange rate, which has not moved since the 60 percent July 31 devaluation. Reserve Bank of Zimbabwe (RBZ) governor Gideon Gono in January resisted pressure to devalue the dollar, proposing broader reforms as the answer to the economic crisis. Tobacco Industry and Marketing Board (TIMB) acting chief executive Andrew Matibiri said tobacco farmers wanted an exchange rate in line with the parallel market rates. The US dollar traded at $13 000:USD1 on the parallel market yesterday, while the official rate remained at $250. "The farmers also want a framework that will not require adjustments before the end of the selling season in September this year. Until an agreement is reached to sustain the issues of growers' viability, the auction floors will remain closed," Matibiri said yesterday. The state media reported that Gono had called on farmers not to withhold their crop. The central bank has in the past introduced a tobacco performance, research and development facility, which rewards growers for actual production in a bid to restore viability in the sector. But farmers said such support was inadequate without the review of the exchange rate. This year a crop of 80 million kg is expected from the 50 000 hectares planted by the 17 500 registered tobacco farmers. Zimbabwe produced its smallest crop since independence last year when 55 million kg were sold. Tobacco, which enjoyed peak production of 237 million kg in 2000, has slid each year over the last six years falling to 160 million kg in 2001/2, 85 million kg in 2002/03 to 68 million kg in 2004. A combination of the shortage of inputs, undercapitalisation and the government's chaotic land reform are blamed for the decline in the production of tobacco, once Zimbabwe's single largest earner of foreign currency. Preparations for the next crop have already started and Matibiri said the current impasse needed to be broken early to restore the farmers' confidence. Enditem