Stakeholders in the tobacco industry have expressed their fears over the possibility of price manipulation due to the demise of the auction system.
The fears are triggered by the fact that a paltry four (4) percent of farmers self-funded this year while the majority were financed by contractors, which means that very little volume will be sold through the auction system.
Zimbabwe has a dual marketing system where the tobacco is sold through both auction and contract but the obtaining situation suggests that little tobacco will go through the auction.
Therefore, the auction system might not be able to determine the minimum grade price of tobacco since the volumes that go through the auction are insufficient.
Speaking to The Sunday Mail Business and Tobacco Industry Marketing Board (TIMB), chief executive officer Dr Andrew Matibiri allayed fears of price manipulation. He said:
Many farmers will be de-contracted and will be free to sell through the auction system.
We hope this will provide reasonable volumes to prop up the auction.
If this does not happen, we are going to have a mechanism to determine minimum prices to ensure that farmers are protected from any kind of price manipulation.
Zimbabwe Tobacco Association chief executive officer, Mr Rodney Ambrose, said there was a need to restore the viability of the auction system to cushion farmers from all kinds of abuse by the merchants.
Source | The Sunday Mail