Debts weigh down Premier Tobacco Auction Floors

Debts weigh down Premier Tobacco Auction Floors Mrs Chinamasa

Business Reporter
PREMIER Tobacco Auction Floors is reeling under financial constraints amid indications that it may fail to obtain a licence for the forthcoming marketing season, sources said. Insiders told The Herald Business that Premier, the country’s third largest auction floor is weighed down by debts, mainly outstanding tobacco levies and unpaid wages. The tobacco levy on growers was re-introduced at a rate of 1,5 percent of the selling price last year to finance reforestation and research activities. However, in light of the potential impact of the El-Nino induced drought on tobacco output, Government reduced tobacco levy from to 0, 5 percent, with effect from January 1 this year.

“By the end of last year, the company had not remitted about $1 million collected from tobacco levies and this really puts them in a tight corner in terms of obtaining a license for the forthcoming season,” an official who requested not to be named said.

“Again, there is a lot of pressure from many workers who are also owed a lot of money.” Some disgruntled workers claimed the deteriorating financial situation was due to poor management, saying the company may suffer the “consequences” of their alleged mismanagement.

Efforts to get an official comment from Premier proved fruitless by the time of going to print. Last year, the company also faced challenges in obtaining the license due to statutory debts. Zimbabwe has three tobacco auction floors – Tobacco Sales Floor, Boka and Premier.

In the recent years, Millennium Tobacco Auction Floor and Zimbabwe Tobacco Auction Floor collapsed after experiencing financial challenges that saw failing to pay debts. The 2006 tobacco selling season will open on March 30, Tobacco Industry and Marketing Board chairperson Mrs Monica Chinamasa said last week. She said 23 buyers have been licensed to buy on the auction floors while 15 merchants have been licensed to buy for contract sales.

She could not be reached to comment on licensed auction floors.

Zimbabwe’s tobacco output will decline by 20 percent due to the late start of the cropping season and the effects of El-Nino induced drought, according to TIMB. Last year, the country produced nearly 200 million kilogrammes of tobacco, down from 216 million kg produced a year earlier, the record tobacco output in just over a decade.

Zimbabwe earned $855 million from tobacco exports in 2015, about 11 percent higher than the previous year on higher prices and demand from China, according to the TIMB. This makes tobacco the country’s single largest export commodity, ahead of gold and platinum.

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