Association Hails New Tobacco Support Price

Source from:  The Herald (Harare) 06/01/2005

THE Zimbabwe Tobacco Growers' Association (ZTGA) has hailed the new tobacco support price, saying it would undercut side markets and, thus, effectively destroy them during the current selling season. ZTGA president Cde Julius Ngorima said growers were happy with the relationship they enjoyed with financial institutions. He was referring to the support price announced by Reserve Bank of Zimbabwe Governor Dr Gideon Gono last week as backdated to the first day of the selling season. "The new support price of $5 000 per kilogramme would cushion us in meeting some of our production and input costs," Cde Ngorima said. "Dr Gono and the Government have done their part as they have recognised the problems bedevilling tobacco growers. We hope to see buyers offering better prices as we progress." However, he said, although the new support price would bring relief to farmers, it would not compensate for the low prices being offered by merchants at the auction floors. "We have been fetching an average of US130 cents per kg, compared to US230 cents per kg at the end of last year's selling season. Our target this year was US3 000 cents." "Farmers should be able to go back to the field, but low prices are discouraging. Poor prices do not only discourage us, but have the potential of driving some of us to side markets (where parallel market rates reign)," Cde Ngorima said. Burley Marketing Zimbabwe managing director Mr Bruce Searles said it was too early to assess the impact of the newly introduced support price on deliveries. "While it is early for me to comment, everybody is looking forward to seeing good and tangible results." Dr Gono announced the tobacco support price from last year's $2 000 to $5 000 this year when he presented the 2005 Post-Election and Drought Mitigatory Monetary Policy Framework. A total of 8,8 million kg of tobacco worth US$10,2 million had been sold at an average price of US114 cents per kg by close of business on Thursday. This is compared to a total of 11,2 million kg valued at US$21,6 million that was sold at an average price of US191 cents per kg during the same period last year. The average tobacco delivery was estimated at 2 500 bales per day. The country is expecting to sell some 100 million kg of tobacco this year, up from the 68 million kg sold last year. Enditem