Tobacco farmers withhold crop as prices tumble

The Herald, 23 April 1993

AS prices continue plunging at Harare’s tobacco auction floors, many farmers are refusing to accept the auction bids and are taking bales back to their farms, hoping that prices will improve in the season.

Yesterday, farmers rejected the winning bids of 28.84 percent of the 16 853 bales auctioned and only 1 858 bales were sold.

Late yesterday afternoon, farm trucks were lining up at the auction floors to take away the withdrawn bales.

Prices are less than half what they were this time last year in US dollar terms, reflecting the huge slump in world prices after both Brazil and Zimbabwe, two major exporters, both produced large crops.

Major international cigarette manufacturers are reported to be cutting prices and are on the verge of a price war as cheaper brands increase their share of a world market hit by depression and declining disposable incomes.

Most Brazilian producers are small-holders, and with their lower overheads are able to cope with lower prices. Zimbabwe competes on quality, but Brazil this year has cut prices to lure buyers.

“It is a very difficult and sad situation for a lot of people. The situation is very volatile at the moment,” said one farmer.

The increasing number of unsold bales had created storage problems and the Tobacco Sales Floor was now storing the tobacco free of charge.

The Zimbabwe Tobacco Association president, Mr Ian Alock, in an interview with The Farmer, the Commercial Farmers Union’s weekly publication, categorically denied that the Tobacco Sales Floors might be closed due to the current low prices.

LESSONS FOR TODAY

While tobacco farmers still face challenges, below are headlines from The Herald since the land reform programme, which may tell a story of a thriving tobacco sector:

1. Forex relief for tobacco farmers – The Herald, 13 March 2020

Tobacco farmers will this year have unlimited access to foreign currency from the sale of their crop after the Reserve Bank of Zimbabwe (RBZ) designated tobacco proceeds as free funds.

2. Zim earns US$358m from tobacco exports —The Herald, September 18, 2019.

Zimbabwe has generated US$358 million from the exportation of 94, 2 million kilogrammes of flue-cured tobacco this year, as the industry presses ahead with the promotion of value addition to maximise returns.

3. Tobacco deliveries to break record — The Herald, August 20, 2019.

Tobacco deliveries are set to surpass last season’s record-breaking delivery of 252 million kilogrammes as deliveries continue at the auction and contract floors.

4. Tobacco registrations increase 65 percent —The Herald, November 10, 2018.

Tobacco grower registrations for the 2018-19 season have increased by 65 percent from 98 233 farmers last season to 162 028, statistics from the Tobacco Industry and Marketing Board (TIMB) have shown.

5. Zim earns $870m from tobacco —The Herald, December 14, 2014.

ZIMBABWE has earned $871, 2 million from 176,4 million kilogrammes of tobacco exported mainly to South Africa and China since the beginning of 2017.

6. Zim tobacco exports gross $735m — The Herald, November 24, 2016.

Zimbabwe has so far exported 133 million kilogrammes of flue-cured tobacco valued at US$735,9 million, latest statistics from the industry regulator show.

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