Price Wrangles Stall Zimbabwe Tobacco Auctions

Source from:  Tue Apr 22, news.yahoo.com HARARE (AFP) 04/24/2008

Zimbabwe's once lucrative tobacco marketing season failed to take off as scheduled on Tuesday for the second year running amid price wrangling between farmers and buyers. Not a single bale went under the hammer at the Tobacco Auction Floors before officials agreed on a week-long postponement. Andrew Ferreira, vice president of the Zimbabwe Tobacco Association said the selling season had been pushed back by a week. "The whole problem relates to what package the farmers get. Last year's exchange rate has now been eroded by inflation, and everybody now knows the exchange rate applying on the parallel market," he told AFP. Farmers get paid in Zimbabwe dollars based on the official exchange rate with the US dollar which is a tiny fraction of the black market rate in a country where inflation is running at around 165,000 percent. Maxwell Machiya, a small-scale tobacco grower from Hurungwe, northern Zimbabwe, said he was not looking for anything less than four US dollars per kilogramme. In nearby Malawi, tobacco sales last month opened with prices hitting a record high of 11 dollars (6.90 euros) per kilo (24.20 dollars/15.80 euros per lb.) "I only brought four bales with me to assess the situation," he said. "I have got another 300 kilogrammes at home, but right now I am waiting to get a proper price." Senior government officials including deputy agriculture minister David Chapfika, buyers and growers had earlier gathered at the auction floors, expecting to formally launch the selling season. In April last year, sales of flue-cured tobacco -- once Zimbabwe's top foreign exchange earning crop -- were also delayed over a pricing stalemate. Flue-curing dries out the tobacco without exposing it directly to smoke. Tobacco production in Zimbabwe has taken a slump from a record high of 236.13 million kilogrammes (236,130 metric tons) in 2000, the year controversial land reforms were launched, to just 68.8 million kilogrammes last year. This year, the country expects to reap around 70 million kilos. Once a leading exporter, tobacco farming has fallen on hard times which critics blame on contentious land seizures, fuel and fertilizer shortages and disputes over pricing. At its peak in previous years tobacco used to rake in some 30 percent of the country's foreign currency, then making it the country's second export product after gold, but the sector is now a shadow of its former self. Zimbabwe's land seizure programme, which started in 2000, had a major negative impact on tobacco production. Some 4,000 commercial farms were seized, and taken over by small-scale and mainly inexperienced growers. Enditem