Rejection rates eased to 65% in week three, but volumes and prices stayed weak amid oversupply concerns.
By Kingsley Jassi and Benadetta Chiwanda Mia Tobacco rejec-tion rate may have declined last week to an aver-age of 65 per-cent from as much as 98 per-cent in the first week, but volumes traded and prices remained low, fig-ures show.. As at the third week of trad-ing, accord-ing to Tobacco Com-mis-sion (TC) fig-ures, 12.3 mil-lion kilo-grammes (kg) of all types of tobacco had been sold, rak-ing in $26.1 mil-lion.. This com-pares unfa-vor-ably to last year’s
per-form-ance, when 13 mil-lion kg of tobacco fetched $31.9 mil-lion at an aver-age price of $2.28 per kg, slightly higher than this year’s $2.13.. For TC, the third week fig-ures are enough to trig-ger hope that the sea-son is com-ing to sta-bil-ity to build on the recent suc-cesses that saw tobacco regain-ing the old domestic sales glory.. TC spokes-per-son Telephorus Chig-wenembe said the mar-ket is pro-gress-ing well.. “In terms of rejec-tions, we are find-ing com-fort
in the pro-gress we registered in the third week.. “In the first two weeks we saw daily rejec-tion rates ran-ging between 90 and 100 per-cent.. In the third week we saw rejec-tion rates com-ing down to 65 per-cent in some days at dif-fer-ent mar-kets and we expect this pos-it-ive trend to con-tinue until we reach single digits or bet-ter still to zero,” he said.. This year’s mar-ket is marred by over-sup-ply as records show an
estim-ated national tobacco out-put of 190 mil-lion kilo-grams against the indic-ated demand of 170 mil-lion kilo-grams.. Coupled with global over-sup-ply this year, it is expec-ted that the sales will be less com-pet-it-ive as the local buy-ers also had to buy excess tobacco last sea-son.. Grow-ers are wor-ried, and Tama Farm-ers Trust has since called for tighter con-trol on tobacco pro-duc-tion.. Tama Farm-ers Trust Pres-id-ent Abiel Kalima Banda said the auc-tion mar-ket has vir-tu-ally stalled, with
most tobacco still being rejec-ted.. “There is a slight change on the con-tract mar-ket because buy-ers are buy-ing at the set min-imum price.. But at the auc-tion, I don’t see any change because I can tell you that in the last few days, no single bale of tobacco was picked.. All the bales were rejec-ted.. So this is not good for a farmer,” Banda said.. Banda also raised con-cern over delays in pay-ments to farm-ers,
say-ing some grow-ers who sold tobacco on the open-ing day of the mar-ket are yet to receive their money.. He fur-ther claimed that some farm-ers were sur-prised to dis-cover that pro-ceeds from their tobacco sales were allegedly being dir-ec-ted into unfa-mil-iar accounts.. “Farm-ers are sur-prised to see that their accounts have been changed in the sys-tem.. The indic-a-tion is that their pro-ceeds will go into another account, not the account which the farmer has been
using,” Banda said.. Com-menters have since urged author-it-ies to phase out auc-tion sys-tems that take up 20 per-cent of the total volumes sold and fully embrace con-tract farm-ing under the Integ-rated Pro-duc-tion Sys-tem that com-par-at-ively give buy-ers con-trol on pro-duc-tion pro-cesses to ensure the required qual-ity and quant-ity.. The Min-istry of Agri-cul-ture, Irrig-a-tion and Water Devel-op-ment met with the tobacco buy-ers, the reg-u-lator and other stake-hold-ers in an attempt to calm down the mar-ket that
had star-ted on a troubled note that saw auc-tion tobacco lying unsold on the floors.
tobacco market, Tobacco Commission, rejection rates, oversupply, contract farming, auction system, farmers payment delays