‘We need to review tobacco pricing model’

20

THE Tobacco Industry Marketing Board (TIMB) has appointed Meanwell Gudu, as chief executive, taking over from Andrew Matibiri. Our Staff Writer, Farai Mabeza (FM) spoke to Gudu (MG) on his vision as he takes office. Below are excerpts from the interview.

FM: Congratulations on your appointment. What objectives do you wish to achieve during your tenure as chief executive (CE)?
MG: As the incoming CE my key objectives are;
– To lead the industry in attaining Vision 2030, guided by the National Development Strategy (2020-2025) and the Agriculture and Food Systems Transformation Strategy (2020-2025).
– To lead in transforming the tobacco value chain to a US$5 billion industry by December 2025 in line with the tobacco value chain transformation strategy;
– To work with stakeholders in the industry including other government departments to increase annual production to 300 million kilograms by 2025;
– To increase the local financing of tobacco production to 70 percent of total costs per hectare, through localization initiatives, from the current 30 percent by 2025;
– To accelerate value addition and beneficiation from the current one percent to 30 percent by 2025.
– To champion sustainable tobacco production by ensuring that 50 percent of tobacco produced is being cured using renewable energy by 2025.
– To improve the credibility of the tobacco marketing system by ensuring 100 percent compliance to regulations by all players.
FM: What would you say are the key challenges being faced by the tobacco sector at the moment?
MG: The sector operates in a dual system, that is auction and contract. The former is where tobacco growers are self-funded; they support their own tobacco production until they can sell on the market.
However, the major challenge is the limitations on access to funding from the banks because of lack of bankable collateral by most farmers.
This has pushed them to opt for contract farming which in a way has seen a decline of tobacco sales on the auction floors.
Another challenge the sector is dealing with is deforestation caused by growers cutting down indigenous trees for fuel wood for curing tobacco and we have to deal with the loss of viability of tobacco growers cauised by the high-cost structure of producing tobacco.
FM: How do you intend to address these challenges?
MG: Certainly, there are plans to keep the auction system running. The only way that can be achieved is to ensure farmers have access to more funds at their disposal. The government recently introduced the Land Agricultural Development Bank of Zimbabwe to provide financial support to all categories of farmers.
As TIMB we are also rolling out the Tobacco Input Credit Scheme to support farmers with inputs, working capital and technical expertise. There is need to plant more fast-growing tree species to supply fire wood for curing tobacco.
There is also need for more research and development curing systems that can burn coal more efficiently especially for small scale growers.
FM: There are concerns by some farmers of collusion and price manipulation. Do these concerns have merit and how do you plan to address that?
MG: The TIMB’s role is to regulate and promote the orderly marketing of tobacco to the satisfaction of all stakeholders involved.
With the pricing of tobacco being determined at the auction floors through a transparent system, the grower is protected from any unfair pricing by the contractor who stands guided by the previous day grade price matrix obtained from the auction floors.
FM: Farmers do not seem to be very happy with contractual arrangements. How best can they be helped to make tobacco farming more viable for them?
MG: There is need for more training and awareness programmes to equip growers to be able to interpret the contracts. Growers’ associations and unions can play a big role in this.
There is also need to review the tobacco pricing model in the country given that at the moment five percent of the auction tobacco volume determines the minimum prices on contract sales.
FM: How do you see the future of the sector in the current context?
MG: This is the second selling season under the “new normal” imposed by the Covid-19 pandemic which has also brought with it positive changes especially the acceleration of decentralised tobacco sales in line with government policy of devolution.
In the 2021 selling season the board has authorised decentralised contract sales to be conducted at the central location of Karoi, Mvurwi, Bindura, Marondera and Rusape. Globally, the demand for cigarettes is declining due to enforcement of anti-smoking regulations from lobbyists and introduction of reduced risk electronic nicotine delivery systems.
There is need to facilitate agricultural diversification into alternative crops. There is also need to invest in collaborative research and development efforts to develop new and improved tobacco varieties that can serve non-smoking uses.
FM: What are your thoughts on the current marketing season and what do you envision as the ideal future for tobacco in Zimbabwe?
MG: The 2021 marketing season has started off very well and we are hopeful we will surpass last year’s 184 million kgs of tobacco by the end of the selling season. We envision a collective sustainable production of tobacco as the future for tobacco in Zimbabwe.
This will entail efficient production of quality tobacco in conditions that limit the impact on the natural environment and that improve the socio-economic conditions of the people and communities involved in its production in line with the Sustainable Tobacco Production (STP) standard produced by the global cigarette manufacturing companies.
The current marketing system should also leverage on Information Communication Technology (ICT) to improve efficiencies. Growers should monitor sales in the comfort of their homes through ICTs.
There is a need for use of even artificial intelligence (AI) in classification of tobacco and it’s pricing. Big data analytics can also be used for important decisions by many stakeholders.
TIMB is sitting on a rich source of data which can even be used to create innovative products and services such as a futures market for tobacco leaf in Zimbabwe.