Prices Worry Farmers as Zimbabwe Tobacco Sales Open

Source from:  businessday.co.za Reuters HARARE 04/26/2006

Zimbabwe tobacco auctions opened mixed today, with officials saying the market was firmer than last year but with growers of the key commodity saying prices could not sustain them into the next season. Officials at the country's main auction centre, the Tobacco Sales Floors (TSF), said the first bale sold at $2,51 per kg, while the highest sale for the day was $2,60, a price they said augured well for the selling season which traditionally runs to October. "I can say the prices are firmer compared to last year. The farmers did not complain much about the prices. In the past sales were disrupted by angry growers (over prices) but this year we didn't see that," said TSF spokesman Lodwin Gatsi. But a farmer from the Trelawney farming district northwest of Harare who declined to be named said she was dejected because her 15 bales of tobacco had sold at between 45 and 60 US cents due to poor quality. "Most of us got our fertiliser late and even the little that we managed to get was washed away by heavy rains, resulting in a very poor crop," she told Reuters. "When I look at how much I put in, and what I will get out of the auctions, it is not worth it for me to stay in tobacco," she added. Price tags on sold bales awaiting collection by buyers showed prices ranging from 75 to 255 US cents per kg. On the eve of the auctions yesterday, central bank Governor Gideon Gono announced a 35% bonus on all early deliveries of the crop, but officials said this would still put producer earnings well behind input costs. Growers are paid in Zimbabwe dollars at the official exchange rate and Julius Ngorima, president of the Zimbabwe Association of Tobacco Growers grouping some 30,000 mainly small-scale growers, said farmers would require a minimum of $2,00 per kg to remain viable. Ngorima declined to comment today, saying he needed time to assess trends, but industry officials have said most small-scale farmers were not able to produce the good quality crop needed to fetch higher prices. Farmers are also unhappy at being paid at a stagnant official exchange rate of 99,201 Zimbabwe dollars per US dollar, less than half the rate prevailing on a thriving black market due to shortages of hard currency. Tobacco output hit a record 236 million kg in 2000 but the former key foreign currency earner, which used to account for a third of all exports, has been in steady decline since then, yielding just 50 million kg last year. The sector's decline has worsened an economic crisis marked by chronic shortages of foreign currency, fuel and food, unemployment of 70% and the world's highest rate of inflation. Enditem