Farmers have sold the 90.6 million kg of flu cured tobacco delivered so far for US$210 million and the dumping of the interbank rate tomorrow with the first auction of the new system is likely to calm farmer fears that they were being underpaid.
Farmers are paid half the price for their crop in local currency, at the official rate, and half as free-funds foreign currency. With the surge in inflation recently, they were worried about viability with the fixed exchange rate. But with the auction system replacing the interbank rate, this problem will ease or vanish.
After touring tobacco auction floors and meeting with stakeholders in the tobacco industry recently, Finance and Economic Development Minister Mthuli Ncube assured stakeholders in the tobacco industry that Government was committed to addressing issues affecting the sector to ensure it survives and farmers to get value for their money.
“We want to make sure farmers can go back to the land and afford inputs. The major challenge has been the parallel rate.
“The tobacco sector is an important industry a good foreign currency earner. This year we are at an advantage because Brazil has low volumes and we should take advantage,” he said,
The implementation of the market-based exchange rate policy as resolved by the RBZ will be a welcome development to the tobacco and cotton sectors.
Meanwhile, Tobacco Industry and Marketing Board statistics indicate that by day 35 tobacco sales had surpassed by 50 percent the volumes that had been sold by farmers compared to the same period last year.
By day 35, farmers had collectively sold 78.1 million kilogrammes worth US$139 million.
The bulk of the crop has been sold through the contract floors where 87.4 million kilogrammes worth US$202 million went under the hammer while those financing themselves sold 3.2 million kilogrammes valued at US$8.2 million through the auction floors.