Source: Tobacco prices decline – NewsDay Zimbabwe June 26, 2017
Average tobacco prices are this year lower than last year, latest figures from Tobacco Industry Marketing Board (TIMB) show.
BY FIDELITY MHLANGA
The figures showed that as of 20 June, this year’s average price was $2, 92 down from $2,93 during the same period last year.
Zimbabwe Farmers’ Union president Wonder Chabikwa said prices offered at auction floors were dragging the golden leaf prices down.
“It was not supposed to be like that. It’s because of auction floors which continue to buy tobacco at low prices. The buyers also talk about quality. That average we would have done better,” he said.
Auction floors which consist of Tobacco Sales Floor, Premier Tobacco and Boka Sales Floor had an average price of $2,87, whereas that of contract floors was $2,94.
Contract floors offered the highest price at $6,00 whereas auction floor’s was pegged at $4,99.
Tobacco Industry Development Support Institute, Southern Africa (TIDSI) executive director Jeffrey Takawira attributed the decline to low grade, aggravated by poor handling by farmers.
“Since it is an auction system good quality crop is usually generated by serious and established tobacco farmers,” he said.
Poor prices at auction floors are traditionally blamed to collusion within the buying process. However, efforts to enhance transparency through the much-hyped e-marketing were futile as the system failed to run smoothly.
Takawira said more training should be offered to new tobacco farmers to improve quality.
This came after farmers were affected by the cash crisis which caused them to endure the chilly weather at the auction floors while waiting for their pay-outs which have dwindled to $50 per day.
“Every year we have experienced unrest at the auction floors caused mainly by erratic money supply and failure by farmers to access cash at the banks and this has led to some established farmers migrating to other cash crops albeit in small numbers. It is a known fact that tobacco brings in foreign currency enough to cover the country’s fuel import bill for 12 months. But after delivering their crop to the market suddenly the money is not there. It boggles the mind,” Takawira said.
He said given the current predicament facing farmers, it was handy to create a farmers’ bank.
Meanwhile, TSL Limited posted positive results for the six months ended 30 April, 2017. The company’s revenue was up 14% at $23,6 million, with operating profit increasing by 73% to $2,8 million. Profit before tax was 160% higher than the prior year at $2,1 million, attributing this to a good rainy season and business growth initiatives which significantly benefitted both TSF and Propak.
“Tobacco Sales Floor has retained its dominant position in the auctioning of the independent crop with market share holding at over 60%,” the group said in a statement accompanying the results on Friday.
“Volumes handled for merchants have increased significantly. The overall volume growth by 165% over prior year reflects the fruition of initiatives to sign new clines, in particular, merchants coupled with the 10-day earlier start to the tobacco selling season which contributed additional 20% volumes.”
The company added: “The impact of the new business model introduced in the prior year at Propak Hessian has now been fully embedded and previous challenges of counterfeit wraps contained.”
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