Zimbabwe: Ministry Assesses Tobacco Companies' Requirements

Source from:  The Herald (Harare) 12 October 2007 10/15/2007

The Ministry of Agriculture is studying the needs of indigenous-owned tobacco-exporting companies with a view to bolstering their participation at the auction floors. Agriculture Minister Mr Rugare Gumbo said the participation of indigenous tobacco industries at the auction floors had remained subdued, accounting for only 4 percent of exports despite spirits efforts to encourage growth. "The Tobacco Industry and Marketing Board (TIMB) has since 1994 deliberately licensed more indigenous owned tobacco-exporting companies to participate at the auction floors but these merchants account for less than 4 percent of the total exports. "These companies have faced difficulties in raising offshore funding and penetrating export markets. "My ministry, in conjunction with all the industry's stakeholders, will continue to assess ways of assisting these entrepreneurs overcome these hurdles," he said. TIMB chairman Mr Njodzi Machirori said 22 companies had been registered as tobacco buyers at the auction floors but only 10 had actually participated after satisfying rigid Exchange Control Regulations. Existing legislation required buyers to deposit foreign currency with the central bank before they were given the green light to buy the golden leaf. The Zimbabwe Association of Tobacco Merchants & Buyers and Gwai Leaf Tobacco managing director Mr Owen Tavengwa told journalists earlier this year that foreign companies were the major beneficiaries of offshore loans. Mr Tavengwa said last year he had an order to supply 2 million kilogrammes of tobacco to his Chinese clients but only managed to export 700 000kg worth US$1,5 million. This year, he said, his company could only access US$500 000 for 100kg of tobacco for the export market, hardly enough to meet the ever-increasing demand. A major drawback was that indigenous buyers did not have sufficient representation on the marketing side of tobacco, a situation which, he said, tended to give foreign buyers an unfair advantage. Zimbabwe is poised to regain its status as one of the leading tobacco producers in the world. Production rebounded from a 30-year low of 55,5 million kg in 2006 to about 72 million kg this year. The increase in production has also seen a corresponding improvement in quality, which pushed up the average price for the season to US$2,32 per kg, the highest since 1997. Enditem