Curtain comes down on tobacco selling season

Source: Curtain comes down on tobacco selling season | The Herald

Curtain comes down on tobacco selling season

Elita Chikwati

Senior Agriculture Reporter 

The 2021 tobacco marketing seasons officially closed yesterday with auction floor operators calling for affordable funding for smallholder farmers if the auction system was to continue.

While auction floors, which deal with less than 6,5 percent of the crop, have closed, sales of the huge contracted crop, the other 93,5 percent, will continue until further notice because of the volumes that are still being received. 

According to the Tobacco Industry and Marketing Board, the auction tobacco clean up sale for the 2021 marketing season will be held on August 5. 

Depending on the volumes of deliveries, the clean-up sale may be continued for more than one day and until all delivered tobacco has been sold.

Most farmers are growing tobacco under contract farming where they are assured of funding, usually get some back-up and in previous years obtained higher prices from contractors than those selling on the auction floors. But the final prices are dependent on the benchmarks established on the auction floors, which give the market price for the critical qualities and types from which all other prices can be calculated.

But in the present tobacco marketing season, farmers reckon prices at the auction floors were now firmer than those offered at the contract floors although the highest auction price was US$4,99 per kilogramme while the top price offered by a contractor was US$6,70. Prices vary according to type and quality, with premiums paid for top quality in desired varieties.

By Tuesday farmers had sold 188 million kilogrammes f tobacco for a total of US$522 million. 

Of this, 176,6 million kilogrammes worth US$488 million was grown and sold through the contract system while 12,2 million kilogrammes valued at US$ 34, 5 million was self-financed and sold at the auction floors.

Auction floor operators yesterday said they were happy with the firm prices offered this season, but expressed concern over the low volumes passing through their floors as the huge changes brought about by land reform switched the bulk of the crop to contract. Until land reform almost all the crop was grown by around 2 000 large plantation owners. Now the overwhelming bulk of the crop is grown by tens of thousands of small-scale growers who cannot borrow from the banks and rely on the major merchants to fund their inputs in return for guaranteed deliveries.

Boka Tobacco Floors managing director Mrs Chido Nyakudya yesterday said there was need for sustainable funding if farmers were going to produce the crop on the own and then sell on the auction floors.

“Prices were a plus this season, we are happy with the improvement on the prices offered at the auction floors. We are however still struggling as the auction market keeps shrinking,” she said.

 Mrs Nyakudya said the auction floors were important as they determined fair prices on the market.

 She said auction floor operators did not have the capacity to provide funding to farmers. 

“We are only offering agronomic advice to farmers.” 

 Premier Tobacco Floors executive director, Mr Owen Murumbi yesterday said their auction floor was not prepared to close although the marketing season had officially ended as they were still receiving significant deliveries from farmers.

“We were not ready to close. We feel some farmers may not wait for the mop up sales in August and may decide to sell at the contract system using their fellow growers’ numbers,” he said.

 On the survival of the auction floors, Mr Murumbi said there was need for direct funding for farmers they do not sorely depend on contractors.

 Mr Murumbi said the prices offered his season were viable. 

“The prices were good and the payments system perfect. Farmers were happy to get their foreign currency.” 

Zimbabwe Farmers Union director, Mr Paul Zakariya, said although prices were firmer this season, most smallholder farmers did not make much in profits.

“Contract farming arrangements prove not to be working well for our farmers. Cost of inputs under contract are unviable. Besides, most contractors are fronting for merchants. As a result, whatever volumes of tobacco we generate do not serve local interests.

“There is need to work tirelessly to direct local resources to fund tobacco production and re-energise our tobacco auction system. That’s a sure way to won the primary output, value add and enjoy all the downstream benefits,” he said.

TIMB chief executive, Mr Meanwell Gudu, said he was expecting that the Agriculture Finance Corporation will be able to give farmers funding at concessionary rates so that more farmers can self-finance.

“There is need for auction floors to continue operating as they are important in determining the minimum prices,” he said.

The 2021 season faced the challenge of Covid-19 and the sector had to put in systems and modalities to curb the spread of the pandemic and to protect farmers and staff at the floors.

Auction floors were decentralised to districts and provinces.