TOBACCO growers have voiced their concern over the golden leaf price at the auction floors, which seems to have been set at US$4,99 per kilogramme in a development that has raised worries about buyer collusion.
Since the start of the marketing season, the top price for premium tobacco has been constant at US$4,99 per kg, while the contract price has been hovering around US$6 per kg.
“The season is progressing reasonably well, even though we have raised concern about the US$4,99 cap which is on the auction system and for us it’s a kind of a sign of collusion, which is worrisome,” Zimbabwe Tobacco Growers Association president George Seremwe told Standardbusiness.
“We cannot have the auction system offering lower prices than the contract.
“The contract has gone up to US$6,90 and for us, there is a discord.
“The same buyers who are buying at the auction are the same buyers who are also buying at the contract.
“So that’s why we suspect there’s collusion. We would want the prices to go up because if you look at the production cost, it was quite high.”
Seremwe said growing tobacco would not be sustainable for the farmers due to poor prices offered at the auction floors.
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“So, the growth of tobacco has to be attractive by the prices. We know the price world over has gone up, so we also expect the prices to go up than what is currently prevailing on the market,” he said.
“We talk of sustainability of the farmer. We talk of sustainability of the farmer.
“As farmers we think it is not sustainable at the moment.”
Shadreck Makombe, president of the Zimbabwe Commercial Farmers’ Union, said farmers expected the prices to be better compared to the previous season
“The prices are not yet at what we would have expected,” Makombe said.
“We would have expected a few coins up,” he added, noting that the quality of tobacco this season was low due to inadequate rains.
“Again, it’s the only start of the marketing season, most of the tobacco being sold there is primary leaf tobacco, not quite what we want.
“We expect the prices to firm up or to increase for the farmers to get anything meaningful from their crop.”
Federation of Farmers Unions president Bright Bvukumbwe told Standardbusiness that some dubious contractors were buying tobacco at way lower prices, pushing farmers to side marketing and eventually defaults.
He disclosed that they have engaged the government to develop a standardised form for tobacco contracts in order to stop fraud that deprives farmers of their money.
This is happening in the midst of allegations that tobacco contractors have been defrauding farmers by using contract forms that hide information and conceal fraudulent insurance contracts.
Over time, this has caused tobacco farmers to suffer greatly; some have lost properties and thousands of dollars to debt collectors as a result of not fulfilling their contractual duties.
According to Bvukumbwe, the standard form began to take effect at the close of the previous season, and usage is anticipated to rise in the coming months.
“That has been a problem and an issue for a very long time, which we have been engaging in,” he said.
“But now together with the ministry, we have managed to put up that contract form that when you sign in for your inputs, it is standardised.
“We are all saying a farmer must be given the complete package he needs to do a crop of tobacco if it’s a hectare or whatever he needs to get the correct inputs.
This way there will be no defaults by farmers because he will be secure.
“The other reason why the farmer defaults is to do with side marketing.
“He would want to pay school fees and do other things but the contractors have been leaving them with nothing.
“What’s the point of not side marketing if you are not getting fair value for your crop? Contractors have to pay up. They can’t be paying US$1,50 for the same grade of tobacco.”
Tobacco Industry and Marketing Board (TIMB) spokesperson Chelesani Tsarwe said as of day three of the 2024 tobacco marketing season, TIMB had recorded and total of 4,1 million kgs of tobacco, which have been sold.
This is in comparison to 1,5 million kgs of tobacco sold during the same time last year.
“The average price pegged at US$3,12 per kg is firmer this season as compared to U$2,63 per kg paid last season,@ Tsarwe said.
“As a result of the Elnino conditions witnessed in southern Africa starting late last year, the expected tobacco hectarage is lower compared to last year yet there are more buyers this season in need of the crop.”
According to her, demand and supply principle is being witnessed with the demand of the crop this year very high and supply is low.
“More buyers have also been registered, meaning more players in the market leading to competition on the auction floors, hence better prices being offered,” she noted.
“While on the contract floors, contractors who fear side marketing of the crop are also offering firmer prices and encouraging their growers to deliver their crop timeously.”
As Zimbabwe’s economy continues to decline, most farmers have been left with no choice, but to operate through contracts which offer them inputs and they pay later.
While the country rakes in more money from tobacco, the growers have remained poor and heavily indebted to the contractors, whose number has increased over the years.
An investigation that was once carried out by The Standard in partnership with Voluntary Media Council of Zimbabwe showed some anomalies.
For example, Onhardt Tobacco Private Limited’s 11-page tobacco contract did not indicate the amount owed by the farmer to the company.
A separate acknowledgment of debt was signed upon receiving the inputs.
The same applied to the Mashonaland Tobacco Company contract.
Several of the farmers were in agreement that the acknowledgment of debt does not state how much the farmer is required to pay back.
