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Black front emerges in Zimbabwe's tobacc... |
Black front emerges in Zimbabwe's tobacco wars
A rival auction floor has been set up, but there is hardly room enough for another player, writes CHRIS BISHOP
Zimbabwe is the largest seller of tobacco in the world, moving 209-million kilos of leaf a year worth $700-million - a third of the country's annual foreign currency earnings. Zimbabwe's 3 500 growers export 98% of their crop, largely through the established Tobacco Sales Floor in Harare. But against the stable, lucrative market - controlled from generation to generation mainly by the white minority - has arrived competition from indigenous business people, who want to secure a large stake for the black majority. The Boka Tobacco Auction Floor opened this week promising higher tobacco prices for Zimbabwean producers, especially the small, indigenous growers. The R100-million floor, which resembles a giant aircraft hangar, was developed by Roger Boka, a multimillionaire businessman in his sixties who has built an empire on mining, publishing and tobacco. He has long been an outspoken critic of the white business establishment, which still controls 90% of the economy. Boka has run a series of advertisements in national newspapers berating the establishment, including one where he likened white businessmen to predatory snakes. "We have good quality tobacco here and I want the price to start at $4.50 and shoot up to $5 and $6," he said at the opening of his floors. Boka, who has pledged to bring up prices to deliver more money to growers, also said he had guaranteed loans worth $1.2-billion to support his cause - more than enough to buy up the entire Zimbabwean tobacco crop. But despite the boasts, early trading stayed stubbornly at an average of around $2 a kilogram, despite the fact that heavy rains restricted the crop. Ironically the disappointing prices could have won new friends for the Boka floors. Tim Mhaka, a spokesman for the 200 small growers who remained loyal to the rival Tobacco Sales Floor, said 75% of them were ready to leave. "If Boka is going to push the price up we will go to him. The prices here are not fair and we need money for replanting." But despite the promise of higher prices by the competition, which lured a handful of white farmers away from the established floors, many of the large growers remained stubbornly loyal. "I wouldn't go to Boka on principle. He can't attack us in the papers one minute and expect money from us the next," said one. Robert Webb, head of the Zimbabwe Tobacco Association, said the race issue was unlikely to play a factor in fierce competition in the coming six months of the growing season. "It's just rhetoric. I am a fifth-generation indigenous Zimbabwean. All we are interested in is selling tobacco." The question in many minds is whether Zimbabwe can support two large tobacco floors. The established floor is working to only 87% of capacity and few bales have so far arrived at the Boka Floor. One point that all agree upon is that Zimbabwe is incapable of growing enough tobacco to keep both floors supplied. It's likely to prove a season of cut-throat competition particularly as the unusually wet 1996-7 conditions will mean a smaller than targeted crop. Growers had hoped to produce about 235-million kg this season, 16% more than last year, reports the Financial Times. But the heavier rains have cut production to less than 210-million kg, and while the top third of the crop is described as "magnificent quality", the average quality may not be as good as last year. After last year's 39% rise in prices when flue-cured tobacco sold for a average of $2.95 a kg, the industry has braced itself for unchanged, if not lower prices in 1997. Predicting prices in Harare is notoriously difficult, but with prices lower than last year in both Brazil's much larger market and Malawi's small market, growers are hoping only that they can match 1996. Brazilian prices are averaging about $1.80 a kg, down 7% on the 1996 figure. However, the depreciation of the Zimbabwean dollar will help cushion the impact on margins. The local currency has weakened 14 % against the US dollar over the past year. Assuming a crop of 210-million kg and an average price of at least $2.80, flue-cured tobacco will earn some $590-million in 1997, little different from last year's $592-million. But in Zimbabwean dollar terms, output value is likely to be at least 15% higher at nearly Z$7-billion.
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