Tobacco Season Threatened

Source from:  fingaz.co.zw 04/24/2007

ZIMBABWE'S tobacco marketing season is under threat from an acute foreign currency shortage, which has hampered the importation of critical packaging material. Industry sources indicated that the country's packaging materials suppliers were battling to source wrapping paper known as sack craft to package tobacco for sale on the country's auction floors. The tobacco-selling season, initially scheduled to be opened in March, had been called off after growers refused to deliver tobacco because of an unattractive exchange rate. The tobacco auction floors are now expected to open on Tuesday, but industry sources said the unavailability of packaging material was likely to frustrate the opening of the delayed start to the season. The country has three auction floors - the Tobacco Sales Floor, the Zimbabwe Industry Tobacco Auction Centre and Burley Marketing Zimbabwe. The Tobacco Industry Marketing Board (TIMB), which regulates tobacco trade in the country, confirmed this week that there was a massive shortage of wrapping paper, saying local producers had been allocated insufficient foreign currency to import raw materials to manufacture packaging products. Sack craft is normally imported from Sappi, a South African paper and pulp company, and from agencies in Sweden. "There is no wrapping paper. Hunyani Packaging have been allocated insufficient funds," said acting TIMB chief executive officer Andrew Matibiri. Sources at Hunyani Packaging indicated that even in the event that they received fresh foreign currency allocations to import the packaging materials, they were unlikely to meet the opening date for the auction floors as shipping could take over two weeks from South Africa and eight to 10 weeks from Sweden. Demand for tobacco packaging, which had fallen in recent years because of a reduced crop output, is expected to rise this year following optimistic projections that output could rise to 70 million kgs, up from 55 million kgs harvested last year. The shortage of wrapping paper adds to a plethora of woes besetting the tobacco industry. The Financial Gazette reported last week that authorised foreign currency dealers were struggling to mobilise offshore funding for tobacco purchases because of the country's increasing risk factor. Zimbabwe is battling an economic recession, now in its seventh year, characterised by acute foreign currency shortages. The export sector, predominantly agro-based, has suffered immensely from an agrarian reform that has disrupted the farming sector in the country. The absence of international financial support, cut back to force President Robert Mugabe's government into adopting far-reaching economic and political reforms, has exacerbated the country's foreign currency woes. Enditem