Tobacco farmers see decline in leaf prices

HARARE - In years gone by, the chant of the tobacco auctioneer was music to farmers’ ears.

That chant, however, had increasingly become discordant following the drop in tobacco quantity, quality and prices after the land grab in 2000.

New farmers struggled to find their feet.

From a peak of 237 million kg when the golden leaf was the second biggest foreign exchange earner after gold in 2000, production had dipped to a mere 49 million kg in 2008, selling at just above $2/kg.

In the interim period,  growers had to be cajoled, arm-twisted and threatened to bring their leaf to the floors because of depressed prices. Farmers complained they were not recovering their  costs as growing the leaf is labour intensive. And constant bungling by the ministry of Agriculture where inputs came in late did not help the situation.

But Zimbabwe, the world’s fourth-biggest exporter of flue-cured tobacco, after Brazil, India and the US, has been  clawing back lost ground since dollarisation over five years ago.

From the 49 million kg in 2008, figures reached 132 million kg by 2011 and 145 million kg in 2012. The 2013 season was said to be one of the best at 160 million kg, although the target 170 million kg was missed. The 2014 season is expected to be yet another hallmark with over 88 000 farmers expected to bring 180 million kg of the leaf. 

The music seems to be coming back to the farmers’ ears, albeit with a bit of discord.

Some farmers have been complaining about low prices. Figures from the Tobacco Industry Marketing Board indicate so far the opening price has slumped to $3 for the first two weeks of sales compared to last year’s $3.57, a 16.27 percent decline as compared to a similar period last year.

Industry watchers say the low prices are likely to affect final earnings. Heavy rains are blamed for the poor quality of tobacco, resulting in receding prices. After three weeks of sales, 19 million kg had been sold, grossing $58 million.

Other industry watchers say Brazil’s huge output may also be weighing down tobacco prices.

All this is happening when President Mugabe’ s cash strapped government was hoping to boost revenues to fund a budget that has left many ministries crying for funds.

Tempers boiled over last week after farmers accused buyers of cheating them. At Boka Tobacco Auction Floors which caters for small growers,  farmers protested against buyers who they felt were deliberately shortchanging them by buying tobacco at low process — as low as 60 cents — and selling it for $3 later.

They felt that prices which were as low as 60 cents to $3 did not compensate for the hard work and effort they had put in producing the leaf. Tobacco growing is a labour intensive exercise requiring the the right inputs and packing. It also provides employment for thousands of people hired for weeding, picking, curing and packaging.

Anti-riot police had to be called at Boka Auction Floors to keep the situation under control.

But Tobacco Industry Marketing Board (Timb) chief executive Andrew Matibiri  said the lower tobacco prices were a reflection of the low quality of the tobacco and not cheating by buyers.

He said farmers who had good quality tobacco were enjoying good and competitive prices.

Timb is now urging farmers to improve their tobacco quality because low quality leaf has gone down in price by between 15 and 16 percent.

The profile of tobacco farmers has drastically changed in the last decade-and-a-half.

From the 1 500 of the then about 4 500 white commercial farmers who produced 97 percent of the tobacco delivered to sales floors, that number has grown to a motley crowd of 65 000 small farmers who earned $602m last year.

The buyers have changed too. China is now the biggest buyer of Zimbabwe’s tobacco, along with traditional buyers South Africa, the United Kingdom, Indonesia, the United Arab Emirates, Mauritius and Russia.

The shift from mostly European buyers to China has helped foster growth as the Chinese market is almost insatiable.

Discord is no longer coming from the auction floors but other sources.

Tobacco smoking and advertising has come under attack in many European capitals, impacting on tobacco sales. Smoking is now banned in many restaurants and bars in Europe and America.

However, environmentalists warn that the increase in local tobacco production and revenue should not distract from the potential risk of future deforestation, due to new curing methods used by new farmers.

The farming methods being applied right now are environmentally damaging and very threatening to the long term prospects of the farming sector, they say.

Previously, coal was used to cure tobacco.  Many of the nation’s  small-scale tobacco farmers now use firewood to cure their tobacco, instead of coal.

With tens of thousands of farmers chopping down trees for firewood, there is a ‘desertification’ threat in Zimbabwe’s tobacco farming regions.

Latest figures show that Zimbabwe is losing forests at the rate 300 000h per annum — the highest rate of deforestation in southern Africa. Wood also accounts for 60 percent of the total energy supply in Zimbabwe, with 96 percent of  rural people relying on wood for fuel.  The deforestation rate suggests the rate is now three times the average  forecast for the period between 1985-1992, according to the ministry of Environment, Water and Climate.

Tobacco has also lured maize farmers who have now switched to growing the leaf, exacerbating the shortage of the staple crop. Farmers blame the depressed price of grain, which stands at 35c a kg for the switch, given that tobacco is currently fetching $2,90.

Government has been forced to import grain from neighboring countries to plug a shortfall of affecting 2,2 million Zimbabweans, according to the UN World Food Programme.

To imagine that all the effort by tobacco growers, auctioneers and cigarette companies ends up in contended puffs of smoke, boggles the mind.

 

Comments (2)

most of the pple here in our country especially those on position of influence in business per say are not willing to invest in risky & long timeframed profit return prospects such that they want to frastrate the effort showing land bussiers by short changing them under the guise of poor quality & the tune of brazilian tobacco. most unscruplous business ppl are rushing in retailing & money lending leaving manufacturing & farming primary production less occupied yet it is where cooperated investment & plenty of resources for an ideal future of our economy are needed seriosly. this sector will succumb like cotton did if not dealt with fairly. God fearing pple are in urgent needy to lead us opmistically punctuated with futurism. middlemen in tobacco selling esp blacks are a cancer. farmer to buyer who wants to process it a holistic approach.

chitsotsi chanyanya - 28 March 2014

Syndrome of borrowing to grow, ndoyauraya. The question is do all these contracted farmers need support. The merchants pay top dollar for contracted tycoons, hence they average out by paying peanuts to free-lance growers on auction, lets wake up this is business. Quality for the past 3 years to date has been the same, it's always a rainbow. Hope we stop all this contracting business tione kuti fodya haiuye here ku auction. Those buyers who want to try funny matrix buying --- out! Auction means buyers bid, the highest bidder gets a bale. It is surprising these merchants go into board meetings and agree on prices resulting in the buyers collectively deciding values for particular tobaccos - that's why prices on auction never surpass 4.99. Ndo ma silly dynamics acho...Karl Max once prophesied that the rich will get richer and richer; the poor will get poorer and poorer.

Perfect Analyst - 10 April 2014

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