Samuel Kadungure Senior Reporter
THE multi-million tobacco industry – whose 2017 marketing season opened on Wednesday with everything pointing to a fantastic year – is set to release about 215 million kilogrammes with potential to rake in $700 million which will go a long way to improve the foreign currency situation in the country.
A total of 80 745 tobacco growers are hoping for better fortunes as international demand remains very high because the world’s other major producers, the US and Brazil, have inferior crops.
Zimbabwe is projecting a 12 percent growth for the agricultural sector driven by high output from major crops such as maize, cotton and tobacco.
As the tobacco auctions opened on Wednesday, 80 750 tobacco growers and international buyers were infected by gleeful anticipation of high prices and earnings exceeding $700m which will help improve the foreign currency situation.
Tobacco remains the country’s major foreign currency earner with earnings reaching nearly US$1 billion last season.
On Wednesday more than 1 000 bales went under the hammer simultaneously at the three auction floors – Boka Tobacco Floors, Tobacco Sales Floor and Premier Tobacco Auction Floors – using the newly introduced e-marketing.
At Boka Tobacco Floors the e-marketing system experienced some challenges, and auction had to be done using the conventional system with the highest price of $4.60 per kilogramme.
At TSF and Premier, the system worked perfectly with the highest price of $4.99 and $5, respectively.
Agriculture Minister, Dr Joseph Made, said everything was pointing to a good tobacco marketing season.
His sentiments were echoed by the Zimbabwe Farmers Union director, Mr Paul Zakaria, who said the quality of tobacco delivered on the first day – mainly by small-scale farmers – was of high quality.
Mr Zakaria expressed optimism that the “good crop and poor price” dilemma that haunted farmers in the past will be eradicated through the automation of tobacco auctioning. He said the new system was long overdue and its introduction would minimise buyer collusion, reduce marketing costs and result in better returns for farmers.
Unlike the conventional system where buyers, agents and farmers will walk through the auction floors, bidding will be done online, while farmers, who would have brought their gold leaf, are seated in the gallery.
“Things are more orderly than in the past. We are happy that the crop delivered is really top quality, and as good crop is coming through, we expect the prices to be firm so that farmers can get a return for their investment,” said Mr Zakaria.
Mr Zakaria said farming is a business and farmers should get a return for their investment, unlike in preceding seasons where their hopes were extinguished after racking up huge losses due to lower prices offered at the auction floors.
The ever nose-diving price regime impacted them negatively and drowned some growers in serious debt as banks demanded their loans back, leaving most of them in a quandary that compelled them to sell their cattle to cover the ballooning debts.
“There is need to embrace technology, and as nation, we cannot be left out when the rest of the world is moving towards that. Hopefully the farmers will get intended benefits. We are in the right path, and our farmers should be financially literate and make the best out of the value that shall be unlocked through this system.
Farmers should prioritise the purchase of inputs for the coming season so that they are guaranteed of going back into business, and all else should come second,” emphasised Mr Zakaria.
The Reserve Bank of Zimbabwe, apart from guaranteeing the five percent export incentive for all gold leaf produced this year, has advised that small scale farmers will withdraw $1 000 from their first sale and $500 for subsequent sales.
Commercial farmers will justify their cash requirement through their banks.
RBZ has availed a US$70 million nostro stabilisation facility to augment the foreign exchange resources in the banks’ nostro accounts to ensure tobacco farmers’ requirements are met.
Finance and Economic Development Minister, Cde Patrick Chinamasa, said the introduction of the export incentive scheme financed through bond notes has had a positive impact on the production of tobacco and has expressed optimism of improved earnings in 2017 from the sub-sector.
The 2017 tobacco incentive will be paid monthly.
Tobacco Association of Zimbabwe president, Mr David Mutasa, said the quality of the leaf should be matched with better prices.
“There is refreshed hope among Virginia tobacco growers as we cherish what promised to be a gainful marketing season. The quality of the crop tendered so far is good, and despite the size of the leaf, a starting price of $4.60 is not bad. We are looking forward to surpassing the ceiling price for the 2016 season.
We believe, quality-wise, that this year’s virginia tobacco is better than the one produced last year,” said Mr Mutasa. TIMB has registered 15 contracting companies to pre-finance tobacco production and about 22 Class A buyers for the season.
The tobacco authority has also shunned Class B buyers, who have been accused of ripping off farmers by playing middlemen for growers whose tobacco would have been rejected at the auction floors. In preceding seasons, farmers complained of corruption at the auction floors which saw some growers bribing officials to influence prices.
The electronic auctioning of tobacco will also reduce the processing time for grower payments and eliminates illicit floor activities, such as ticket tampering.
Another benefit to be derived from the e-marketing system is that tobacco buyers will receive real-time data as the auction process happens and will therefore be able to tally bales when they reach the dispatch section of the sales floor.