Zimbabwe Tobacco Sales Open With Crop At 20-Year Low

Source from:  Nasdaq 05/08/2009

Zimbabwe's tobacco selling season began Thursday with the smallest crop in two decades expected to go under the hammer, in the latest sign of how badly the economy has crumbled. About 42 million kilograms of tobacco is expected to pass through the auction floors, according to the Zimbabwe Tobacco Association, a far cry from the peak of 236 million kgs sold in 2000 when it was the country's biggest foreign currency earner. ZTA said not only has crop output declined but growers have also shunned the market as only 8,000 farmers planted tobacco, compared with 28,000 last year. In 1990, Zimbabwe produced 133 million kgs of tobacco. Prices at the three auction floors were ranging from $2.30 to $4.50/kg depending on the quality of the product. Philemon Mangena, managing director of Tobacco Sales Floor said although national output for had declined, he expressed hope that the sector would rebound. "Last year and the two previous seasons there was chaos because of the poor pricing structure and the use of the overvalued Zimbabwe dollar, but now everyone is money in hard currency," Mangena told AFP. "Although this year's output is the lowest we have had in many years, the sector will do much better next year as inputs are readily available and there are no disputes between growers and buyers over pricing." The government this year abandoned the local currency, which had been left worthless after years of hyperinflation, in favor of hard currencies. Zimbabwe uses the South African rand as its reference currency. Tobacco used to be the country's major foreign currency earner, but consecutive years of drought and President Robert Mugabe's chaotic land reforms have decimated farming. Chairman of the Tobacco Industry and Marketing Board, Njodzi Machirori attributed the decline in tobacco to contract growers who failed to deliver inputs to farmers. "Most contractors promised to supply farmers with inputs and they failed to deliver the inputs," Machirori said. "About 86% of crop is financed by contractors who failed to fund the crops." Enditem