• March 28, 2024

Market lacks logic

 Market lacks logic

The spectacular growth of Zimbabwean tobacco production has prompted Mashonaland Tobacco Co. to reopen its processing facility.

The Zimbabwe auction market for flue-cured tobacco defies logic, according to a story by the associate editor of the Manica Post, Obert Chifamba.
Chifamba pointed out that the highest price paid on March 21, the first day of the 2018 marketing season, was US$4.90 per kg.
Of course, he said, many farmers would deliver primings and most of their early-harvested leaves on the first day, which did not necessarily reflect the quality of the crop in its entirety. The best quality tobacco usually found its way to the floors sometime later in the course of the marketing season.
It was obvious that the highest-quality leaf should fetch the highest prices of the season and, logically, those prices had to be higher than the $4.90 recorded on the first day. Yet the sad reality seemed to suggest that as the quality got better, the prices either took a tumble or hit a ceiling – a ceiling of steel or granite.
This price ceiling had in the recent past been the farmers’ biggest undoing. It had driven most farmers to think twice about producing the crop, though most had been unable to make that decision because tobacco was the most rewarding crop at the moment.
The farmers had had to swallow the bitter pill of disappointment and go back to the field year-in, year-out.
The farmers were always driven by the hope that the time for cartels might be nigh, and the fact that they didn’t want to miss out when this eventually happened.
‘Quite a gamble!’ Chifamba said. ‘On the ground the odds have always remained stacked heavily against them.’