Zimbabwe: Farmers Continue to Withhold Tobacco Over Pricing Stalemate

Source from:  The Herald (Harare) March 21, 2007 04/06/2007

FARMERS yesterday said they would continue withholding their tobacco for the 2007 selling season until the Government comes up with a profitable price for the golden leaf. Farmers have since last week withheld their tobacco, arguing that a kilogramme of tobacco cannot be cheaper than a banana, which now costs between $1 000 and $2 000. A kg of tobacco is worth about US$1,50, which -- when converted at the official bank exchange rate of US$1 to $250 -- translates to the farmer getting $375 per kg. In an interview, Zimbabwe Farmers' Union vice president Mr Edward Raradza unless price distortions were resolved, farmers would not sell their tobacco. "As farmers, we are not going to sell our tobacco until Government has announced prices that enable us to plant again next season," Mr Raradza said. He said farmers had already submitted in written form their concerns to the Gover- nment for consideration by the Ministry of Agriculture. "We have forwarded our papers to Government and they are currently working on them. So we are happy with the minister's statement that he is going to address the issue once and for all," he said, referring to the Minster of Agriculture, Cde Rugare Gumbo. Following the stalemate, Cde Gumbo announced on Tuesday that the Government was moving to eliminate distortions in tobacco pricing. The tobacco selling season usually commences around March/April yearly but has since been postponed indefinitely owing to the pricing impasse. However, Zimbabwe Farmers' Development Trust chief executive Mr Lovegot Tendengu said there was no stalemate as such over the pricing of tobacco but that farmers were only asking for the exchange rate applicable to growers to be reviewed to US$1:Z$10 000. He said currently farmers are paid in local currency at the rate of Z$250 to US$1 in sharp contrast to the parallel market rate that is now hovering around $15 000 to the greenback. "There is no stalemate. I don't know where people are getting this. Farmers have not yet finished reaping their crop so the pricing stalemate is not an issue at all. It is a misconception by the media as tobacco is sold through the auction system," Mr Tendengu said. Some tobacco farmers have also called for the Government to pay them 65 percent of their earnings in foreign currency. Currently farmers are getting 15 percent of their total earnings in foreign currency, which is held in their foreign currency accounts. However, Reserve Bank Governor Dr Gideon Gono last week maintained that he would not yield to the farmers' demands. Dr Gono said tobacco farmers should remember that they are not the only foreign currency earners and, thus, should not hold the country to ransom. He said for farmers to continue withholding their crop unless the dollar was devalued would not help anyone. "This is tantamount to biting the hands that feeds you," Dr Gono said. Most auction floors were closed yesterday and officials indicated that they would only open when farmers start selling their crop. "We have not yet been told of a new date, but we understand there are still discussions between the stakeholders and authorities," Tobacco Industry and Marketing Board technical director Dr Andrew Matibiri said. In a related matter, more than 400 tobacco farmers contracted by Saltlakes Tobacco are expected to deliver at least three million kilogrammes of the crop to the auction floors. Company executives told The Herald separately that all the contracted growers were willing to sell their tobacco to allow them to get funds to prepare for the next tobacco farming season. Saltlakes executive chairman Mr Temba Mliswa said the growers did not want to hold the Government to ransom and had agreed that all their tobacco be sold. Sales executive Mr Macmillan Matimba said the company was confident that the Government would come up with a viable support price through the Reserve Bank. "We know that Government is working on a good support price through the RBZ. We are confident the price would be good enough to allow the farmers to go back into the fields next season," he said. He said it was important for the company to sell its tobacco for the Government to get the necessary foreign currency to spur other economic activities. Saltlakes is now disbursing support finance to allow the farmers to harvest, cure, package and transport their crop to the floors. Mr Matimba said preparations for next season had already begun with funds for tillage and inputs being processed. He said the company has earmarked to finance the tillage and planting of 10 000 hectares. The support includes chemicals and seedbed preparation. Enditem