Good prices, but farmers still cry

19 Mar, 2017 - 00:03 0 Views
Good prices, but farmers still cry

The Sunday Mail

Harmony Agere and Livingstone Marufu
The tobacco auction floors opened last week with both farmers and buyers taking the usual wait-and-see attitude of the early days of the marketing season in the hopes that pricing will go their way.

Auction floors officially opened on Wednesday and there were a few glitches with the newly-introduced electronic auction system prompting officials to quickly revert to a manual system.

Tobacco Industry and Marketing Board spokesperson Isheunesu Moyo had in the build-up to the opening day said e-auctioning would curb collusion and sharing of information by buyers, thereby reducing corruption that compromises prices.

The system initially worked and some farmers sold their crop for as high as US$4,70/kg.

But prices at Boka Tobacco, Tobacco Sales and Premier Tobacco auction floors tumbled soon after e-auctioning crashed.

Tobacco prices are affected by multiple factors, particularly quality, but farmers believe there may have been connivance to tamper with the electronic system to allow buyers to manipulate prices.

“The new system was working to our satisfaction because we were fetching good prices,” said a Karoi farmer, Shepherd Luke Mutinhima, who witnessed e-auctioning being implemented at both TSF and PTF.

“Of course the system was slow and they kept on stopping for long periods but the majority of the crop fetched a price of at least US$3,50 a kg. But now the system is down and the prices have all of a sudden dropped and we suspect there might have been tampering to allow the buyers to manipulate prices.”

Farmers at TSF and PTF on Thursday were, as they are wont to do in the early days of the marketing, threatening to withdraw their crop if prices did not improve.

They called for the immediate re-introduction of the e-auction system.

At Boka it was a different case as farmers said the electronic system was complicated and contributing to lower prices.

Farmers said they had brought few bales of their crop, mainly from the first and second reaping, to test prices.

“Now that they have put away the computers we are now satisfied because everything is clear,” said Fredrick Gijimani of Macheke. “The prices seem to have improved also and we are satisfied.”

Official figures show that the opening prices are actually better than last year’s.

“The (farmers) I came across are saying prices are good,” said TIMB’s Mr Moyo. “Even if you look at the report, prices are better than same time last year.”

The average price per kg on the first day was 46 percent higher than in 2016, up from US$1,51/kg to US$2,20/kg.

TSF sold 104 066kg for US$234 243 at an average price of US$2,25; while Boka sold 60 153kg at US$132 154 at an average price of US$2,18/kg. Premier Tobacco sold 27 312kg for US$56 332 at an average price of US$2,06/kg.

The highest price was registered at PTF (US$4,80) followed by TSF (US$4,75) and then Boka (US$4,71).

The figures point to a promising season, and TIMB is waiting for an Indian consultant to come and work on the e-auctioning glitch.

Mr Moyo said, “We are committed to the full implementation of the electronic marketing system. We have experienced testing problems. So as not to inconvenience farmers we have return to the conventional system whilst we work on the e-marketing system.”

E-auctioning is a fundamental departure from the traditional tobacco bidding system as it uses an electronic structure that gives buyers and farmers real time data as the auction process happens. From the moment the farmer takes his/her booked tobacco to the auction floors, the number of bales, weight, grade, location, and bank details are captured into the system.

Unlike the old system, farmers will know the grade of their crop and the price it will likely fetch. This will reduce the amount of bales rejected due to disagreements on grade and price, improving efficiency.

After booking, just like in the old system, tobacco is then displayed in the floors where auctioneers move around with an electronic machine marking the winning bid for each bale.

During this process information about bookings, transactions and prices for a particular buyer or farmer will be displayed on electronic screens, removing the old system of shouting. It is hoped the system will effectively eliminate collusion and sharing of information by buyers, if successfully implemented. In these respective processes of collusion and sharing, buyers clandestinely agree on a price ceiling as well as equal opportunities to bid for tobacco without stiff competition. The whole idea of auctioning is defeated and farmers are forced to sell their crop at ridiculously low prices.

But with the new system, all these collusions will be eliminated forcing buyers to bid more for tobacco.

Farmers unions remain confident that the e-marketing system will improve efficiency. Zimbabwe Farmers Union executive director, Mr Paul Zakariya, said farmers should embrace the new system as it will benefit them.

“Farmers are still quite busy and the time between now and the open season can be used to perfect the system,” he said. “We cannot run away from technology, times have moved so the system has to be perfected and farmers must embrace new technologies and as much as we understand, operations can be well managed under the system.”

Zimbabwe Commercial Farmers Union president, Mr Wonder Chabikwa, concurred saying there was no clear way of conducting business at the floors previously.

“There was no clear way of doing things at the floors and the old system was unreliable,” he said. “We believe and know this system will eradicate the human factor and corruption as well as make farmers prepared for the auction system.”

Zimbabwe Tobacco Association chief executive, Mr Rodney Ambrose, praised the e-marketing system but warned that yields could be lower than the expected 200 million kg.

“The increase in hectares planted and number of registered growers indicated a crop in excess of 200 million kgs,” he said. “However, with the heavy rainfall, hail, leaching, quick ripening rates, curing constraints and power challenges experienced to date, yields are expected to be lower and as such a crop lower than 200 million kg is expected.”

On the cash transfer system introduced last season, farmers have expressed mixed reactions with some expressing fears over cash shortages. Small-scale farmers are able to withdraw cash of up to US$1 000 from their first tobacco sale and a maximum of up to US$500 for subsequent sales under the 2017 selling season.

Tobacco is the country’s biggest foreign currency earner, raking in nearly US$1 billion in 2016.

At least 105 795 hectares of land were put under tobacco and according to the TIMB, 82 110 farmers registered to grow tobacco during this cropping season, with projections being that 200 million kg will be produced.

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