Martin Kadzere Senior Business Reporter
Zimbabwe’s tobacco auction companies have been given the green light to decentralise their operations during the next marketing season starting in March next year in a move that will reduce costs incurred by farmers on transporting the commodity to the market.
Tobacco and Industry Marketing Board chief executive Andrew Matibiri told The Herald Business that all three auction floors —Boka Tobacco Floors, Tobacco Sales Floor and Premier have been granted licences to set up tobacco auction facilities outside Harare.
“Boka will operate from Rusape, TSF from Karoi and Premier from Mvurwi,” said Dr Matibiri.
The programme will also help decongest the existing facilities. However, with the falling volumes of tobacco sold though auction, concerns had been raised whether it would be feasible for auction floors to set up facilities outside Harare.
This year, Zimbabwe produced about 180 million kg of tobacco of which 20 percent was sold through the auction system. The Federation of Farmers’ Union welcomed the move, but urged authorities to ensure there would enough buyers at the new buying centres “to ensure enough competition”.
“This is good for the convenience of the farmer and it will reduce congestion at existing auction centres but we would want to see all buyers represented at the new centres to increase competition,” FoFU chairman Mr Wonder Chabikwa said in an interview.
Zimbabwe, the world’s fourth largest tobacco producer, has a dual marketing system where the produce is sold through auction and contract systems. Some industry players said the gradual decline of the auction system could cause price manipulation in favour of the contractors, which would drive farmers away from growing the crop.
Meanwhile, Dr Matibiri said distribution of tobacco inputs under the Reserve Bank’s $28 million facility to support small-scale farmers has begun. He said the regulatory board had so far distributed inputs to cover 1 500 hectares.
“The total facility can cater for about 22 000ha and we are hoping the target will be achieved,” said Dr Matibiri.
The central bank came up with a $28,5 million facility to support the small-scale farmers to prop up the tobacco auction marketing system. This followed serious concerns raised by some industry players that the collapse of the auction system would lead to massive price manipulation through contract sales.
Zimbabwe’s tobacco auction system used to be the marketing model of tobacco in the world, but tobacco volumes have shrunk as farmers, mostly those who benefited under the land reform joined contract schemes as they did not have money to finance production.