No Headway in Tobacco Price Talks

Source from:  Rangarirai Mberi  04/11/2005

TALKS to resolve a potentially damaging impasse over tobacco prices achieved little progress yesterday, with farmers saying they would not let up on demands for higher Zimbabwe dollar prices for the golden leaf. Tobacco officials met with Reserve Bank of Zimbabwe and government officials yesterday, seeking a review of the currency rate and a higher subsidy for their crop, the country's single largest foreign currency earner. There was an improvement in US dollar prices yesterday, but Rodney Ambrose, the chief executive officer of the Zimbabwe Tobacco Association, said there was still a dispute over the conversion rate. "Tuesday's opening prices were significantly lower than we expected, but US dollar prices have improved today (yesterday). Nothing came out of our meetings though. We are still worried about the local currency return and talks are continuing," Ambrose said. Tobacco auction houses cancelled the season's opening sales on Tuesday after about 150 farmers protested against a sharp drop in prices. The producers were back at the floors yesterday while the government, the Tobacco Industry Marketing Board (TIMB) and tobacco associations sought a solution. "We have had a good turnout today and the quality we have seen is a lot better than yesterday. The issue (over prices) is before the minister and the TIMB," said Ian Logan, the sales and marketing manager of Tobacco Sales Floors. By mid-morning yesterday, although some leaf was fetching as low as US25 cents, prices were averaging US179.9 cents per kilogramme, still lower than the opening price of US195 cents but better than the lows of US22 cents that had driven Tuesday's protests. The opening price was US21 cents higher than last year's opening day average, but farmers said returns at current prices lagged behind production costs. Producers say it costs them just above $20 000 to produce a kilogramme of tobacco, but US dollar prices, at $6 200 on the greenback, would give returns of about $11 000 for each kg. In 2002, it cost $200 to produce a kg. While producers protested at what they called unfair prices, buyers yesterday took a dim view of the quality of the crop that was brought to auction. Brazil and India may be offering similar quality tobacco for less, a buyer said, insisting the prices were a true reflection of the crop on view. Enditem