Tobacco farmers threaten boycott

Zimbabwe's tobacco farmers, the country's main foreign exchange earners, are threatening to withhold this season's bumper crop from auction to pressure the government into devaluing the local
currency.

"With costs of production up by 70 percent and no change in the exchange rate or tobacco prices, the economics of selling at 38 to the (US $) dollar means we'll go broke," one tobacco farmer who asked not to be named told IRIN. "There is no guarantee that farmers will send out tobacco if they don't fix up the exchange rate", which was set by the government in January 1999.

Zimbabwe is heading for a record tobacco production of around 230,000 mt this year, up from 192,000 mt in 1999, due principally to dry weather conditions in December. The invasion of white-owned farms by war veterans is expected to result in losses of only around 1,000 mt, as the crop was substantially reaped and cured before the occupations began.

"Some farmers say they won't sell while farms are occupied by war veterans, but that suggestion has been dismissed. There is too much (financial) pressure on farmers with the banks, and they are desperate to get income now," the tobacco grower said.

However, the tobacco farmers association is to meet with the Tobacco Industry and Marketing Board on Thursday to push for a delay in the opening of the auction floors from 26 April to 3 May. There is hope among the farmers that by then Zimbabwe's commercial banks could breach Reserve Bank guidelines on the exchange rate, offering closer to the black market price
of 45 Zimbabwe dollars to US $1. There have also been discussions with government officials over a "crawling devaluation" of a few percentage points a month, the farmer said.

"The exchange rate must recompense farmers for their escalating costs," he said. "Around 20 percent (devaluation) would do. But a whole section of the country sees devaluation as raising costs (to consumers). We have to accept the changes will be modest, but I'm sure we are going to resolve this problem by early to mid-May."