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Saturday, May 25, 2024

Stakeholders call for reforms in tobacco industry

Story by Owen Mandovha, Business Reporter

WITH the 2024 tobacco marketing season set to open next month, attention has been drawn to the need to address underlying shortfalls in the tobacco pricing system and other challenges which deprive farmers of fair value from the golden leaf.

High quality flue cured tobacco is in demand for blending purposes and yearly hundreds of millions of dollars are raked in from exports.

According to statistics from the Tobacco Industry and Marketing Board, 296 million kilogrammes of tobacco were produced last year setting a new record in the country’s history.

The figure fell short of the government’s target of 300 million kilogrammes set in the Tobacco Industry Transformation Strategy.

With the 2024 tobacco marketing season getting underway on the 13th of next month, there has been debate on a trading system highly entrenched in the colonial auction system capping prices on the auction floors at US$4,99 per kilogramme.

An insight into the global trade of tobacco indicates that on the export market, a kilogramme of processed tobacco fetches multiple times, triggering a debate on whether local farmers are getting enough from their sweat.

Executive Director of the Zimbabwe Farmers Union Dr Paul Zakaria says the auction system needs to be reformed in line with the transformation of the industry over the years where indigenous farmers are now the mainstay of the industry.

“Unfortunately, farmers have been prejudiced over so many years by buyers who collude on the auction floors to offer lower prices that are not related at all to quality, and this means that they are not getting fair value for their crop. This system needs to be looked at and the same applies to contract floors where farmers are price takers because they have no control over pricing.”

President of the Zimbabwe Progressive Tobacco Farmers Association Mr Mutandwa Mutasa laments that only a few players like merchants and exporters are benefiting from the tobacco industry.

“There is essentially nothing to brag about the industry if we do not involve farmers at the top end of the value chain by ensuring that they are also exporters. If farmers’ participation in the industry ends up on the auction floors and contract floors, we are fooling ourselves in believing that our farmers are benefiting while a few cartels are the ones who are milking farmers.”

The coming in of the Tobacco Industry Value Chain Transformation Strategy to attain a five billion United States dollar industry by 2025 is according to the majority of analysts a sign that the industry can do more to benefit the economy.

The net proceeds from tobacco each year are a tiny fraction of the hundreds of millions of dollars of tobacco sales earned each year.

The law governing tobacco funding whereby offshore loans must be used for production means that the majority of proceeds are used to settle these loans, hence the need to undertake essential reforms in the industry.

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