Zimbabwe: Tobacco Stalemate Ends

Source from:  The Herald (Harare) April 25, 2007 04/27/2007

THE 2007 flue-cured tobacco selling season finally opened yesterday after the Government gave assurance to farmers that they would get realistic returns on their produce in Zimbabwean dollar terms and would also retain 20 percent of their foreign currency earnings. This was an increase from last season's 15 percent, contrary to previous reports that the facility had been scrapped. The new support price would be announced within seven days. The Government urged farmers to deliver more of the "golden leaf" and to negotiate for good prices in US dollar terms. Discussions on the new pricing structure were about to be wrapped up. Sales, which had initially been billed for 7:30am as per tradition, only began at 3pm as growers awaited the Government's statement on prices. The first sale went for US$2,95 per kilogramme while about 400 bales were delivered to the Tobacco Sales Floor yesterday. The Acting Minister of Finance, Cde Patrick Chinamasa; the Minister of Agriculture, Cde Rugare Gumbo; and the Reserve Bank of Zimbabwe Governor, Dr Gideon Gono, jointly made a commitment to the farmers yesterday that they would get a viable deal that would enable them to plan for the next season. Farmers would also be paid their outstanding bonuses of $5 000 per kg which they were entitled to last season. The new figure would be inflation-adjusted. "We admit that we delayed in coming up with a viable price before the opening of the selling season due to some discussions within Government, but we are almost there," Cde Chinamasa said. "We need to do justice to our farmers by giving them viable prices and we believe if there is no viability, then our land reform will die." He encouraged farmers to deliver their tobacco without paying too much regard to how much they would get in Zimbabwean dollar terms, but should rather negotiate for better prices in US dollar terms. "Don't worry about the Zimbabwean dollar component. Money is coming. Negotiate with buyers to get better prices in US dollar terms," he advised. Dr Gono challenged farmers to put their faith in the Government saying the promises made for a "more than viable" price would be fulfilled. "The Government will never let you down," said Dr Gono. He, however, warned the farmers to desist from holding the Government and the nation at large to ransom, stressing that all farmers and other sectors of the economy would receive equal attention. "There is no need for any farmer to want to hold Government or the nation to ransom. "Zimbabwe is known for discipline, so we would want to maintain that. "You should deliver your tobacco. And to those who are involved in smuggling the crop to neighbouring countries in the middle of the night, be warned, your days are numbered," added Dr Gono. He said the Government was in the process of coming up with a framework to ensure viability not only in agriculture, but other sectors such as tourism, mining and manufacturing. Cde Gumbo said the Government would continue to work on viable pricing structures for all agricultural commodities to ensure production did not slacken. In response, chairman of the Tobacco Growers' Trust Mr Wilfanos Mashingaidze commended the Government for having farmers' concerns at heart. "We got more than we expected. We are happy because we got more than what the Government has said. As growers we want to acknowledge Government's commitment." Zimbabwe's flue-cured tobacco-selling season was originally scheduled to start in March, but was postponed indefinitely after farmers unilaterally decided that the selling conditions were not right. At the heart of the dispute was the current exchange rate of US$1 to Z$250 which they wanted reviewed.Another concern were reports that the central bank had scrapped the 15 percent foreign currency retention facility. However, during the meeting yesterday, Dr Gono shed light on the confusion surrounding the purported scrapping of the forex retention facility. He explained that it was, in fact, the Tobacco Industry and Marketing Board which had written to the central bank suggesting that farmers be paid 100 percent in local currency. TIMB made the proposal in a letter to division chief import facilitation, validation and administration Mr Morris Mpofu. The letter, dated February 13 and signed by TIMB chief executive Mr Stanley Mutepfa, said the organisation's board had come to the conclusion that those growers requiring foreign currency could then be allowed to buy it at the exchange rate they would have been given when they sold their crop. However, yesterday the TIMB chairman professed ignorance of the letter. "I don't know anything about it. We are going to investigate and communicate to the ministers here and to the governor (Dr Gono) on the outcome. For the past three selling seasons, auctions have been temporarily held up for one reason or another. Zimbabwe's tobacco production has continued to decline over the years due to a multiplicity of factors, notably inadequate preparations and delays in the disbursement of critical inputs and unfavourable prices at the auction floors. This was followed by a commensurate fall in foreign currency earnings, reaching a modest US$206 million in 2006. About 80 million kg are expected to go under the hammer this year, up from 55 million kg last year. Enditem