Zimbabwe: Perennial Congestion at Tobacco Auction Floors

ZIMBABWE’S perennial problems at the tobacco auction floors are far from over despite an increase in the number of auction floors operating in the country, experts have said.

Last week, the Tobacco Industry Marketing Board (TIMB) suspended new deliveries and bookings at the then two operating auction floors – Tobacco Sales Floor and Boka Tobacco Sales Floors – a few days before a new operator came on board.

Tobacco leavs

Tobacco leavs

The industry regulator said the move was aimed at easing congestion at the floors as farmers besieged the auctions demanding instant payments.

The suspension was lifted last week and deliveries resumed a day after.

But industry experts said tobacco marketing reforms are required to restore efficiency at the floors. They say the coming in of Millennium Tobacco Company, Zimbabwe’s third auction floor, is not enough to deal with the problems unless some changes are made to the marketing of the cash crop.

Farmers patiently sitting on the concrete floors, restless and wailing children and long queues of grumbling growers at enquiries desks have become a common feature at the floors.

Auction floor operators blame farmers for not following “proper booking procedures” before visiting the floors.

Currently, tobacco growers are required to register with TIMB regional offices before they make deliveries to the floors.

They say an expected increase in tobacco output this season has also compounded the problem. Government is projecting 150 million kgs of the cash crop this year up from 123 million kgs sold last year.

Independent estimates show that the figure could rise to as high as 187 million kgs.

Contract farmers, according to the official projections, are expected to drive the resurgence of the industry which suffered at the height of the chaotic land reform exercise, which targeted white commercial farmers.

Zimbabwe Tobacco Deliveries Rise to Highest in Eight Years, Beating Estimate

Zimbabwe Tobacco Deliveries Rise to Highest in Eight Years, Beating Estimate

“Most farmers come to the floors before their crop is booked at TIMB’s regional offices across the country,” said Richard Chabata, Millennium Tobacco CEO.

“Another issue that could be leading to the congestion is the pricing. Farmers are thronging the floors for speculative reasons. Last year the marketing season opened with relatively high prices and closed on a low note. So farmers feel that approaching the floors earlier, even without following booking procedures, will give them better prices.”

A kilogramme of tobacco averaged US$2,88 last year.

Official statistics show that currently this year’s average price is US$2,87.

TIMB CEO Andrew Matibiri said the temporary suspension of trading at the floors was meant to reduce bottlenecks during the tobacco marketing season which opened in mid February.

“The congestion has been cleared after we dealt with the backlog,” he said. “We are considering having transporters register and ensure that they are paid through the central stop order system. This would ensure that growers have followed marketing regulations.”

Industry sources also say failure by Zimbabwe Industry Tobacco Auction (Zitac) – currently under liquidation – to reimburse Mashonaland Tobacco Company, a tobacco merchant, US$350 000 for last year’s tobacco sales has led to mistrust between the auctioneers and the buyer.

This, they said, had resulted in some merchants abolishing pre-payments of the crop which could in turn also result in payment delays to growers.

Matibiri, however, said only smaller merchants were paying auction floors upon presenting daily invoices, saying big buyers were still making advance payments.

At least 10 of Zimbabwe’s commercial banks have opened shop at the floors as business grows at the auctions.

Farmers who spoke to businessdigest accused auction floors of underhand dealings although marketing of the crop is done on a first -come-first-serve basis.

Edward Tome, the treasurer-general of the Tobacco Association of Zimbabwe, blamed auction floors for allowing farmers to approach the floors before booking as competition intensifies.

“We are not happy and we blame the auction floors for the chaos that happened before TIMB suspended deliveries to the floors,” Tome said. “The floors disregarded a working document we prepared last year that says farmers should come to the floors only when they are booked.”

He, however, said the congestion is expected to ease in a fortnight following TIMB’s intervention.

Efforts to get comment from the Zimbabwe Tobacco Association, an organisation representing predominantly white commercial farmers, were in vain at the time of going to print.

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