4 December 2012

Zimbabwe: Made Blasts Price Barriers in Tobacco Marketing

AGRICULTURE, Mechanisation and Irrigation Development Minister Dr Joseph Made last Friday castigated the use of price barriers during the 2012 tobacco season saying the practice should not be allowed to continue next year.

In a speech read on his behalf at a National Tobacco Workshop to mark closure of the 2012 tobacco marketing season, Minister Made said a maximum cap of US$4,99 per kg was used in the last season resulting in a number of tobacco grades of clearly different style and quality fetching the same price.

"It is my hope that in the next marketing season this price barrier will be no more," he said.

Dr Made also expressed concern over the large difference between auction floor and contract prices for similar grades.

"It is again my trust that will be corrected before the 2013 marketing season opens," he said.

He said his ministry would continue to review different pieces of legislation to ensure that every stakeholder is protected.

To this end, he said Government was working towards obligating the financial services sector to provide affordable funding to agriculture.

Financiers have been charging high interest rates to growers and this has made it difficult for the farmers to get the necessary funding to increase their yields.

Minister Made said he was aware of the global market requirements that are increasingly tailored towards sourcing tobacco from countries whose production models are sustainable.

"The green issues in tobacco production coupled with the World Health Organisation's Framework Convention on Tobacco Control are some of the biggest challenges facing our industry.

"Government will continue to engage both local and international stakeholders to find ways of mitigating challenges from WHO's framework convention. I am sure that recommendations from this workshop will ensure that Zimbabwe reclaims its position as a leading exporter of good quality favour style tobacco," he said.

He hailed all stakeholders for ensuring the increase in production of the golden leaf during the past three years.

"I would want to congratulate all stakeholders in the industry on the production and successful marketing of the tobacco crop presented by farmers in 2012," he said.

"It is gratifying to note that there is now a collective responsibility in addressing challenges that arise in the sector," he added.

Tobacco Industry and Marketing Board chairperson Mrs Monica Chinamasa, who gave an overview of the 2012 tobacco season, noted that the tobacco industry was faced with a number of problems including non-compliance with good agricultural practices and severe shortage of funding coupled with high interest rates charged on these funds.

"There is therefore need to look for all possible ways of reducing costs across the whole value addition chain, from production to marketing.

"While merchants can easily do so, there is need for auction floors to also fund production so as to increase their throughput," she said.

She also pointed out that financiers, including contractors and insurance companies were experiencing poor performance on collection of loans and premiums due to poor production and side marketing.

The 2012 farming season saw 71 316 registered flue-cured tobacco farmers come into the picture. Small-scale farmers growing an average of 1,3 hectares constituted 80 percent of this number.

In addition, there were 239 and 938 registered burley and dark air-cured tobacco growers respectively.

Mrs Chinamasa said the increased number of auction floors coupled with enforcement of marketing procedures had helped to eliminate congestion and chaos at floors.

A total of 144,5 million kilogrammes of flue-cured tobacco was sold, with contract sales accounting for 63,95 percent of total sales and individual sales accounting for the remainder.

A total of US$527,6 million was paid out to growers this year compared to US$361,4 last year, representing a 46 percent increase in earnings to growers.

Burley tobacco raked in US$136 123 in sales at an average price of US$2,17 per kg while dark air-cured tobacco was sold at an average of US$1,54 per kg.

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