The 2019 tobacco marketing season officially opened in Harare yesterday and other provinces, amid mixed feelings among farmers over the prices offered with others demanding fair prices commensurate with their efforts and investment they injected into their farming business.
The marketing season commenced on a low note as many growers adopted a wait-and-see attitude while others who sold their crop were disillusioned by the low prices offered by merchants. The indications are fewer farmers delivered their crop on the opening day compared to past selling seasons due to a plethora of reasons they want addressed before they part with their golden leaf.
The opening bale price should be a motivator for farmers to deliver more the next day, but the US$4,50 per kilogramme price that is 40 cents less than the price of the first bale last season was not good news for the majority of the growers.
Inasmuch as many farmers bring lower grade tobacco during the first week of selling, offering US$0, 20 per kilogramme dampened many farmers’ fighting spirit after paying an arm and leg to transporters to bring the crop to the market.
Besides, the assumption that the first crop is of poor quality has also affected some farmers who bring in their best tobacco as it is also sold for a song.
This explains why the activity was low at all the three auction floors –TSF, Boka Tobacco Floors and Premier Tobacco Floors — places that traditionally record impressive sales on opening day.
The tobacco auction system that has been gradually recording low sales as farmers protest price cartels that fix uneconomic prices has always created problems for farmers who at times stage demonstrations at the auction floors.
All stakeholders in the tobacco industry should understand that farmers this farming season experienced many bottlenecks when producing the crop, ranging from expensive inputs such as fertilisers that immediately assumed prices in US dollars or equivalent of the local currency at black market rates, while labour charges followed suit.
Transporters are also demanding payment in US dollars and this will see farmers holding on to the crop in anticipation of better prices in the future. However, this is not good for the Reserve Bank of Zimbabwe that is anxiously waiting for the foreign currency inflows to improve for it to pay for critical commodities such as fuel and medical drugs.
Non-exporters in the manufacturing sector are waiting to bid for the foreign currency on the interbank floating system, hence the apex bank should never make the mistake of offering RTGS dollars only to farmers as this will create chaos during this marketing season.
Like previous selling seasons, indications on the ground do not point to a flawless marketing season due to a number of developments as a result of the Monetary Policy Statement announced on February 20 by the RBZ.
There are a number of thorny issues and grey areas that need explanation on how rural farmers who lack proper information dissemination facilities are going to handle.
In the Monetary Policy Statement, RBZ Governor Dr John Mangudya announced that farmers will retain 30 percent of their foreign currency, a threshold that was later increased to 50 percent after negotiations with farmers’ representatives.
There are also reports that farmers will get 100 percent RTGS on sale of their crop and the bank has to explain this to avoid confusion on the market.
We feel there is inadequate information on how farmers will receive their entitlement in foreign currency given that there was no public announcements to the close to 200 000 growers, the majority of whom are based in rural areas.
Assuming that opening an FCA account can be done at the auction floors, the farmers are supposed to be educated on how to open FCAs to avoid chaos and this ought to be done expeditiously.
Besides the challenges associated with the FCA matrix, there have been bottlenecks in cash payments with growers in the past being made to wait for weeks before receiving their dues.
Wealso implore farmer organisations and the Tobacco Industry and Marketing Board to educate the farmers on the need to supply yield estimates, get registered on time and book their delivery dates to avoid unnecessary delays.
If the apex bank decides to pay farmers in hard cash, mechanisms should be in place to ensure that unscrouplous bank officials do not take the money at the expense of the farmers. We implore all stakeholders, especially the RBZ and TIMB, to manage the marketing process in a manner that encourages the farmers to continue growing the crop well into the future.