Maravi

(HERALD) Liberalisation of tobacco marketing debatable

Liberalisation of tobacco marketing debatable
By Elita Chikwati

Last week the Herald Business carried an article on tobacco farmers who wanted the marketing of the crop to be liberalised as was the case with other commodities such as maize and wheat. This was met with different reactions from farmers and stakeholders in the industry.

Tobacco growers felt that they were being deprived of the freedom that had been given to fellow farmers producing food crops. Liberalisation of the tobacco marketing meant farmers could sell their crop to willing buyers.

This, according to the tobacco growers, would give farmers a wide market for attractive prices and payment systems.

The tobacco growers said selling their crop through the auction system complicated the marketing process.

One concerned grower said farmers should be given a choice whether to sell at the auction floor or to merchants who will later sell through the floors.

A number of tobacco growers especially in Centenary are selling their crop to middleman who give them cash on the spot. This they say is much better than to wait and sell at the auction floors.

Remember there is the need to transport bales to Harare if the tobacco is to be sold through the conventional system.

Transportation of bales has always been a problem for the farmer. Most of the transporters charge exorbitant fares per bale and farmers have no choice but to pay to have the commodity taken to the floors.

Besides the poor transport system, the tobacco grower always complains of the poor payment system. Farmers for the past few seasons have been experiencing problems accessing their money after selling the tobacco. In some instances they were given small amounts of money in cash while the rest was a cheque which took several days to encash. This forced some tobacco growers in some instances to set up temporary structures near the auction floors.

This is bad for one to be reduced to almost a destitute because of poor payment system.

At one time the farmers were told they would get 15 percent of the proceeds in foreign currency and this never materialised. The farmers who tried to access the funds failed to do so since the process was complicated.

So farmers feel by selling their crop to the merchants they will not experience problems of transport shortage and late payments.

Sometimes farmers need cash to pay school fees, buy food and pay for medication. The farmer should not wait to sell tobacco at the floors to get money. Thus the merchant will be the best person to address the problem.

It is expensive for small-scale tobacco growers to transport few bales maybe one or two to the auction floor.

However, the Tobacco Industry Marketing Board is not in agreement with this arrangement.

In fact police are carrying out investigations and any farmer seen to be side marketing will be prosecuted. TIMB was also talking to farmers through their local leadership to discourage them from engaging in the "illegal" trade.

TIMB acting chief executive Dr Andrew Matibiri said his organisation was working towards addressing the problem.

Contractors have been asked to go out into the farming areas and talk to the growers and assist in the best way to ease the problem.

Now what about those not on contract? TIMB is looking at ways of linking some companies to go and buy tobacco from the farmers. The reason why TIMB was established in 1935 was because the open market system had failed for the tobacco industry. TIMB was meant to co-ordinate the marketing of tobacco so that farmers would realise their due profits.

According to Dr Matibiri, tobacco growers were being ripped off by private buyers who would make huge profits at the end. Thus the board was established to protect the farmers from unscrupulous dealers.

The liberalisation of the market was tried and farmers could export their crop but this did not work.

Of course it may work for a short time but it is not sustainable.

TIMB is warning farmers selling their retained or new crop to private buyers that they will incur losses. For instance the tobacco growers are said to be selling at US$1 per kilogramme but the auction floor could offer a much higher price even after taking into consideration transport and other logistical costs..

It is unfortunate that TIMB tries to explain why farmers should not sell to private buyers but the intended beneficiary who is the tobacco producer is not fully appraised of the situation.

As long as the two groups operate in bad faith, there will always be problems.

These could be solved if the two parties come together and map the way forward. They can discuss the issue until they reach a resolution. Tobacco growers expect buyers to pay them this time in foreign currency. Most growers are expecting an improvement in the payment system. Even if the farmer is to be paid through the bank, he or she would require some cash to meet some basic expenses.

Labels: MARKETING, TOBACCO

posted by MrK @ 4:59 PM