Zimbabwe Tobacco Farmers Earn $3,6m

Source from:  The Southern Times 04/12/2016

Zimbabwean tobacco farmers have earned about $3,6 million from the sale of the golden in the first week of the season, a 33 percent increase from the $2,7 million that was realised in the same period last year.

The golden leaf remains one of the country's main sources of revenue, generating about $700 million annually and accounting for a large chunk of export receipts.

Figures from the Tobacco Industry and Marketing Board show that approximately 2 million kg of tobacco has gone through the auction floors, 55 percent more than last year.

Contract sales reached $1,2 million from 509 261 kg in the period under review while auction sales stood at 1,5 million kg worth $2,4 million.

From the 29 606 bales laid this year, only 2 032 were rejected, accounting for the decline in the percentage of rejected bales to 9,23 percent from 18.06 percent in 2015. Despite the increase in volumes, farmers are receiving lower prices for their crop than they got during the same period in 2015. TIMB says tobacco sold for an average price of $1,79 per kg on Tuesday, down from $2,08 last year.

Tobacco farmers in Southern Africa have been receiving lower prices for their crop the past three years largely due to irregular rainfall patterns that have seen the quality of the leaf compromised. As a result, the number of farmers registered as tobacco growers has significantly declined to about 70 000 from over 100 000 in 2014.

This season, tobacco volumes are expected to decline by 20 percent from the 198 million kgs produced in 2015 due to the El Nino induced drought which affected the crop.

TIMB chief executive Dr Andrew Matibiri last week said although the country expects lower volumes, there had been an improvement in the quality of the leaf this year.

"We hope this will translate to good prices. We expect tobacco merchants to pay fair prices commensurate with the quality of tobacco which will enable farmers to have sustainable returns on their tobacco," he said.

Last year, farmers protested against the low prices (as low as 10 cents per kg) that merchants offered for their crop resulting in the suspension of sales on the first day of the season. Although prices later firmed, farmers still felt they had been prejudiced as auction sales continued receiving significantly lower prices than contract sales. The problem has not been restricted to Zimbabwe only but is spread across the region. Farmers in Malawi expressed dissatisfaction over the prices offered for their crop at the beginning of the selling season in April last year. They felt the merchants were not offering them the correct prices for the quality crop they had brought to the floors. Malawian farmers realised $337,4 million from the sale of 193 million kg in 2015 compared to $361,6 million from 192 million kg in 2014.

About 400 000 farmers felt the pinch of lower prices as merchants gave contracted tobacco higher prices and snubbed all other growers.

Malawi is one of the five largest tobacco producers in the world, largely due to low export tariffs, cheap labour and lack of regulations.

The country dedicates more than 5 percent of its farming land to the crop - the highest percentage globally.

While tobacco sales make up 70 percent of Malawi's income, its production has also been marred by issues of child labour in the tobacco fields as children below 15 are forced by economic necessity to work with their families in the tobacco fields due to the high levels of poverty.

Zambia has also become a big producer of tobacco in the region as the government tried to minimise the economy's dependence on copper, which has largely suffered from plummeting global prices and low demand.

The Zambian government has had to come up with measures to promote export diversification to stabilise export earnings, leading to the rise of tobacco exports. The industry currently employs more than 450,000 people, necessitated by the demand for Zambian produced tobacco at international and regional markets. However, farmers have not been spared the effects of the drought that has hit the region, affecting the quality of the tobacco and subsequently lowering the prices. All tobacco producers expect lower volumes this year but Zimbabwe's situation has been worsened by the move by government to ban all cash payments at the auction floors to encourage the use of banks.

However, farmers were complaining that they had not received their money, three days after the auction floors opened, raising questions on the efficacy of the new payment system.
The TIMB said the system had been fine-tuned and farmers were now able to get their money on time.

While farmers were not happy with delays in accessing their money, the new payment system is likely to bring more joy than tears to the growers.

Said Dr Matibiri: "Financial inclusion will improve the quality of life, improve farmers' access to financial services as well as improve farm productivity in terms of average revenue for the grower as well as yield per hectare." Enditem