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August 20, 2008

Zimbabwean tobacco growers to shun auctions in favour of contract growing

About 70 percent of Zimbabwe's tobacco may be sold on contract direct to merchants next year, with farmers avoiding the traditional Harare-based auction houses, the government's Tobacco Industry and Marketing Board said.

"That situation may help raise production because farmers growing on contract generally receive assistance in sourcing inputs from the merchants,'' Andrew Matibiri, chief executive of the board, said in a telephone interview today from the capital, Harare. "There is a shortage of inputs, particularly fertilizer.''

Tobacco farmers traditionally sell their leaf through three auction houses, including Tobacco Sales Floor Ltd., the world's biggest. The country produces mainly flue-cured tobacco which rivals the U.S. for quality. TSF competes with privately owned Zimbabwe Tobacco Auction Center and Burley Marketing Zimbabwe (Pvt) Ltd.

Production has slumped from a high of 235 million kilograms (517 million pounds) in 2000, the year President Robert Mugabe began the often-violent seizure of most of Zimbabwe's white- owned farms. The country produced 75 million kilograms of mainly high-grade, flue-cured tobacco last year.

The number of merchants contracting farmers will increase from 13 last season to 17, Matibiri said. Zimbabwe's tobacco season, from planting to marketing, generally lasts 3 months.

Deliveries of the crop have fallen to 36.6 million kilograms since sales began in April, compared with 50 million kilograms in the same period last year. The southern African nation expects to harvest 70 million kilograms of tobacco this year, Matibiri added.

Though output has plummeted, tobacco remains Zimbabwe's single most valuable commodity, accounting for 18 percent of the country's $759 million exports between January and June 30 this year. The entire mining industry, including exports of platinum, gold, ferrochrome and nickel, accounted for 53 percent, said Harare- based economist John Robertson.

Bloomberg

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