Tobacco industry seeks $400m boost

Tobacco Industry and Marketing Board

THE Tobacco Industry and Marketing Board (TIMB) is seeking $400 million from the market to boost the on-going auction system and capacitate small-scale tobacco growers, a senior industry executive has said. 

This comes at a time when over 85 percent of tobacco in the country is being sold under the contract system, amid concerns production could be negatively affected as merchants tend to manipulate prices. 

TIMB chief executive officer, Dr Andrew Matibiri told the Business Chronicle that only three auction floors were functioning against 35 contractors. 

He said something needs to be done about the issue so as to fully capacitate the auction system. 

“As a country we need around $400 million to keep the auction system alive and overturn the overdependence on a contract system. Any figure close to the aforementioned amount will improve capacity utilisation of the auction floors,” said Dr Matibiri. 

“As we speak we have only three auction floors against 35 contractors. There is certainly a big mismatch on that. Of all the earnings we got, an average of $400 million was retained by contractors and we also need that kind of money to keep them at bay.” 

Dr Matibiri alleged that contractors were manipulating tobacco prices hence the need for the monetary authorities to step in and push the input support scheme from $70 million in a bid to match the $400 million retained by contractors. 

He said farmers in the tobacco sector were unwilling to be contracted but that lack of funding was forcing them to do so. 

Zimbabwe Federation of Farmers Union chairman, Mr Wonder Chabikwa, said the desire to get additional funding would help independent tobacco farmers to improve productivity. 

He said existing contract companies were not going to be affected by the move but stressed the need to balance out the tobacco sector and to promote fairness. 

“As farmers we have realised that the bulk of tobacco is produced under contract farming and this has been affecting operations at auction floors, which were losing business,” said Mr Chabikwa. 

“We are encouraged by TIMB’s push to increase the tobacco input scheme to $400 million to maintain the systems at par as the seemingly powerful contractors will not manipulate prices and affect Government programmes like the 50 percent forex retention as most of the money is kept by the contractors.” 

Mr Chabikwa said the $400 million fund will assist smallholder farmers who finance themselves to increase tobacco production. 

In 2010 the tobacco auction floors were collapsing and Government saw it prudent to come up with a facility to assist small-scale farmers who sell on the auction floors in partnership with Agribank. 

Agribank strategy, marketing and business development director Mr Joseph Mverecha said the tobacco facility, which is under Agribank’s supervision, should increase to the $400 million to help tobacco farmers to improve tobacco output. 

He said small-scale tobacco farmers normally experienced challenges accessing top dressing fertiliser and this could be an opportunity for them to boost their operations. 

“We are also concerned about the increase in the cutting down of trees as a result of tobacco production. The facility can also be used by farmers to procure coal for curing their tobacco. It is the farmer who will make a choice on what he or she wants from the facility,” he said. 

Tobacco is among the country’s largest forex earners alongside gold and platinum. Last year tobacco earned $900 million against gold’s $1,6 billion.

—@queentauruszw