Zimbabwe: Govt Pays $256,4bn as Tobacco Support Price

Source from:  The Herald (Harare) New Ziana 18 May 2007 05/22/2007

Government has so far paid out $256,4 billion as tobacco support price to growers since the marketing season began last month. According to statistics released by the Tobacco Industry and Marketing Board on Wednesday, this represents a vast increase from the $150,3 million the Government paid out to growers over the same period last year. The Government has in recent years adopted a policy of awarding tobacco farmers a top-up price rather than give them a special exchange rate as one non-inflationary measure aimed at incentivising growers as well as ensuring the viability of the sector. Thus the central bank announced last month that growers will, up to September 30, be given a top-up support price of $40 000 for every kg that fetches a price of US$1,50 and above. Deliveries that fetch prices below the US$1,50 per kg will be paid the support price on a pro-rata basis. This policy is meant to reward quality production, the central bank said. The exchange rate remains pegged at US$1 to $250. Meanwhile, at the auction floors, a total of 5,4 million kg of tobacco worth US$9,6 million had been sold at the country's three auction floors at an average price of US$1,78 per kg as of Monday this week. The Zim dollar price with support price averaged $47 615 per kg, compared to $224,41 last year. During the same period last year, some 2,6 million kg of the cash crop worth US$3,7 million had been sold at an average price of US$1,45 per kg. The wastage rate for 2007 has been remarkably low at 4,12 percent compared to 9,32 percent last year. Mouldy and mixed hands constituted the bulk of the crop that has been rejected. Commenting on the sales so far, TIMB acting general manager Dr Andrew Matibiri expressed satisfaction with the increase in deliveries and firming of prices. "Things are going on well, deliveries are increasing and generally the farmers are happy with the prices," he said. Dr Matibiri said the increase in deliveries showed that farmers were taking heed of their call to deliver the crop early so as to get more value from their crop. Burley Marketing Zimbabwe managing director Mr Bruce Searles also expressed happiness with the way sales were going. He said deliveries were becoming strong as most farmers wanted to beat the September 30 deadline. Mr Searles, however, announced that the selling of burley tobacco would start on Tuesday next week with the entire crop being sold through contract. An estimated 80 million kg of the golden leaf is expected to go under the hammer this year, up from the 55 million kg sold last year. Tobacco is one of the country's top foreign currency earners. Enditem