Zimbabwe: Tobacco, The Crop of Choice

Source from:  The Herald 11/22/2011

Tobacco has emerged as the farmer's favourable crop because of its market value. Agriculture Reporter Elita Chikwati spoke to Tobacco Industry and Marketing Board chief executive, Dr Andrew Matibiri on what is taking place in the tobacco industry. How do you describe the just ended tobacco-selling season? The season was long and challenging. It commenced on Tuesday, February 15, 2011 and ended on August 18, 2011 after 125 selling days. This was the second time the industry has commenced the selling season two months earlier than the traditional opening. Why did you change the opening period? It was after requests from both merchants and growers. This move was also taken to cushion farmers from cash constraints. The early opening of the season has become very popular with both growers and merchants because of the attendant benefits. How many growers produced tobacco last season? There were over 66 000 registered flue-cured tobacco growers, of which over three quarters were small-scale, growing an average of 1,3 hectares each. In addition, there were 752 registered burley tobacco growers. Which auction floors and companies participated? Three auction floors, Tobacco Sales Floor (TSF) and Boka Tobacco Auction Floors (BTF) and Millennium Tobacco Floor (MTF) were licenced to operate this year. This year, a total of 23 companies were licenced to operate as "A" Class buyers. Out of these, 12 companies actively purchased tobacco at auction sales. Twelve companies were licenced to conduct contract growing and buying schemes. How much tobacco was sold during the past season? A crop of 132,4 million kg of flue-cured (Virginia) tobacco was sold, with contract sales accounting for 56 percent of the sales. The seasonal average price per kg for flue-cured tobacco was US$2,73 as compared to US$2,89 for 2010. Top quality grades from the cutters, leaf and lugs groups consistently fetched average prices above US$4,00 throughout the season. In addition, 415 205 kg of burley tobacco, worth a total of US$512 182 have were marketed so far, at an average price of US$1,23 per kg compared to US$1,96 in 2010. What were the challenges faced by farmers during the period? The season had its own share of challenges faced by farmers during production and marketing. The season was characterised by inadequate funding from the financial institutions. This has now become a perennial problem that militates against rapid recovery of production. Which sector has been greatly affected by this lack of funding? The A2 sector is the most affected by this lack of funding. This sector only accounted for 12 percent of total production, compared to 28 percent for A1, 18 percent communal, 11 percent small-scale (formerly African Purchase Areas) and 31 percent large-scale producers. What other factors affected production last season? The national yield was also affected by a predominant wet spell in tobacco growing districts during late February. Production was also affected by incessant power cuts that inadvertently increase the cost of production and reduce viability. The current sales floor facilities and all marketing systems were overwhelmed and congested due to the number of growers coming to the markets. This resulted in farmers enduring unnecessary delays in marketing their crop. What do you think are the solutions to the problems? It is apparent that there is need for concerted efforts to train growers to reduce the handling losses. It is reported that the handling losses were as high as 21 percent during the season. The major challenge being faced by growers is funding for production, with challenges in marketing being a factor. By and large marketing challenges are to do with educating growers on tobacco marketing procedures (registration, filing of production estimates and booking sales). These can be addressed through extension and training. Funding will continue to haunt all farmers until liquidity in the economy improves. Every season TIMB has been blamed for under estimating tobacco volumes coming through to the auction floors. This has resulted in buyers bringing less money only to discover that there are high volumes of the crop. What is your comment? It is not fair to place all blame for the inaccurate crop estimates on TIMB as the figures are arrived at consensus from all stakeholders - tobacco buying companies, contracting companies, other government agencies and authorities. At the same time it must be understood that buyers will only bring in enough money to buy what they have confirmed/unconfirmed orders for, and TIMB or any other authority has no control over this. What criteria do you use to select buyers? TIMB does not select buyers. Any person or concern who wishes to buy tobacco has to apply to TIMB to do so and once granted a licence, has to satisfy Exchange Control Regulations as relating to buying tobacco, before being allowed to do so. What are B Class buyers and what is their role in the marketing of tobacco? Last season they were suspended from buying tobacco? Why were they suspended and do you see them returning to the auction floors soon? B Class buyers buy tobacco for speculative purposes; they buy tobacco which they think they can make a profit after resale. They operated on auction sales and were suspended because of complaints that they were getting involved in unscrupulous activities. There has been talk of decentralisation of the auction floors to provinces. How far has this project gone? The issue of decentralisation is still very much under active consideration and as has been reported before TIMB has gone out and established offices in the provinces. In addition some contract buyers are considering establishing collection points and even buying points in the tobacco growing areas. It seems tobacco buyers are only interested in the crop and are not willing to invest in infrastructure to ease problems for farmers. What is your comment? I do not think that it is entirely correct to say that contractors are only interested in the crop and not willing to invest in infrastructure. I think it all depends on their financial resources. A number of contractors have gone out and built barns, established or rehabilitated irrigation systems, established exotic woodlots, clinics schools and general development in support of their contracted farmers. How effective has been the decentralisation of TIMB offices for registration and booking services? The decentralisation of TIMB was effected in March/April this year and the most direct positive aspect of this is that the majority of tobacco farmers are registering at these offices, rather than having to come to the TIMB's Harare offices. Some tobacco growers continue to deliver their crop to the auction floors without having made prior booking arrangements? What are the causes and how do you plan to contain the situation once and for all? The main reason that farmers bring their tobacco without making booking is lack of education on tobacco marketing. Tobacco has always been sold after making prior booking and the very rapid increase in numbers of growers has meant that the process of training growers, especially over the last few years, has lagged behind. The tobacco industry has seen an increase in the number of growers and crop out put. How many farmers have registered to grow tobacco during the 2011/12 season? The number of growers who have registered to grow tobacco in the 2011/12 agricultural season stood at 29 859 as at 28 October 2011, compared to 27 267 at the same time last year. What can you say about the quality of tobacco being produced by farmers and how can it be improved? The quality of tobacco is very acceptable and remains in demand. However, tobacco is an exacting crop and for farmers to consistently achieve high prices they must follow the recommended agronomic practices to the full - from land preparation all the way to presentation on the sales floor. How much tobacco is expected to be produced during this season? It is premature to give a figure of how much tobacco will be produced this agricultural season as the process of transplanting tobacco into the field is still under way and it is not quite certain how the 2011/12 weather will turn out. This year's seed sales were 4,9 percent higher than those of last year. What is future of the tobacco industry in Zimbabwe? The future of tobacco is very bright if farmers can increase the production of flavour tobacco for which the country is known for. If farmers produce what are known as filler types of tobacco, which can be produced very cheaply in other parts of the world then our industry will not be able to compete successfully. Enditem