Online Reporter
Yolanda Mlilo, Sunday News Reporter
IN a move towards enhancing transparency, fairness, and stability within the tobacco sector, the Tobacco Industry and Marketing Board (TIMB) has unveiled a new weighted average price grade matrix pricing model.
This innovative approach incorporates pricing data from all sales channels, including both auction and contract sales, thereby establishing a more predictable and competitive pricing framework for farmers.
In an interview with Sunday News, TIMB public relations officer, Mrs Chelesani Tsarwe revealed that through the engagement of tobacco stakeholders by the tobacco regulator, a new pricing model was agreed and developed.
“The weighted average price grade matrix pricing model is now in use. Pricing of tobacco will be based on an agreed price between the contractor and the grower,” she said.
The grade price matrix generated shall be used as a pricing monitoring tool at all contract sales, thus the agreed price should not be lower than the weighted minimum price for the same grade as derived from all selling points (auction and contact).
“TIMB will ensure full enforcement through supervision and monitoring by personnel at all contract selling points and minimum prices were previously derived from auction floors since the inception of contract farming in 2004,” she added.
Furthermore, the new pricing model is based on minimum prices for all grades derived from all selling points where the produced Weighted Average Price Grade Matrix will be used at all contract sales.
“The 2024 marketing season auction average price ($3,55) was higher than the contract average price (US$3,43), yet auction average prices determined the grade-price matrix. Under normal circumstances, the contract sales average price was supposed to be equal to or higher than the auction sales average price,” she said.
The new 2025 Tobacco Pricing Model will help to stabilise prices, ensuring that farmers are fairly paid.
“The weighted average grade-price matrix sets a floor or minimum price per every grade of tobacco, ensuring that farmers receive at least a minimum price for their crop, regardless of market fluctuations.
“Generally, the weighted average grade–price matrix is a very vital mechanism for protecting tobacco growers in Zimbabwe, providing price stability, quality-based pricing, transparency and fairness,” said Miss Tsarwe.
She further revealed that the price matrix will reduce price fluctuation, minimise market manipulation through efficient and effective monitoring by TIMB personnel deployed at all contract selling points.
“TIMB can conduct regular market surveillance to monitor prices and ensure compliance with the price matrix and use data analytics tools to analyse price data and identify trends, patterns and anomalies enabling timely interventions to ensure compliance with the new pricing model,” she said.
Through the new pricing model, TIMB aims to provide transparency and clarity, which is likely to reduce price disputes between growers and contractors.
“The new pricing model provides a stable and predictable income for farmers reducing the impact of market fluctuations,” she said.
With the new pricing model, TIMB is confident that the tobacco industry will be better positioned to achieve its full potential, and to make a more meaningful contribution to the Zimbabwean economy.
