Zim Tobacco Auction Set for Bleak Start

Source from:  busrep.co.za April 24, 2006 Sapa-AFP Harare 04/25/2006

Zimbabwe's tobacco auction floors will Tuesday open for the annual selling season, but farmers say the crop will the lowest since independence in the southern African country. Once a leading exporter, tobacco farming has fallen on hard times which economists blame on land seizures, fuel and fertilizer shortages and disputes over pricing. "This year's crop is the lowest since 1980," said Rodney Ambrose, chief executive officer of the Zimbabwe Tobacco Association. "The sector has suffered over the years because of viability problems," Ambrose told AFP ahead of Tuesday's opening. Tobacco has seen a drop in production and quality and it is estimated that this year's crop will come in at 47 to 50-million kg. Output rebounded to 73 million kg last year after dropping to 64 million in 2004, but was still a far cry from the record 237-million kg of tobacco moved off the auction floors in 2000. Tuesday's auction opening is being overshadowed by problems over pricing. Farmers on Monday also clashed with Reserve Bank governor Gideon Gono over prices for this year's crop after the central bank backtracked on an earlier announcement that it would pay a fixed price per kilogramme. Zimbabwe's central bank has promised a guaranteed floor price of $1.80 (about R10.90) per kg, but later withdrew the offer saying that the price would be determined by the market as auctioning started. Farmers said they were upset about the withdrawal of the guaranteed price, which also came with the promise of a top-up should tobacco fetch lower than $1.80 per kilogramme. They said the lack of a fixed price ahead of the season created uncertainty in the market and they were worried that their crops might be valued at less than the set price. Zimbabwe needs more than $223-million to finance its next tobacco crop, Agriculture Secretary Simon Pazvakavambwa told a parliamentary portfolio committee earlier this month. The farming season for tobacco this year starts in August. Tobacco used to be the largest foreign exchange earner after gold, but the sector is now a shadow of its former self, blamed by critics on Zimbabwe's contentious land seizures, drought, and a lack of foreign currency and fuel. Zimbabwe's land seizure programme, which started in 2000, had a major negative impact on tobacco production. Some 4 000 commercial farms were seized, at least 17 of them large-scale tobacco producers. Enditem