Tobacco Floors Unlikely to Open Today

Source from:  herald.co.zw Business Reporter 04/29/2008

THE official opening of the 2008 tobacco selling season could be delayed by another day amid indications that there is still no position on issues that were raised by tobacco farmers, especially the support price. Sources close to negotiations that are taking place to resolve the issues said the selling season, which was deferred by a week, was unlikely to take off today as the matter was being dealt with at the highest level. "The issues raised by the farmers are going to be discussed at a Cabinet meeting when it sits tomorrow (Tuesday) so it is highly likely that the floors will open tomorrow," said a source who declined to be identified. Apart from the support price, tobacco farmers were also asking for a new exchange rate as well as the settlement of the outstanding Foreign Currency Account shortfalls. There was not much activity when the Herald Business visited the Tobacco Sales Floor where the traditional official opening of the selling season is held annually. Bales of tobacco that had been lined-up in preparation for the official opening last week were still in the same positions that they were last week. There was not much activity at the receiving bays. Some farmers who had come to assess the situation said it was highly unlikely that farmers would bring in their tobacco soon until they are certain that the season is underway. "There has been too many disruptions and it is costly for farmers to be shuttling up and down. "Many farmers especially small-scale will feel the pinch of the delays as they usually sell off their tobacco to meet obligations such as school fees. "As things stand the floors are yet to open yet schools have already opened," said Mr Sam Mano from Headlands. Tobacco Industry Marketing Board chairman, Mr Njodzi Machirori last week announced that the official opening had been deferred to today after his team and the Deputy Minister of Agriculture, Mr David Chapfika had consulted the Minister of Agriculture. At the time Mr Machirori said they had been assured by the powers that be that they are still trying to come up with a viable price for the industry. Problems have forced the tobacco auction floors to delay opening during the past two seasons. Last year the season was postponed indefinitely after farmers indicated that they were not ready to sell their tobacco until they got a special exchange rate arguing that the exchange rate of US$1 to $250 applying then was not viable. The exchange rate was subsequently moved to US$1 to $30 000 but farmers are insisting that it is not enough. It took the intervention of two ministers and the Reserve Bank of Zimbabwe governor, the then acting minister of Finance, Mr Patrick Chinamasa, the Minister of Agriculture, Mr Rugare Gumbo and Dr Gideon Gono to persuade the farmers to deliver their crop. The impasse was resolved after the Government had announced a support price for the farmers and they would also retain 20 percent of their foreign currency. Government initially pegged its support price at $40 000 per kg, calculated on a pro-rata basis benchmarked at US$1,50 per kg, which was increased to $55 000 per kg towards the end of the season. The farmers were also demanding an average price of US$4 per kg at a rate of about $500 per US$ against the previous year's US$1,99 per kg at an exchange rate of $105 per US dollar. The average price for contract sales was US$2,26 while for auction sales it was US$2,40 per kg and the overall seasonal average price was US$2,32 per kg. About 75 million to 80 million kilogrammes of flue-cured tobacco are expected to be delivered to the tobacco auction floors this season compared to 73 million kg for last year. Enditem