Low tobacco prices smoke Zimbabwe farmers out of auction as IMF set to issue reforms report card

Officials blame quality of cash crop for low prices offered for one of the southern African country's most important exports.

ZIMBABWE’s tobacco farmers briefly walked out of the first auction of the selling season on Wednesday in protest over disappointing low prices for one of the country’s major industries.

The first bale to go under the hammer sold at $3,50 per kilogramme, a price farmers said was “too low” after expecting around $4.99.

“We would rather let the crop rot than sell it for a song so that other people can benefit from our sweat,” said a farmer from Karoi in northern Zimbabwe who asked not to be named.

The auction managers explained that the price was determined by the quality of the crop.

Industry Minister Mike Bimha painted a gloomy picture of the tobacco season after erratic rains left farmers counting their losses.

“There was a late onset of rains, which delayed planting and the establishment of main dryland crop,” Bimha said in a speech to officially launch the start of the marketing season.

“Consequently, there was a lot of unsuccessful replanting, and this resulted in poor crop establishment and unevenness throughout the tobacco growing areas of Zimbabwe.”

Tobacco farming is a major employer in Zimbabwe and one of the country’s most important industries, accounting for 29 percent of total exports.

A total yield of 190 million kilogrammes is expected this year, down from the 216 million sold last year, according to the Tobacco Industry and Marketing Board.

Meanwhile a team from the International Monetary Fund team leading efforts to re-engage Zimbabwe said on Wednesday it will “assess” whether the country has adhered to agreed reforms aimed at normalising its relations with the lender.

“We are going to look whether the policies that have been implemented in the last five months have been broadly consistent with what we agreed,” said Domenico Fanizza, IMF’s head of mission to Harare, to a Zimbabwe parliamentary committee on finance and economic development. 

Check reforms adherence
Fanizza said the global lender has been giving Zimbabwe technical support and it will want to check whether reforms to regain the confidence of multi-lateral institutions have been adhered to. 

“It is an essential step in building the momentum in the process of re-engaging with the international financial community, and in particular the international financial institutions,” he said. 

“Once that (has been done) it means we can think about the financial re-engagement of the IMF in the country and also Zimbabwe can think of requesting rescheduling of the outstanding bilateral debt…,” he added. 

The IMF resumed its programme with Zimbabwe in 2013, shortly before crunch elections extended President Robert Mugabe’s 30-plus-year rule. 

Zimbabwe was stripped of its voting rights by the IMF in 2003 and nearly got expelled, a rare move for the Washington-based institution. 

But in 2012, the IMF relaxed its restrictions on providing consulting support to Zimbabwe as the country moved toward constitutional reforms and showed improvement in economic policy cooperation with the fund. 

The IMF has urged among other reforms, the reviewing of the indigenisation policies—which require local majority ownership of companies. The policies have scared off much needed foreign investment.

Fanizza said that the cash-strapped country needs to clear its outstanding arrears with the IMF and World Bank if it is to access the much needed loans. Zimbabwe’s arrears to the IMF stand at $152 million and $1.2 billion to the World Bank, Fanizza said. 

Zimbabwe’s economy has been on a downturn for over a decade with shortages of cash and industries operating below capacity, or shutting down outright.

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