Zimbabwe: Tobacco Growers Threaten to Hold Back Crop

Source from:  Financial Gazette (Harare) 10 April 2008 04/11/2008

ZIMBABWE'S agitated tobacco growers could withhold their crop from the auction floors, which are scheduled to re-open this month. The move could further batter the beleaguered economy and delay an expected inflow of foreign currency into the country. Tobacco farmers who spoke to The Financial Gazette this week said they were concerned with the government's pricing policies, which they feared could undermine their operations. Tobacco farmers have since last season been battling to get foreign currency payments for tobacco auctioned in the last marketing season. Under the payment plan, which was unveiled by the government last year, farmers were supposed to receive 20 percent of their receipts in foreign currency. But farmers said they had not received any foreign currency payments. The farmers were expected to stage a protest before the auction floors open to object the payment regime for tobacco, which is sold in US dollars, but for which they are paid in Zimbabwe dollars. The 20 percent foreign currency payment system had been unveiled to encourage farmers to continue growing the crop and to ensure they remained viable. Although the government has previously given tobacco farmers a favourable exchange rate, different from the fixed exchange rate prevailing on the market, this has not been sufficient to placate the farmers. "The pricing structure is not viable. Farmers won't recoup costs," said Mukwambo Beaven, a tobacco grower in Odzi, Manicaland. The Zimbabwe Tobacco Association (ZTA) warned that the tobacco industry could collapse if the government did not offer farmers a better exchange rate. "The real concern is hyperinflation and what is the selling package? If we sell at the current prices we will be broke. We want a review of the tobacco selling package," said Andrew Ferreira, the ZTA President. Tobacco growers have in recent years resorted to withholding their crop to protest low prices and force government to meet their demands. Small-scale growers charged that if the government failed to unveil a lucrative selling package they could be pushed out of tobacco farming. Ferreira also disclosed that intermittent power outages, which are affecting curing of the crop, could result in losses. "If you go beyond eight days of curing it affects the weight of cured leaf and weight is money," Ferreira said. Zimbabwe's tobacco industry, which was a key foreign currency earner for the country over the past twenty years, is on the brink of collapse. Last year only 73 million kg's passed through the country's three auction floors and only a paltry 70 million kg's are expected to be marketed this year. The country sold more than 200 million kg's of the golden leaf in 2000, before the current decline, caused partly by a chaotic land reform. Enditem