HARARE, March 5 — Chaos reigned at the Boka and Tobacco Sales Floor (TSF) auction floors here Wednesday when the Zimbabwe marketing season for the golden leaf opened as farmers demonstrated against low prices being offered.

Farmers who wanted to sell tobacco at Boka and TSF broke into song and dance as they slammed the 3.50 US dollars per kilogramme that the first bale fetched compared with 4.85 USD last year, disrupting the auctions.

The highest price that tobacco fetched on Wednesday was 4.99 per kg while the lowest was bought for 0.20 USD per kg. Three auction floors — Boka, TSF and Premier Tobacco Floors — are licensed to sell the crop this year.

Sales were later resumed after the intervention of the Tobacco Industry and Marketing Board (TIMB), whose technical services director, Meanwell Gudu, said it was within the farmers rights to reject low prices but added that they had not done it in the proper manner.

“We will continue to talk to buyers to review the prices of tobacco upwards,” he said.

Boka chief executive officer Rudo Boka said farmers should be educated on the right channels to use when they were not satisfied with prices instead of resorting to demonstrations which disrupted sales. “If farmers are not happy with prices they should use the arbitration route that is the reason why TIMB officials are always there when sales are taking place,” she said.

A TSF official said the auction floors sympathized with farmers on the need for better prices for quality tobacco. ‘We want prices to go up because our commission also increases,” said the official.

Speaking while officially opening the 2015 tobacco selling season, Industry and Commerce Minister Mike Bimha said although sustained increases in tobacco production and proceeds paid to tobacco farmers had
been witnessed over the past five years, more benefits could be accrued from tobacco exports if initiatives to add value to the crop were embraced.

“Value-addition of raw tobacco into cigarettes can provide a tenfold net increase to the fiscus in line with ZimAsset (the Zimbabwe Agenda for Sustainable Socio-Economic Transformation ), which emphasizes the need to value-add and beneficiate our mineral and agricultural resources,” he said.

Bimha added that the crop which would be sold this year was produced under an awkward and challenging environment. “Generally, there was a late onset of rains, which delayed planting and the establishment of the main dry land crop. Consequently, there were a lot of unsuccessful re-plantings and this resulted in poor crop establishment and unevenness throughout the tobacco growing areas of Zimbabwe,” he said.

Most tobacco was planted towards the end of November, with more than 60 per cent of the dry land crop planted after the first week of December. The cropping situation was exacerbated by the incessant rains received from about the second week of December 2014 which led to water logging, leaching and widespread destruction of tobacco handling infrastructure.

Last year, total flue-cured tobacco amounted to 216 million kg, earning the country 684 million USD.
This year, the TIMB has forecast production at 190 million kg owing to unfavorable growing conditions.

Meanwhile, the TIMB has announced that it plans to introduce electronic sales of tobacco at auction floors this season in a bid to improve transparency in the pricing of the crop.

TIMB chairperson Monica Chinamasa said to improve transparency in pricing, the board in consultation with the industry, would this season be testing a new system in selling the crop. “The TIMB will introduce electronic processes into selected tobacco marketing procedures to reduce human intervention and influence,” she added.

“This will greatly improve transparency in the pricing and reduce the current tendencies on the auction market characterized by seemingly overt collusion in pricing of tobacco.”

Under e-marketing, the bidding process by buyers would involve the use of personal hand-held gadgets through which a buyer will secretly bid for tobacco without the influence of others.

E-marketing will also encompass the use of radio frequency identification tags to track the movement of tobacco from the farms in order to reduce side marketing and theft of tobacco bales.

Chinamasa said the sector had been infiltrated by illegal tobacco buyers who preyed on unsuspecting farmers by offering to buy rejected bakes at very low prices outside the legal system. In order to protect the growers, the TIMB had introduced new procedures for re-handling rejected bales.

“Auction floors will automatically send the bales to re-handlers and these will in turn re-offer the bales on behalf of the grower,” she said, adding that growers were this year expecting an improved and fair pricing for their tobacco.

“Regrettably, the maximum cap or ceiling price of $4.99 per kg that has prevailed at auction floors for the last two years is not desirable as it certainly does not reflect the true value of the leaf. This has resulted in a number of tobacco grades, of clearly different styles and quality, all fetching the same price,” she said.

To date, almost 90 000 growers have registered to sell their crop this marketing season. Of these, at least 16,679 are new growers who registered for the first time compared to 26 816 who registered to sell for the first time last year.

About 190 million kg of tobacco is expected to be sold through both auction and contract systems this year, down from 216 kg last year.