14 February 2013

Zimbabwe: Banks Urged to Fund Tobacco

YOUTH Development, Indigenisation and Empowerment Minister Saviour Kasukuwere has challenged the banking sector to fund agriculture, particularly the tobacco sector, to boost the economy. He was officially opening the 2013 tobacco selling season at Boka Tobacco Floors yesterday.

The ceremony was also attended by Defence Minister Emmerson Mnangagwa, Chief Justice Godfrey Chidyausiku, Minister of Justice and Legal Affairs, Patrick Chinamasa and heads of agricultural institutions.

Minister Kasukuwere said a long time ago, 74 percent of agricultural funding came from the banking sector, but these days farmers were struggling to access support.

Only 17 percent support for agriculture came from the banking sector. If financial institutions provided more packages to farmers, tobacco production would grow dramatically, he said.

Minister Kasukuwere said agriculture was a major employer and contributed to the Gross Domestic Product. Last year 10,7 percent of the GDP came from the tobacco industry.

He was also grateful at the increase in the number of tobacco growers, particularly the small-scale farmers, who constitute 80 percent of the grower base. He attributed this to the land reform programme.

"It is also noteworthy that in this process, more and more youths and women have ventured into tobacco production to empower themselves," he said.

"This indigenisation of tobacco production has been achieved, thanks to the successful land reform programme started by Government in 2002."

Minister Kasukuwere urged the Tobacco Industry and Marketing Board to work closely with his ministry to allow the development of farmers' livelihoods through the purchase of shares in the mining sector.

"It is my wish that, as in all other economic sectors, the process of indigenisation and empowerment be taken further along the value addition chain of the tobacco industry and my ministry will always be there to assist in the implementation of this policy," he said.

TIMB chairperson Mrs Monica Chinamasa said tobacco growers faced viability problems due to the increasing cost of production. She was concerned over the two worrisome pricing issues prevalent in 2012. Mrs Chinamasa noted the emergence of a maximum cap or ceiling for auction floor prices of US$4,99 per kg.

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

"The second pricing issue I have is that of the uncomfortable difference between auction floor and contract prices for similar grades," she said. "I expect that the buyers will correct these anomalies during this season."

The first bale to be sold fetched US$4,70 per kg, a price described by many as "fair". Prices at all auction floors were ranging above US$4 per kg.

Farmers' Development Trust chief executive Mr Lovegot Tendengu said the US$4,70 was fair, considering that the leaves were primings.

"These are the lower leaves and we hope for an increase in prices as we go upwards," he said.

Zimbabwe Farmers' Union second vice-president, Mr Berean Mukwende said he expected the prices to be higher than the closing highest price of US$4,99 per kg last season.

"Last season we closed with the highest price of US$4,99 per kg and now we expected to open with a higher price, he said.

Zimbabwe Commercial Farmers' Union president Mr Wonder Chabikwa said indications were good this season. He was confident prices would increase as the quality of the leaf improved.

Tengwe farmer Mr George Mutingondo said he was happy with the opening prices and said the season looked promising for him.

Most farmers said they were satisfied with the prices and the treatment they were receiving at auction floors.

The TIMB's stringent enforcement of marketing rules and procedures helped to virtually eliminate congestion and chaos at the floors in 2012.

This year, farmers were also reminded to adhere to the regulations.

Three auction floors - Boka Tobacco Floors, Premier Tobacco Floor and Tobacco Sales Floor - were licensed this season.

The floors have a capacity to sell 33 000kg of the "golden leaf" daily. This means the selling season may be shorter than the previous ones.

A total of 170 million kg are expected to go under the hammer this season, compared with the 144 million kg sold last season.

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