Smallest tobacco crop since 1972

HARARE - Zimbabwean Agriculture Minister Joseph Made has told tobacco
farmers unhappy with low prices and government exchange controls to stop
growing the crop that, together with mining, generates the bulk of the
country’s hard cash earnings.

Growers have withheld tobacc

o from the auction floors that opened for trade
last week, saying low prices ranging from US$0.60 to US$2.65 per kilogram
would push them out of business. This season’s crop is the smallest in 34
years – the result of government-backed farm seizures that have seen the
destruction of once-thriving commercial agriculture.

Last year Zimbabwe, once the world’s second-largest tobacco exporter after
Brazil, sold 74 million kilograms of the crop compared with a record 234
million kilograms in 2000.

The farmers say an order by the government that they receive payment from
foreign buyers in local currency at the interbank rate – which hovers around
Z$100,000 to the American dollar – would plunge them into bankruptcy. They
had to source hard cash to import chemicals and other inputs on the black
market where the greenback fetches well above Z$200,000.

Made said: “We have told (tobacco) farmers that they can try another crop if
they are not happy with what is being offered. The prices that are being
offered are good and the central bank has also given a 35 percent early
delivery bonus (for farmers sending their crop to the market early).”

Made’s statement echoes comments by Reserve Bank of Zimbabwe governor Gideon
Gono who was quoted by state media at the weekend as having accused tobacco
farmers of being “perpetual cry babies” always demanding unsustainable
subsidies from the government.

The government is banking on the sale of nearly 50 million kilogrammes of
tobacco produced this year to help ease an acute hard cash crisis gripping
the southern African country since the International Monetary Fund withdrew
balance of payments support eight years ago.

But activity at tobacco auction floors has remained slow with farmers
withholding their crop until prices firm up. The fall in tobacco production,
compounded by the government’s introduction of a system whereby farmers can
bypass the auctions by growing the crop under contract, has also threatened
the viability of auction floors.

“Over the past couple of years we have had to tailor our employee numbers
due to the fall-off in the volumes,” said David Mashingaidze, managing
director of Harare’s Tobacco Sales Floors, which runs what was six years ago
the world’s biggest tobacco auction floor.

Recent announcements by the government that it is inviting white farmers
back to the land are seen as an attempt to revive food production as well as
tobacco output and end a foreign currency shortage that is responsible for
acute shortages of fuel, electricity essential medical drugs and other basic
commodities because there is no hard cash to pay foreign suppliers. –

Post published in: Economy

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