This year’s tobacco selling season starts tomorrow with the opening of the auction floors and with the contract sales, which handle the bulk of the crop, starting a day later on Thursday.
Farmers are expecting good prices. They are confident they produced a high quality crop due to the favourable rains and they are expecting high demand since the volumes, at around 200 million kg, will be slightly lower than in the previous seasons.
Zimbabwe Commercial Farmers Union president, Dr Shadreck Makombe, yesterday said farmers were geared for the season and were expecting good prices.
“Farmers want viable prices so that they can recover their costs and be able to go back to the land. We expect ethical contractors and we hope there will be no collusion on prices.
“We expect business ethics to prevail. We also advise farmers and other stakeholders to stick to Covid-19 regulations to curb the spread of the pandemic. Farmers should put their health first and adhere to the regulations,” he said.
Dr Makombe urged banks to have facilities in place at the auction floors and the contractors to ensure farmers get their payments processed quickly and so avoid having growers stay at the floors or linger at the contractors.
“We also urge farmers to deal with reputable transporters and avoid moving tobacco at night,” he said.
There were reports in previous years of farmers losing their tobacco to unscrupulous transporters.
Tobacco Association of Zimbabwe president Mr George Seremwe said farmers were expecting a smooth season that is not influenced by middlemen.
“We expect a good season as farmers are going to get 60 percent foreign currency retention. The foreign currency will help us break-even and remain with a profit.
“We hope as the season progresses, the retention will also be reviewed. We also expect higher prices since most farmers produced a high quality crop. We hope the TIMB (Tobacco Industry and Marketing Board) will ensure buyers are genuine and there is no collusion on prices.”
The First Round Crop and Livestock Assessment report indicates that farmers planted 125 177 hectares of tobacco this season compared to 117 049 hectares last season.
TIMB statistics show that by March 19, 145 625 farmers had registered for tobacco. Of these, 79 127 were from the communal sector, 50 197 A1 farmers, 8 574 were A2 farmers and 7 272 were small-scale farmers.
This season, farmers are getting 60 percent of their money in foreign currency deposited into their FCAs and 40 percent in local currency as compared to last year when the ratio was 50-50.
Farmers say that last year they were hit by the fixed official exchange rate at the start of the season. Once the auction started this quickly rose to something far closer to real market values, but the volatility of the markets last season is one reason why so many pressed so hard for far higher retention levels of foreign currency.
Even now farmers are worried about those suppliers who use black market exchange rates when selling goods for local currency, even when they buy their foreign exchange on the auctions, and want more effective action taken to stop this.
The TIMB and Reserve Bank have built up a set of rules to ensure both contractors and farmers are committed and act fairly.
For example, last year before the contracts were finalised contractors wanting to participate had to first provide proof of commitment or intent to the TIMB and then submit to TIMB a complete schedule of inputs and their costs by June 30.
Copies of legally binding contracts had to be handed to the TIMB by September 30 along with proof of inputs distributed using paid up invoices or payment plans with suppliers. All this was to ensure that farmers were dealing with competent registered and properly funded contractors. Side marketing is banned under the contract system, with all farmers under contract expected to fulfil their side of the agreement.
Lands, Agriculture, Fisheries, Water and Rural Resettlement Deputy Minister Vangelis Haritatos last week said the Ministry was satisfied with the preparations by the auction floors and their adherence to the Covid-19 regulations.