Published by the government of Zimbabwe
5 April 2004
Harare — THE 2004 tobacco auction selling season kicked off to a good start compared to the first three days of last year.
Farmers commended the prices, which are quoted in the United State dollar and by close of business a kilogramme of tobacco was fetching an average US$176,99 compared to US$164,31 on the third day of season last year.
A good start at the auction floors may be a precursor to the contract system, which is scheduled to start this week.
Authorities were last week putting the final touches for the inaugural contract selling system, which would see the crop being sold at designated points in the field.
There are some problems though which have emerged, especially the thorny issue of the exchange rate where the farmers want a special rate above the prevailing auction rate. This is not the first time that the farmers have asked for an upward review of the exchange rate, as it was also the case in the last two selling seasons.
There were also fears that the contract system may be derailed by some unscrupulous buyers who want to buy the crop from the farmers without having supported them in growing the crop.
Under the contract system, supporting firms assume the role of both auction floors and tobacco merchants.
Already there are reports that some of the tobacco buying companies have deployed their employees across the country to buy the crop without even have provided the growers with inputs.
However, the main worry of the farmers is the exchange rate, which is determined by the prevailing rate at the auction floor.
Mr David Makomborero, a Karoi farmer, said while the floor prices were encouraging, it was the blend rate which was proving problematic.
As at the end of business last week, the blend rate stood at $3 518,71 for every US dollar earned on the auction floor.
Tobacco growers retain 75 percent of their foreign currency earnings at the prevailing auction rate on a particular day with the rest being calculated at $824.
"The prices are not enough if you compare to what we would have put into the crop.
"We are ploughing an average of $10 million per hectare and we expect between 2 000 and 2 500 kg.
"If you factor in the transport cost at more than $20 000 per bale, then you would see that at the end of the day, we are left with nothing," said Mr Makomborero.
He added that they were still waiting to hear from their representative on what would happen next.
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