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Zimbabwe: Shortage of Packaging Materials Likely to Blight Tobacco Auctions
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Financial Gazette (Harare)
3 April 2008
Posted to the web 3 April 2008
Kumbirai Mafunda
Harare
ZIMBABWE'S tobacco auction floors will open their doors to merchants next month amid concerns over the availability of crucial packaging materials.
Industry players disclosed this week that the annual tobacco auctions, a key generator of the country's export receipts, would start on the April 22 and stretch through to October.
Officials at the country's three auction floors, the Zimbabwe Tobacco Auction Centre, the Tobacco Sales Floor and Barley Marketing Zimbabwe told The Financial Gazette that foreign currency shortages hampered efforts to import wrapping paper and this could once again affect the commencement of the marketing season.
Officials at Hunyani Paper and Packaging, manufacturers of the packaging paper, confirmed the shortages of the wrapping paper, which they attributed to foreign currency shortages.
The officials said they would need to import 300 tonnes of the special tobacco paper to meet requirements for the marketing season.
"We are making arrangements to import the paper," said an official who asked not to be named.
It is feared that if Hunyani fails to secure foreign currency to import the paper, they could fail to beat the opening deadline for the auction floors as deliveries could be delayed.
Last year, shortages of the wrapping paper and hessian, material used to manufacture packaging and concerns over pricing delayed the commencement of the selling season, which was initially scheduled to start in March but was later postponed to April 24.
Growers' representative bodies fear that this year's tobacco crop could plummet to between 65 million kgs and 70 million kgs after last year's rebound to 73 million kgs, which earned an estimated US$170 million.
Economic analysts also fear that the drop in tobacco production, once the mainstay of the economy, could compound the country's foreign currency crisis, which already is precarious.
Production of tobacco has been on a freefall since 2000 when government engaged in a controversial land redistribution programme that displaced white landowners with unproductive black farmers, mainly government and ruling party bigwigs and their cronies.
Since then, tobacco output has plunged from an annual peak of 232 million kgs to a disappointing 73 million kgs last year.
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Foreign currency receipts also plummeted to US$170 million, from $400 million before the agrarian reforms. Until the confiscating of commercial farms in 2000, tobacco underwrote the economy, supplying up to 40 percent of the country's total foreign currency earnings.
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