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Gloomy Outlook for Zimbabwe's Tobacco Auctions - 2003-04-24

The annual Zimbabwe tobacco auctions, which are key to the nation's economy, are under way. But, the prospects are gloomy because of a drastic reduction in this season's crop production.

Tobacco is Zimbabwe's main foreign currency earner, and generally whenever the selling season starts, the country's foreign currency situation changes for the better.

But this year, while some foreign currency will be generated, it shapes up as much less than previous years, due to the projected reduction of tobacco produced. The Tobacco Industry Marketing Board says that between 110 million and 120 million kilograms are expected to be delivered to the auction floors.

But Wayne Parham, a vice president of the Zimbabwe Tobacco Association, puts the figure much lower.

"As ZTA, we think the crop is no more than 85 million [kilograms]," he said.

Mr. Parham says that figure would be the lowest since 1981 when, because of the uncertainty after independence in 1980, only 67 million kilograms were produced.

He attributes the steady fall in tobacco production from 236 million kilograms in 2000 to Zimbabwe's land reform program, which has seen white farmers losing their farms to make way for landless blacks. Because of a lack of expertise and inputs, he says, the new farmers have not been able to maintain production at the same levels.

"In ZTA we had 1,470 large scale commercial framers in the 2000 era and about 4,000 small scale," he said. "We now probably have about 6,000 small scale and 400 large scale producing at this time."

Zimbabwe Finance Minister Herbert Murerwa also has attributed the slump in the annual tobacco crop to the land reform program. Addressing journalists Tuesday, the minister said the agricultural sector was going through "a transitional period."

Zimbabwe is facing its worst economic crisis since independence 23 years ago and is experiencing severe shortages of basic commodities, as well as fuel.

The tobacco sales started Wednesday, on the first day of a planned three-day general strike called by the Zimbabwe Congress of Trade Unions in an effort to force the government to reverse a hefty price hike on fuel.

Economist Tony Hawkins predicts that while the tobacco sales will improve availability of foreign currency, it will be down by 40 percent on last year's figures. He says that because the country has little fuel and is in arrears on payments for its electricity imports, whatever is earned will be used as it comes in, leaving nothing for the reserves.