Merchants mobilise US$800m for tobacco

05 Apr, 2015 - 00:04 0 Views
Merchants mobilise US$800m for tobacco More than two-thirds of the 100 000 farmers who produced US$685 million tobacco’s worth in 2014 were smallholder growers

The Sunday Mail

tobacco-on-auction-floorsTOBACCO merchants have mobilised US$832 million in new money to purchase the golden leaf at auction floors, a development that could ease Zimbabwe’s liquidity challenges.

Tobacco Industry and Marketing Board (TIMB) chairperson Mrs Monica Chinamasa said last week the money is more than the US$600 million realised last season.

“All the merchants have mobilised US$832 200 000 million to purchase tobacco and this is new money we are talking about,” she said.

Mrs Chinamasa said the new money would positively impact the economy and ease liquidity challenges.

About 70 percent of the money will be for contract farmers.

“Most of the money brought in by the merchants is going to contract farming because they are basically buying their product. They are the ones who finance the growing of the crop; so, at the end of the day, they are duty bound to purchase their crop,” she said.

Mrs Chinamasa said contract farming had its advantages because “it will be difficult for the contractors not to buy a crop they would have supported and if the contractor offers low prices, it also means it will be difficult for the farmer to service the loan”.

Contract farming is playing a very important role in the production of tobacco as banks find it difficult to finance the sector.

Mrs Chinamasa urged tobacco farmers to register with TIMB every season.

“If our farmers are registered, it will be easy for us to make the projections in terms of how much money we need to buy all the crop.”

TIMB will next season introduce e-marketing to avoid price distortions and other malpractices.

As a result, merchants will have electronic cards where the bids will be shown on the screen during the auction.

“Everything will be done electronically and all the bids will be on the screen. This season we are going to do the dummy bids using few bales of tobacco. We have seen it in India and it works. It is transparent,” she said.

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