adminEdgar Vhera
Agriculture Specialist Writer
AS the 2023 marketing season approaches the half way mark, tobacco farmers have expressed mixed reactions over chances of this year’s average auction price to equal or surpass that of contract, a trend observed over the past three years.
Zimbabwe National Farmers Union (ZNFU) vice president Mr Fidelis Gweshe said events on the market at the moment do not support auction floor prices being higher than contract prices.
“In fact, average prices are higher at contract than auction floors. As of Day 30, average price for auction was US$2, 91 per kilogramme with contract at US$3, 00 per kilogramme.
“The top notch for auction floors is still at US$4, 99 per kilogramme whereas at contract floors quality grades are fetching high prices of US$5, 60 per kilogramme,” said Mr Gweshe.
He said quality of tobacco fetches high prices if one masters the classification of tobacco at the point of grading.
Zimbabwe Tobacco Association chief executive officer Mr Rodney Ambrose concurred saying the pricing at the auction floors cannot be compared with contract.
“The auction volumes only account for nine percent of total volumes, with a limited number of buyers, due to sustainability and traceability issues, and not always the entire crop is offered. Therefore, it cannot be compared to pricing on contract floors,” said Mr Ambrose.
He said as long as affordable, seasonal local funding for producing the crop in the region of US$350 million was availed to farmers, contract farming will remain.
Meanwhile Zimbabwe Commercial Farmers Union president Dr Shadreck Makombe said everything being equal the auction system was the way to go as market forces determine the best price.
“The auction pricing system is good and market driven unlike the contract where the contractual obligation will limit one’s manoeuvre depending on what would have been agreed on paper.
“Unfortunately, currently we can’t take the auction route as farmers have no money and have become prisoners of these contractors,” said Dr Makombe.
He said contractors can collude to fix prices and create a monopoly but if farmers are well capacitated the auction route was the way to go as it will them value for their labour.
Statistics from the Tobacco Industry and Marketing Board (TIMB) shows that over the last three years the average price from the auction floor was higher or equal to that of the contract.
Tobacco Farmer Talk (TFT) group’s Zimbabwe Tobacco Auction Buyers Analysis report for Day 30 obtained from TIMB show that Tian Ze had the highest average auction price of US$4, 14 per kilogramme, followed by Mashonaland Tobacco Company (MTC) with US$3, 53 and Zimbabwe Leaf Tobacco at US$3, 02.
Intercontinental Leaf Tobacco Company (ILT) had bought 23 percent of the tobacco, with Country Agro second on 11 percent and Achievers completing the top three with nine percent.
ILT had paid the largest chunk to growers on US$6 million with Tian Ze following at US$3 million and MTC completed the top three at US$3 million.
Peter Tanyanyiwa
Online Reporter