TIMB fights price collusion

Herald Reporters TOBACCO farmers who sell their crop at the auction have expressed concern over the price, which they say appears to have a fixed top price of US$4,99 per kg for the best quality, compared to the contract price that can rise up to US$6 per kg.

Farmer representatives fear that the continued suppression of auction prices might kill the auction system as everyone would be tempted to move to the contract system. Even now around 95 percent of the crop is planted and sold through contract.

The auctions were set up for the very large scale plantation growers who dominated tobacco before land reform. The far larger number of small-scale growers who dominate the sector, and even many of the medium-scale growers, prefer contracts. Tobacco Farmers Union Trust (TFUT) president Mr Victor Mariranyika said farmers were not happy with the auction prices, adding that the bulk of them had moved into contracts out of desperation.

Mr Mariranyika called on the Government

to intervene for the auction system to remain viable. “Prices should be similar,” he said. Tobacco Industry and Marketing Board (TIMB) chairman, Mr Patrick Devenish, said on Monday that crops of the same quality should fetch similar prices.

“I would like to confirm that the TIMB is very concerned about this,”Mr Devenish said.

He said they “know well” that farmers were getting US$6 at contract floors and “there is absolutely no reason why the same tobacco at the auction floor should not sell at that same price”.

“We will be communicating with the trade to try and understand why they are doing this. We know that auction collusion is not allowed and we hope it’s not that,”said Mr Devenish.

Competition and Tariff Commission spokesperson Mr Tatenda Zengeni on Monday said: “We have also started monitoring what is happening at the auction floors to safeguard the market from any form of collusion that might be taking pace.”