Zimbabwe: Tobacco Deliveries, Quality Improve As Protest Fizzles Out

Source from:  The Herald (Harare) May 10, 2006 05/11/2006

THE 2006 tobacco selling season entered its third week on Monday with the country's three auction floors registering a significant improvement in deliveries. There were fears that deliveries of the golden leaf would remain subdued as farmers protested against the new pricing system. A few hours into the selling season, farmers threatened to pull out of tobacco production citing the "quality-oriented pricing system", prompting Reserve Bank governor Dr Gideon Gono to call on "non-performers" to quit. Analysts who spoke to the Herald Business said it was encouraging to see that more farmers were taking an interest in how the new pricing system worked and were eager to sell their tobacco so that they could start preparations for the next season. "It is good that farmers have made a positive U-turn. Deliveries have really improved," said one analyst, adding: "We do not want to see the industry collapsing. It is our hope for revival of the economy." "Farmers must have realised that delaying deliveries will not yield anything and they should start preparations for the next season," noted another. By end of business last Friday, about 1,4 million kg had gone under the hammer at an average price of US$1,73 per kg against US$0,96 per kg at the same time last year. This was ample proof of the high quality of tobacco on offer, said operations executive of Tobacco Sales Floor (TSF), Mr Lodwin Gatsi. "The quality has really improved," he said, "and we expect even better quality next season." The Tobacco Sales Floor in Willowvale was offering the highest price of US$1,85 per kg on average, according to figures from the Tobacco Industry and Marketing Board while Burley Marketers Zimbabwe and the Zimbabwe Tobacco Auction Centre were offering an average of US$1,60 per kg and US$1,61 per kg respectively. Zimbabwe Farmers' Union president Mr Davison Mugabe said the price in US$ terms was "very encouraging" and so was the quality of tobacco being delivered. Interviews with officials from BMZ, Zitac and TSF revealed that the number of rejected bales had declined to below 8 percent, yet another confirmation that quality ha d improved. "The only outstanding issue is of the exchange rate, which I believe authorities are looking into," said Mr Mugabe. Without going into detail, Mr Mugabe hinted that negotiations on the exchange rate between the relevant authorities and farmer organisations were at an advanced stage. Farmers are pressing for an exchange rate of $185 000 to the US dollar, 85 percent more than the interbank rate of just over $100 000 to the greenback. Only 52 million-kg of the golden leaf are expected to go under the hammer this season, down from the 252 million kg achieved in 1999 and 74 million kg last year. However, efforts are underway to boost tobacco production by virtue of its status as the country's major foreign currency earner. Enditem