Tobacco floors to decentralise

Published: 31 August 2017

SEVERAL tobacco companies have expressed interest in setting up buying facilities outside Harare as authorities seek to decongest the existing auction floors.

Tobacco Industry and Marketing Board chief executive Dr Andrew Matibiri told The Herald Business yesterday that all tobacco auction floors and various contractors have expressed interest in investing outside the capital.

"We have set September 30 (2017) as the deadline for tobacco companies to submit their proposals, but there is huge interest," said Dr Matibiri in an interview yesterday.

"The programme will help to decongest the existing facilities while farmers will incur less costs when delivering their produce."

However, with the falling volumes of tobacco sold though auction, concerns have been raised whether it would be feasible for auction floors to set up mini buying points outside Harare.

This year, Zimbabwe produced about 180 million kg of tobacco of which 20 percent was sold through the auction system.

The Government has already finalised modalities to decentralize tobacco auction floors starting next year with a programme also expected to lower costs incurred by growers when delivering their crop.

Zimbabwe, the world's fourth largest tobacco producer, has a dual marketing system where the produce is sold through auction and contract systems.

Some industry players said the gradual decline of the auction system could cause price manipulation in favor of the contractors, which would frustrate tobacco farmers from growing this key commodity.

Dr Matibiri said the regulatory body explained the risks and urged operators to set up auction facilities that could be used during tobacco off season. "We have laid all the facts in light of the dynamics and it is now up to the companies. That is why we have given enough time for consideration before they can submit their proposals," said Dr Matibiri.

Zimbabwe's tobacco auction system used to be the marketing model of tobacco in the world, but tobacco volumes have shrunk as farmers, mostly those who benefited under the land reform joined contract schemes as they did not have money to self-finance.
- the herald