Zimbabwe: International Tobacco Buyers Jump Over Land in Malawi

Paul Nyakazeya

ZIMBABWE stands to lose millions of dollars in potential earnings from tobacco as international buyers are flocking to Malawi, shunning the local auction floors where a dispute over prices and the exchange rate have delayed the selling season.

This comes as it also emerged that local farmers are smuggling their tobacco out of the country to get better prices. The farmers say they will hold on to their crop until the central bank agrees to their demands for a special exchange rate.

Farmers who spoke to businessdigest this week said merchants who had arrived a week after the scheduled opening of auction floors on March 14 left the country for Malawi a fortnight ago where auction floors opened last week. Some former commercial white farmers displaced by the land reform programme are now based in Malawi.

The Zimbabwe Tobacco Growers Association (ZTGA) confirmed that international buyers had become impatient with the prolonged deadlock and are seeking better deals in Malawi.

"Zimbabwe stand to lose millions of dollars to Malawi if the stalemate continues. The country's traditional international buyers are flocking to Malawi whose crop production has been increasing over the years," ZTGA said.

ZTGA said farmers are also smuggling tobacco to Malawi to seek better returns to remain in business and to prepare for the next season.

Farmers who had harvested their crop in January and early February said they now feared that their crop's grade would decline.

"By the time international buyers return to Zimbabwe, prices might have gone down which is a loss to both government and the farmer," a farmer said.

China is also reducing tobacco imports from the country.

According to Tobacco China Online China is planning to increase production of its import-substitute leaf tobacco to about 55 500 tonnes this year.

That will reduce its reliance on tobacco imported from Zimbabwe.

Zimbabwe has lost its place among the world's top five tobacco exporters due to dwindling output largely caused by disturbances on farms, lack of critical inputs and a fixed exchange rate.

According to January's global production figures from the US Department of Agriculture, the top five exporters are now listed as Brazil, the United States, India, Malawi and China.