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Monday, 7 July 2008

Tobacco Sector Up in Smoke ?

Tonderai Kwidini (IPS) on how the long running political crising in Zimbabwe is ruining the tobacco industry. Excerpt:

.......Since April, business has grounded to a halt at the country's three main auction floors -- Burley Marketing Zimbabwe, the Tobacco Sales Floor and the Zimbabwe Tobacco Auction Centre, all located in the capital Harare.

Some disgruntled farmers complained that they had sold their crop 21 days previously but had still not received payment despite government promises. A few farmers said they had received five billion Zimbabwean dollars, which is equivalent to only five U.S. dollars, while the remainder was deposited in their accounts or paid out in cheques. In Zimbabwe at the time of writing five billion Zimbabwean dollars was only enough to buy a five litre pack of orange juice.

‘‘What can we do with five billion Zim dollars? It all goes to settle food bills that have accumulated during the period that we have been here waiting for payment,’’ said a disgruntled farmer at the Tobacco Sales Floor.

An official at the Tobacco Sales Floor acknowledged that there was a crisis but nothing could be done until the currency crisis currently gripping the country was resolved. ‘‘It’s a problem of cash but we hope that once we start getting special cheques from our banks the payment situation will improve," said Wilson Gopoza, Tobacco Sales Floor managing director.

The ‘‘special cheques’’ come in the form of promissory cheques that can be used as money. These were introduced by the Reserve Bank of Zimbabwe in May in a desperate bid to solve the cash crisis in the country's banking system and to make trading easier. Before the introduction of these cheques farmers were forced to liquidate their cheques through illegal cash dealers. They were being charged a commission of up to 70 percent, a situation which ended up diverting money from the farmers to the cash dealers.

‘‘These disruptions cost farmers a lot of money. Why can’t the government just put its house in order and set prices well in advance so that we don’t have to pay for storage facilities in Harare while we await the resolution of price issues,’’ asked a tobacco farmer from Headlands, about 50 km northwest of Harare. ..

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