Price War Nearly Derails Zimbabwe Tobacco Sales

Source from:  Tue Apr 24, HARARE (AFP) news.yahoo.com 04/26/2007

Tobacco sales delayed over a pricing stalemate between farmers and buyers in Zimbabwe were nearly called off again as a dispute with the government over foreign exchange rates flared on Tuesday. Sales were initially set to start at 7:30 am (0530 GMT) at the main auction house in Harare but the first bale was only sold at 3:00 pm after Agriculture Minister Rugare Gumbo, Central Bank governor Gideon Gono and acting finance minister Patrick Chinamasa came to plead with the farmers. "Your government will not let you down," Gono told farmers at Tobacco Sales Floor. "There is no need for any farmer to hold the nation at ransom. We are concerned about the viability of every business enterprise in Zimbabwe." He said the central bank would announce "something special" within the next seven days that he said would benefit all tobacco farmers. When sales eventually started, the first bale was sold at 2.95 US dollars per kilogramme. Farmers last month held on to their crop in protest against the prevailing exchange rate of one US dollar to 250 Zimbabwe dollars, which they rejected as uneconomic. The farmers receive their money in Zimbabwe dollars based on the official exchange rate which is worth less than 10 percent of the black market rate. A farmer who spoke on condition of anonymity queried why the central bank was delaying in announcing a special exchange rate for farmers. "If you are here for fairness, why don't you just tell us the exchange rate we are going to use," the farmer said. Chinamasa pleaded with the farmers to sell their crops while the government worked out a viable price. "You will be paid handsomely," Chinamasa said. "We are going to give you money, do not worry about the Zimbabwe dollar component, but just be worried about how much you will get in forex, negotiate that with the buyers." Tobacco production in Zimbabwe has declined from a record high of 236.13 million kilogrammes (236,130 metric tons) in 2000 to just 55.6 million kilogrammes last year. While this year about 80 million kilogrammes are expected to go to auction it is still a far cry from the former glory days. Critics blame the slump in production on President Robert Mugabe's land reform programme launched in 2000 which saw the government seize at least 4,000 farms from their white farmers for redistribution to landless blacks. The majority of the new farmers often lack the skills and means to farm. Enditem