Threat to Zimbabwe Tobacco Aales

Source from:  Dumisani Muleya 13 April 2006 04/14/2006

ZIMBABWE's tobacco auction floors face closure next year after the auction season because farmers are failing to repay loans amounting to Z$1-trillion. This comes as the government last week made another desperate effort to save the declining sector by increasing the tobacco price 36-fold, from Z$5000 to Z$180000 - about US$2/kg. Tobacco farmers' reduced income has made repaying loans of Z$1-trillion owed to state agencies and banks nearly impossible. The government said this week it wanted auction floors - operating at 8% capacity on reduced tobacco output - to open earlier than usual to give farmers more time to deliver and market their product. An early delivery of tobacco to auction floors set to open on April 25 will see farmers getting a Z$40000/kg bonus. Opening the auction floors earlier will also help the government to quickly attach foreign currency. The new price follows submissions from the agriculture sector to parliament's portfolio committee on lands and agriculture last week. Farmers' representatives told the committed that the introduction of the dual tobacco auction system had compounded their woes. Zimbabwe is in the throes of a chronic economic crisis characterised by hyperinflation that is sitting at 913,6%, soaring prices and an unemployment rate hovering above 70%. Enditem