Of first day to­bacco auc­tion, ‘curse’ of price ceil­ings

The Manica Post - - Farming/Business - Obert Chi­famba As­so­ciate Edi­tor

THE 2018 to­bacco mar­ket­ing sea­son got un­der­way on 21 March 2018. And the high­est price fetched on the day was $4, 90 per kilogramme. Not bad for first de­liv­er­ies.

Of course many farm­ers will be de­liv­er­ing prim­ings and most of the early har­vested leaves on the first day, which does not nec­es­sar­ily re­flect the qual­ity of the crop in its en­tirety. The best qual­ity usu­ally finds its way to the floors some­time in the course of the sea­son.

Su­pe­rior qual­ity and su­pe­rior ac­cep­tance usu­ally go hand-in-hand. The high­est qual­ity golden leaf must ob­vi­ously fetch the high­est prices of the sea­son and must log­i­cally be higher than the $4, 90 recorded on the first day. That’s the most com­mon­sen­si­cal think­ing ex­pected from all pro­gres­sive Zim­bab­weans yet the sad re­al­ity on the ground seems to sug­gest that as the qual­ity gets bet­ter, the prices ei­ther take a tum­ble or hit a ceil­ing, not just an or­di­nary ceil­ing but one prob­a­bly made of steel or gran­ite.

This price ceil­ing has in the re­cent past been the farm­ers’ big­gest un­do­ing. It has driven most farm­ers to think twice about pro­duc­ing the crop but have been unable to make the firm de­ci­sion of dump­ing it since it is es­sen­tially the most re­ward­ing crop to farm­ers of most cat­e­gories at the mo­ment.

They have had to swal­low the bit­ter pill of dis­ap­point­ment and go back to the field year-in, year-out but the mir­a­cle for a bet­ter price still hasn’t come. The farm­ers are al­ways driven by the hope that the time for car­tels may be nigh so they can’t af­ford to miss out when this even­tu­ally hap­pens. Quite a gam­ble! On the ground the odds have al­ways re­mained stacked heav­ily against them.

To date, prices at the auc­tion floors have not sur­passed the $4, 90 of­fered on the first day of the sea­son yet the con­tract floors have al­ready recorded a high of $6, 25.

Pay­ments for this sea­son have im­proved fairly well with farm­ers get­ting $300 for ev­ery sale, US$150 and the other in bond notes. That’s bet­ter than last sea­son.

The illiq­uid econ­omy of the pre­vi­ous sea­sons has seen most farm­ers only pro­duc­ing enough to pay for ser­vices ren­dered dur­ing the pro­duc­tion process or even fail­ing to do so com­pletely.

This sad de­vel­op­ment has brought with it some stag­na­tion in the growth of the farm­ers eco­nom­i­cally yet when it was first in­tro­duced many farm­ers were left cel­e­brat­ing – they lit­er­ally changed their life­styles, which at­tracted those that had been stand­ing on the side­lines watch­ing. But things changed the mo­ment they stepped into the ring and for some strange rea­son buy­ers seem to have started col­lud­ing to milk the farm­ers dry yet they make a killing when they sell the prod­uct on the in­ter­na­tional mar­kets even­tu­ally.

Farm­ers have in some in­stances done some soul search­ing and unan­i­mously re­solved to stage protests or with­hold their crop but, like al­ways, cred­i­tors and ser­vice providers will be wait­ing for what be­longs to the prover­bial ‘Cae­sar’ to be given unto them.

If only the coun­try was do­ing value ad­di­tion to the golden leaf, maybe things would be bet­ter for the farmer but with al­most 98 per­cent of the to­bacco be­ing ex­ported, it leaves the farm­ers vul­ner­a­ble to price dis­tor­tions from the ‘so-called’ in­ter­na­tional mar­kets that have also sucked dry the zeal of our cot­ton farm­ers.

The coun­try’s new po­lit­i­cal dis­pen­sa­tion had given our farm­ers lots of hope es­pe­cially with the Re­serve Bank of Zim­babwe (RBZ) up­ping the ex­port in­cen­tive for to­bacco farm­ers from 5 per­cent to 12.5 per­cent. The cen­tral bank also said that the farm­ers will get $300 a day when they sell their to­bacco and re­ceive the bal­ance through their bank ac­counts or mo­bile money.

To boost pro­duc­tion lev­els, the RBZ gov­er­nor Dr John Man­gudya raised the $28 mil­lion to­bacco fund in­tro­duced this year to pro­duce about 44 mil­lion kilo­grammes to $70 mil­lion, a move likely to ig­nite small scale farm­ers’ pro­duc­tion to over 100 mil­lion kilo­grammes in 2019.

All these pos­i­tive de­vel­op­ments may count for nought if prices at the floors do not also show some pos­i­tiv­ity.

The trend is wor­ry­ing to say the least. In 2012, the open­ing day price was $4, 45, then, it was $4, 89 for 2013, $4, 85 in 2014 with 2015 record­ing a sig­nif­i­cant dip to $3, 50 be­fore it shot back to $4, 50 in 2016. Last sea­son it was $4, 60 and this sea­son $4, 90.

The big ques­tion there­fore is: ‘Will the price ever break the $5 per kilogramme mark in any sea­son on the open­ing day and have the farm­ers not been learn­ing tricks enough to see them im­prov­ing on their qual­ity with each new sea­son?’

To­bacco sell­ing un­der way at Rusape sales floors

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