Zimbabwe: Wrapping Paper Shortage Hits Tobacco Industry

Source from:  The Herald (Harare) 8 June 2007 06/11/2007

THE tobacco industry has been hit by a critical shortage of tobacco wrapping paper, forcing farmers to resort to buying it from informal traders who are now selling it at prices ranging between $9 million and $11 million a roll. The paper costs less than $1 million on the official market. "We have been forced to acquire the tobacco paper for as much as $11 million per roll, which is enough to wrap six bales. The shortage has been going on for the past two weeks and it seems there is no solution in sight. "We are appealing to both Government and the Tobacco Industry and Marketing Board to quickly address the situation so that the momentum reached in the delivery of crop to the floors is not broken," said one farmer. Others accused some players in the tobacco sector of diverting the wrapping paper to the informal market so as to make a killing. Zimbabwe Commercial Farmers' Union president Mr Wilson Nyabonda confirmed the state of affairs saying this could erode farmers' profit and affect preparations for the 2007/08 cropping season. "I am aware of the shortage of the wrapping paper and have requested the Government authorities to intervene by availing foreign currency to import the paper. "In fact, when the selling season started the country had enough paper to wrap 18 million kilogrammes and has since been exhausted as more than 19 million kg of the golden leaf has so far gone under the hammer. "The industry has requested US$167 000 to import the paper to cover the anticipated 80 million kilogrammes expected to be delivered to the floors this year," he said. An official with the Zimbabwe Industry Tobacco Auction Centre said the company regretted the shortages of wrapping paper and was doing everything within its power to assist growers. "These are circumstances beyond our control, but as Zitac, we are is doing everything we can to make sure that we give farmers this assistance very soon to enable them to sell their tobacco. Currently, we are only assisting all our farmers to buy the hessian bags (that wrap the bales)," said a Zitac official. Tobacco Sales Floors Limited operations manager Mr Lodwin Gatsi could not be reached for comment, while an official at Burley Marketers Zimbabwe said foreign currency applications to import the wrapping paper had been made. "At the moment we have nothing, but we are informed that the sector has made representations to the Reserve Bank of Zimbabwe and we hope by next week the situation will improve," he said. By end of day on Tuesday -- Day 28 -- the country's three auction floors had taken delivery of more than 20 million kilogrammes worth US$43,631 million. The deliveries are more than twice the 10 million kilogrammes delivered to the auction floors over the same period last year. Statistics released by TIMB revealed that the by end of business on Tuesday the floors had received a total of 20 303 030 kilogrammes, with 12 211 762 sold under contract while 8 091 268 went through the auction system. Daily sales continued to soar with 1 295 221 kilogrammes up from 150 285 kilogrammes delivered last year while the average US price remained firm at US$2,15 per kilogramme. Two hundred and twenty-one bales of tobacco have so far been sold with Government paying $1,2 trillion in support price. TIMB acting chief executive Dr Andrew Matibiri said he was happy with the level of support the industry was getting from Government. Government has in recent years adopted a policy of awarding tobacco farmers a top-up price rather as an incentive to growers and to ensure viability in the sector. Growers who sell their tobacco before September 30 this year are entitled to a top-up price of $40 000 for every kg delivered which fetches a price of US$1,50 and above. Deliveries that fetch prices below US$1,50 per kg will be paid the support price on a pro-rata basis. Meanwhile, the Minister of Agriculture, Mr Rugare Gumbo is expected to meet stakeholders in the tobacco industry at the BMZ tobacco floors to map the way forward. Enditem