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 tobacco 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. - ZimOnline