Zim tobacco sales bring some hope
ZIMBABWE’s annual tobacco sales started yesterday. This was a time, in the past, when money rushed into the economy and cheered up everybody – especially the retail sector. Farmers would go to town to see their produce sold and would then hit the shops.
Nowadays, only a fraction of farmers sell on the auction floors. But even reduced numbers would boost the economy as farmers selling their crop at auction have been told by the central bank they will be allowed to withdraw about R13 000 after their first sale of the year, and half that following subsequent sales. They also get a 5% production bonus from the central bank – recognition that they earn foreign currency for Zimbabwe.
Most banks are restricting withdrawals of cash, which is made up of a few US dollars and the Zimbabwe currency, Bond Notes, which were introduced in small denominations, in November.
Many tobacco farmers, even the smallest, have had to create bank accounts to be paid for their crop. Previously, they were paid in cash after sale.
Nowadays, tobacco auctions only handle a small percentage of the annual crop. Most of the crop, especially high-quality leaf from larger growers, is financed by mostly foreign companies which lend farmers cash to plant and grow the crop, monitor the production in the ground and during the curing season, and then buy it off farmers at largely pre- arranged prices based on international indicators.
This change in Zimbabwe’s tobacco world emerged after the post-2000 land invasions which dramatically crashed production as many farmers were chased off their land, and commercial banks would not lend as farms became stateowned and therefore no longer had any commercial value as security for bank loans.
The state’s land bank which used to fund tobacco crop production collapsed at this time.
But tobacco production has recovered in the past few years and the land grab had its up side too.Tens of thousands of new, small-scale tobacco farmers emerged and they do make some cash: “I have seen some very impressive tobacco by small growers this season. It’s a bit light, but it still looks very good, better then usual” said a veteran tobacco adviser who is not allowed to speak to the media.
“I hope I am wrong, but the mainstream tobacco season looks as if it will not achieve the goal we all hoped for of more than 200 million kilograms this season. I think the heavy rain in some parts of the top areas has had an impact on the large growers, but somehow the small guys seem to have produced some very good tobacco this year.”
He and others said they remained “extremely” worried about the dramatically diminishing natural forests as most small-scale farmers use wood to cure their tobacco crop as they cannot afford to buy coal.
Tobacco is one of Zimbabwe’s top three foreign currency producers along with platinum and “diaspora dollars” – cash which flows into the country from Zimbabweans living and working elsewhere in the world, mainly in South Africa and the UK.
Zimbabwe’s ever declining business community hope this week’s tobacco sales will ease chronic shortage of cash at the banks. On Tuesday, some branches of Barclays were restricting customers to R260 in withdrawal.