DEBATE over the price cap for tobacco at the auction floors has taken a new twist, amid indication that there is a one-off taker company controlling the market price.
The 2024 Tobacco Marketing Season entered its third week this Monday with prices of the golden leaf firming above average price of US$3.44 while several bales of top-grade leaf hit the ceiling of US$4. 99 per kilogramme.
“We are happy that our tobacco is fetching lucrative prices. This is my priming, but what worries us is that the pricing ceiling of US$4.99, this must end,” said a farmer.
“No matter that we bring the best quality, the price remains US$4.99. Overall, the auction price is good, but why the price ceiling?,” asks another farmer from Rafingora.
A merchant, who spoke on condition of anonymity let the cat out of the bag saying the price ceiling is a result of collusion.
“From our findings, there is one big off-taker for the particular high quality grade pegged US$4.99. This off-taker control that market and merchants who dare to break that cap will summoned and threatened with unspecified action hence the cap will continue to be there unless government intervenes.”
Investigations by the Agricultural Industry Development Support Institute for Southern Africa (AIDSISA) on the issue revealed that the farmer is the biggest loser in this collusion.
“Our investigations reveal possible collusion by cartels who are manipulating prices at the expense of the farmer. This trend has been going on for years and local financing and value addition of our tobacco should be the solution to this cancer, AIDSISA executive Director, Jeffrey Takawira.
This season, demand for the golden is very high as merchants stampede to buy the leaf and tobacco experts believe it is high time the US$4.99 ceiling should be removed for the benefit of the farmer.