Tobacco auction prices firm

Grace Mahora
Herald Reporter
FARMERS have earned US$305,2 million so far this marketing season from the sale of flue-cured tobacco as prices continue to firm at the auction floors.

As at day 36, the Tobacco Industry and Marketing Board reported that 102,3 million kilogrammes worth US$305,2 million had been sold by farmers, which was, however, less than the 124,2 million kilogrammes valued at US$335,2 million sold during the same period last year.

Prices at the auction floors are higher than those being offered at the contract floors.

The average price at the auction floor on day 36 was US$3,13 per kilogramme, while an average price of US$2,97 per kilogramme was recorded at the contract floors.

But while the highest price in any sale at the auction floor is US$4,99 per kilogramme, the highest seen at the contract floors is US$6,80 per kilogramme.

As always the overwhelming bulk of sales are through the contract system since the opening of the marketing season end of March.

According to TIMB statistics, farmers have sold 7 million kilogrammes of tobacco worth US$22 million through the auction floors while the contracted growers have sold 95,3 million kilogrammes valued at US$283,2 million.

Most farmers grow tobacco under contract farming because they are provided with inputs and in some instances working capital.

Some contractors also have extension officers who are on the ground monitoring the production of their crop reducing side marketing.

Concerns have, however, been raised over contractors offering inadequate inputs and demanding the whole crop.

Some contractors were during the past season accused of failing to pay growers on time.

While most contractors abide, there have been exceptions with the TIMB cracking the whip and even ready to take firmer action.

The TIMB has set stiff measures to regulate contract farming in the tobacco sector.

This season, growers are retaining 75 percent of the proceeds of their crops in foreign currency, up from 60 percent last season.

Tobacco is one of the major sources of foreign currency in the agricultural sector contributing nearly US$800 million every year.