Zimbabwe: Tobacco Farmers Hail RBZ''s Higher Limit

Source from:  The Manica Post  05/16/2016

THE concessionary move by the Reserve Bank of Zimbabwe to elevate tobacco farmers to corporate clients eligible to withdraw up to $10 000 per transaction has brought comfort among farmers though concerns remain about poor tobacco prices and access to cash. The decision by the central bank follows protests by disgruntled farmers against the $1 000 maximum daily withdrawal limit which was not enough to cover labour, transport and other farming activities.
 
The central bank was then forced to review maximum daily cash withdrawal inside banking halls and at Automated Teller Machines to $1 000 and euros and 20 000 rands to promote the widespread use of multi-currencies to arrest the obtaining cash shortages.
 
Zimbabwe Farmers' Union director, Mr Paul Zakaria, on Wednesday said while stakeholders in the tobacco sector commend RBZ's flexibility, they remained worried about subdued prices being offered at the auction floors as well as unabated chronic liquidity.
 
Zimbabwe is facing severe cash shortages, albeit under very difficult circumstances. "The concessionary measures by the central bank have brought comfort on part of tobacco farmers who may want to use proceeds of their marketed product to finish off outstanding tobacco work back home.
 
"However, the challenge remains that cash in some banks is difficult to lay hands on. Otherwise things have improved as a result of the concessionary measures. Farmers are also worried that prices remain depressed at a time they should be firming up. This is the time when prices should be firming up, but surprisingly the market is quite depressed," said Mr Zakaria.
 
Tobacco Association of Zimbabwe president, Mr David Guy Mutasa added that the move by RBZ had averted a potential implosion.
 
"It has actually helped and working good for the farmers. The last thing farmers ever wanted was a strike by their workers for non-payment of salaries. The increase in withdrawals helps farmers to meet their salary obligations. It has averted unnecessary work stoppage, frustration, anger and hurt around this time when almost everyone is busy with reaping, curing, grading and bailing," said Mr Mutasa.
 
TIMB communications manager, Mr Isheunesu Moyo, said the situation at the auction floors was brought under control and business continued uninterrupted. He said TIMB does not control tobacco prices, but supply and demand.

"We are prepared to engage the ZFU if they approach us. So far they have not approached us over the issue of prices. I can tell you for a fact that our prices are high and very competitive internationally.
 
"We have the second best prices after the United States of America. As TIMB, we do not control tobacco prices. They are determined by supply and demand. Price controls cause disruptions and we do not like that," said Mr Moyo. Some of the affected farmers said the withdrawal limit that had been proposed by RBZ presented challenges as they had to pay workers back home.
 
Some farmers said they were not comfortable with getting euros and rands and preferred the US dollar they were used to, while others said it was better to use multi-currencies as long as they got all their money. Zimbabwe has been experiencing cash shortages during the past few weeks, which have seen some banks reducing withdrawal limits.
 
The major reasons for cash shortages include a dysfunctional multi-currency system which has seen the country predominantly using the greenback as its anchor currency unlike in 2009 (when multi-currency was introduced) when 49 percent of the transactions were done in rand.
 
Low usages of plastic money and Real Time Gross Settlement, low confidence and inefficient use of scarce foreign currency have also resulted in cash shortages. The strong US dollar has made Zimbabwe a high cost producing country, expensive destination for tourists while externalisation of funds continued to put pressure on the country's balance of payments position.
 
A total of $244 768 593 was raked in from tobacco exports this season so far at an average price of $5,82 per kg. A total of 42 068 008kg have been sold so far this season. In 2016, seasonal exports increased to 41,7 million kg at an average price of $5,84 compared to last year's 37,5 million kg at an average price of $6,14 per kg.
 
The value of the crop exported to China was $163 870 169 at an average price of $8,11 per kg. South Africa was the second highest buyer, purchasing 7 920 083 of the golden leaf valued at $24 736 067. The average price was $3,12.
 
Tobacco sold to date was 58 percent up from the same period last year at 48,9 million kg. The average price for tobacco was $2,35 per kg at the auction floors. During the 26 days of the tobacco selling season, 87 percent of bales delivered were sold as compared to 83 percent during the same period last year.
 
For the 2016 season, an 18 percent decline in season registrations was recorded from 96 025 during the same period in 2015. Tobacco is one of the country's major export earners. Enditem