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Agriculture Reporter
Tobacco auction floors are considering diversification into contract farming as more growers opt for this system of farming due to provision of inputs and favourable prices offered by contractors.
The farmers benefit more from contract farming as they receive inputs and sell at high prices during the marketing season.
The highest price at the auction floors for the past four years has remained at $4,99 per kilogramme, while at the contract floors buyers have been offering up to $6,15 per kg.
Latest statistics from the Tobacco Industry and Marketing Board indicate that the bulk of the tobacco sales have been conducted at contract floors.
More than 138 million kilogrammes of flue cured tobacco, worth $461 million, have been sold through the contract system, while 47 million kilogrammes worth $129 million have been sold at the at the auction floors.
As a result, tobacco auction firms have found the going tough.
Boka Tobacco Auction Floors chief executive Ms Rudo Boka, said market dictates were pointing towards contract farming. “I realised in 2012 that auction floors could become irrelevant as many people were turning to contract farming,” she said. “BTF has started contracting farmers to produce tobacco and this season we contracted four million kilogrammes.
“Besides the competition on the market, the international market requirements may also force farmers to switch to contract farming. The Framework Convention on Tobacco Control requires merchants to buy a crop that is traceable to the farmer and this is only possible under contract system.”
Premier Tobacco Floors managing director Mr Philemon Mangena said the company was also considering contracting farmers.
Under the contract system, farmers are provided with inputs such as seed, fertilisers and chemicals, while they also get advisory services.
TianZe Tobacco Company production manager Mr Li Xiangyang, said many farmers were willing to get contracted to them in order to get inputs and also because of the favourable prices they get at the end of the season.
“Most farmers cannot access funding from banks,” he said. “These loans are usually expensive and not viable for farming.”
Farmers expressed mixed feelings over the contract system, with some saying they were comfortable with it, while others attacked contractors for ripping them off.
Online Reporter