Zimbabwe: The Curse of the ''Golden Leaf''

Source from:  The Herald 03/13/2015

For Mrs Ketiwe Maburutse, the start of the tobacco marketing season was taking too long. The Tobacco Industry and Marketing Board had delayed opening the auction floors after a seemingly late season. Mrs Maburutse, who had grown the crop for the first time on her two-hectare plot, could not hide her excitement. In her plans, she envisaged buying timber to roof her house in Guruve, pay school fees for her children, buy them winter clothing and sofas for the family.

She was excited! This was just her first crop and no one could begrudge her wild dreams.

After the sale of the first bale at $3,50 per kilogramme, Mrs Maburutse's dreams were shattered. She could not believe her misfortunes. She could only wonder how she could pay the hired labour, school fees and even fulfil some of her imaginations.

"I used a lot of money to grow tobacco. But some farmers were getting high prices last season. I am completely devastated," she lamented.

She, however, quickly joined other tobacco growers protesting against the low prices.

"I used a lot of money growing the crop and I demand a better price. The inputs costs were so high that I cannot get 60 cents per kg for my crop when a loaf of bread costs $1.

"I switched from growing maize to tobacco in anticipation of favourable returns but all my dreams have been shattered as the crop is fetching very low prices. How are we going to survive?"

The low prices have, however, been blamed on buyers. Yet, some farmers point their fingers at farmers' unions for failing to train their members on the important aspects of growing tobacco.

The Tobacco Research Board, TIMB and auction floors have held several trainings on tobacco production in most tobacco growing areas. Agritex officers also offer free advice to farmers while conducting several field days for farmers to learn skills on growing tobacco.

For the past four seasons farmers who sold their crop at the auction floors have complained of low prices compared to those offered for contract farmers.

Their argument is that the tobacco grades are the same. The highest price at the auction floor has remained at $4,99 per kg while at the contract floors the prices could go as high as $6,85 per kg.

The price disparities have forced some farmers to side market their crop to the contract floors where prices are higher.

The disgruntled farmers use a contracted colleague's growers' number.

Stakeholders in the industry have said this is a way of contractors forcing all farmers to go into contract farming.

Others have accused buyers of trying to push indigenous auction floor operators out of business. The buyers who are also contractors, however, argue that they offer higher prices as an incentive saying the higher prices ensure farmers do not side market the crop. A buyer who refused to be named said after investing a lot of money in the form of fertilisers, chemicals and labour, the contractor would not want to lose the crop to other buyers.

"The higher price is a reward for the faithful farmer," he said.

Other buyers argue that prices at the contract floors are higher because of the good quality of the crop produced under supervision. Nevertheless, the arguments have been dismissed by some farmers who produce high quality tobacco but get the ceiling price of $4,99 per kg.

TIMB chairperson Mrs Monica Chinamasa questioned the price disparities.

"Regrettably, the maximum cap or ceiling price of $4,99 per kg that has prevailed at auction floor sales for the last two years is not desirable as it certainly does not reflect the true value of the leaf.

"This has resulted in a number of tobacco grades, of clearly different styles and quality, all fetching the same price."

She, however, questioned how auction tobacco cannot fetch higher prices than the $4,99 per kg while contractors got as much as $6,20 per kg last season.

Mrs Chinamasa said the TIMB had come up with a new system to improve transparency in tobacco pricing.

"The TIMB, in consultation with the industry, will this season be testing a new innovation in tobacco marketing," she said.

The board has introduced electronic processes into selected tobacco marketing procedures to reduce human intervention and influence. Under the e-marketing, the bidding process by buyers would involve the use of personal digital hand-held gadgets through which a buyer will secretly bid for tobacco without the influence of other buyers.

This will greatly improve transparency in the pricing and reduce the tendencies characterised by seemingly overt collusion in pricing of tobacco.

Additionally, e-marketing would also encompass the use of what are radio frequency identification tags or RFID tags for short, to track the movement of tobacco from the farms in order to reduce side marketing and theft of tobacco bales.

Tobacco Industry and Development Support Institute executive director Mr Jeffrey Takawira said the auction system was generally regarded as a fair way of remunerating the tobacco farmer.

"The auction floor has been the most effective way of selling tobacco but there have been allegations of buyers who connive and fix prices. This has been difficult to prove," he said.

Mr Takawira said the Zimbabwean crop had a huge market the world over but the buyers had largely remained pre-dominantly China and Europe.

"The number of buyers is very small and this then renders the auction system open to manipulation and price fixing. It's an old war and there has not been an alternative system of selling better than the current."

He added: "There are no high prices at the contract floors. It is just that our farmers do not put a lot of attention into input costs for their crop. The contractors are supplying firewood to the farmers, fuel, fertiliser, all these are factored in when determining the price at the auction floors by the contractors," he said.

Mr Takawira said there was need for training to ensure tobacco growers produce high quality crop. Enditem