The 2020 tobacco marketing season opened yesterday, starting with the auction sales and the larger contracted crop following. Farmers are always nervous over two factors they cannot control, the weather and the prices buyers will pay. Having managed, despite the far-from-ideal rainfall this season, to produce a respectable crop, farmers are now biting their nails over prices. Changes brought to this year’s marketing season mean most farmers will neither be able to escort their crop nor witness the price determination process.
Many do not have the sort of detailed information they need as to how much a large cigarette factory in China or Europe is prepared to pay for 1 000 tonnes of the Zimbabwean leaf. And everyone needs to remember that tobacco is an export crop. Zimbabweans smoke a tiny percentage of our output, so the eventual foreign buyer is the one who pays the piper and calls the tune. But pricing information must be disseminated as it becomes available.
Flooding the farmers with information rather than just saying “trust us” is required. Minister of Lands, Agriculture, Water, Climate and Rural Resettlement Perrance Shiri had some good suggestions yesterday as he opened the floors, calling for far better use of information technology to give the farmers a virtual presence at the floors, even if they could not be physically present. Some of the problems that we saw last year have been addressed, not to the extent that farmers want, since that is impossible in every country. That day was rocked by sharp differences between farmers, buyers and the Reserve Bank of Zimbabwe over low prices and foreign currency payment modalities, causing farmers to briefly withhold their crop.
The central bank has allowed the retained 50 percent in foreign currency earnings to be regarded as free funds, a huge concession, but has declined farmers’ desires for a variable exchange rate or adjustment of the 50 percent forex retention threshold. TIMB chief executive Andrew Matibiri, however, allayed fears that farmers could be prejudiced in their absence since price discovery is done through a bidding process. “”Tobacco prices are determined through a bidding process. The highest auction floor price forms the minimum contract tobacco price.
He needs to get that information down to the village level. He is correct, but farmers forced to stay at home need more than just an assurance. Zimbabwe Tobacco Association chief executive Rodney Ambrose, who represents mostly large commercial growers, said with the selling season only starting this week, they were cautiously optimistic that farmers will get fair prices for their crop. But small and indigenous black farmers fear they are in for another rude awakening from unscrupulous contractors and middlemen that seek to undercut prices through collusion.
Even Zimbabwe Commercial Farmers Union president Shadreck Makombe confirmed fears among farmers given most farmers will not attend the actual sales process. They must deliver today and sell the following day, while trucks with minimum load capacity of 7 tonnes are barred from carrying tobacco bales. Tobacco is Zimbabwe’s biggest export crop and the country’s second largest export earner after gold, as it earns the country around US$1 billion annually. Farmers will never be happy over the prices they get, but they can be satisfied that no one is cheating them.