Zimbabwe: Tobacco Farmers Holding On to Crop

Source from:  Zimbabwe Independent (Harare) April 27, 2007 04/29/2007

TOBACCO farmers said they will hold on to their crop until government announces a new tobacco price on Monday. The 2007 tobacco selling season opened this week on Tuesday, but few bails of tobacco have been delivered to the country's three auction floors, Tobacco Sales Floor, Zimbabwe Industry Tobacco Auction Centre, and Burley Marketing Zimbabwe, since Tuesday -- unlike previous years as farmers said they were waiting for the new price to be announced by government on Monday. Government on Tuesday said it needed seven more days to come up with new tobacco prices as the annual selling season for the crop opened on a low note. They however did hint at the price range for the new price. Prices during the first three days of trade have averaged US$2,52. The highest selling price was US$2,95 while the lowest was US$0,20. Farmers who spoke to businessdigest expressed concern over the exchange rate which is fixed at $250 to the greenback saying it was very low and will not be able to pay for transport for them to return to their homes. A bail of tobacco sold at US$2,50 at the interbank rate would cost $62 500, less than 100ml of toothpaste. Using a parallel market rate of $23 000 the same bail would cost $5,7 million. Zimbabwe Tobacco Growers Association president, Julius Ngorima, said deliveries had been slow as farmers are waiting for the new price. "Farmers are selling with last year's prices which is very low. Unlike over the past years there would have been over 500 bails of tobacco during the first week of trade," Ngorima said. A total of 297 bails were delivered at the country's three auction floors by mid-day yesterday. When auction floors opened last year, the US dollar was trading at $99 before moving to $101 after the third week of trade. Then government was using the volume-based exchange rate when movement of the exchange rate was determined by the amount of foreign currency which the central bank received. Zimbabwe Tobacco Association vice president Andrew Ferreira said despite farmers selling at last year's price they have been assured their money would be topped-up with the difference when government settles on a price. "The central bank governor and the Minister of Agriculture said they would announce a new package in due course," Ferreira said. "Farmers have started delivering. On a positive note, the government said the foreign currency retention for farmers had not been scrapped," he added. Tobacco farmers on Tuesday met RBZ governor Gideon Gono and Agriculture minister Rugare Gumbo in a bid to resolve an impending crisis with many tobacco growers withholding their crop pressing for better prices. There was no indication that the exchange rate would be adjusted from the current US$1 to $250, which has been a sticking point in the ongoing price dispute. Gumbo on Monday failed to get government approval for the new prices, when farmers had gathered at a Harare hotel waiting for him to clear up the dispute over pricing and other incentives. The minister staged a no-show, raising fears that the tobacco selling season might be delayed. The opening of the floors on Tuesday which traditionally starts soon after 8am was delayed by seven hours to start at around three o'clock after acting Minister of Finance Patrick Chinamasa and Gono told farmers that government will announce a viable support pricing structure in the next seven days. Enditem