Zimbabwe: Fresh Crisis As Farmers Cancel Tobacco Dates

Source from:  Financial Gazette (Harare) April 25, 2007 04/28/2007

TURBULENCE hit the tobacco-selling season yesterday after growers withdrew their crop from the auction floors, despite initial bookings following a government announcement that growers would be given a special Zimbabwe dollar price for their crop. Although a few bales of tobacco had gone under the hammer on Tuesday and yesterday, officials at the auction floors said there had been considerable cancellation of bookings by growers who felt they had to wait until the government unveils the promised incentives, said to be due in seven days from the day auction floors opened on Tuesday. The auctions, which had been scheduled to start in March, had been delayed by almost a month after growers protested at the country's overvalued exchange rate and called for a sectoral devaluation to ensure viability. The government, which has insisted it will not brook calls for a devaluation of the country's embattled currency, said it would only review the Zimbabwe dollar component of growers' earnings. Industry sources suggested this could amount to an exchange rate review for tobacco growers. Growers told The Financial Gazette yesterday that they would only start selling after the government announced new Zimbabwe dollar prices for tobacco. They said that the government had reneged on its pledge to pay a $5 000 bonus per kg of tobacco sold during the 2006 marketing season. "We will have to wait and see whether the promise is genuine. This time around we can't be fooled," said one farmer who only identified himself as Tendai. Growers said transporters were charging between $100 000 and $150 000 to transport a 100 kg bale from farming areas such as Mvurwi to Harare. Such high costs meant that they would incur significant loses if they sold their tobacco at the official exchange rate of $250 to the US dollar, which would give them $737.50 from the average price of US$2.95 per kilogram on Tuesday. Auction floor officials said deliveries were still depressed. The Zimbabwe Industry Tobacco Auction Company (ZITAC) had booked only 100 bales of tobacco, with only 50 bales being sold after growers cancelled bookings for the other bales. "It (trading) is quite low. Some growers have opted to wait until the seven days that were announced by the government," said Irene Ushe, the ZITAC public relations manager. Lodwin Gatsi, the operations executive at the Tobacco Sales Floor, where the auction started after a seven hour delay on Tuesday, said a total of 650 bales had been sold in the two days of trading but this was down on opening sales last year of 1 000 bales. Enditem