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Diaspora Matters

Relocating Musina to Harare

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Prices have once more gone up in local currency. Many private schools are fighting with parents over dollarisation. Some schools which used to get between US$1500 and $4.000 per child a few years back now want the USD equivalent of those previous amounts!

In an inflationary environment everything keeps going in one direction…UP!

With no significant forex inflows, we can expect no change in the pricing systems. Everyone is charging in forex or forex equivalent.

So its a battle the government is not going to win in the short to medium term….the business sector chasing the rate and the rate running away. The government on the other side trying its best but without massive forex injection, its a tough battle.

Stop Gap Measure
Most of the goods you are finding in shops are imports anyway…even the oranges going for RTGS 75 per pack are all imports, we have few orange farms around. When we were in Malawi, we witnessed cross borders buying agricultural produce for sale at Mbare Musika.

Beitbridge receives more than 40 buses everyday and they leave loaded with imported goods. Musina has become one big warehouse for Zim goods….20 years ago the town resembled a growth point but now its a fully grown town and if Zim keeps sourcing its goods from there-it will soon become a major city.

So we have discussed this solution before…and we come back again. Some of the prices we have especially in Harare are unreasonable…yes we are dollarising but the profit margins even go as far as 100%…it makes no sense at all.

So our solution is transfer Musina into Harare, Bulawayo, Mutare or Gweru..

Create special zones whereby foreigners set up their businesses-they sell in forex at low prices and on exit, customers pay duty like they do at borders.

In SA prices are more or less uniform even when goods are transported by road from Joburg to Capetown. The Game Store in Zambia has prices similar to SA despite the goods passing through Zim.

The distance between Joburg and Cape town is similar to Joburg to Harare.

Local industry protection
We should ramp up local production, protect our own industries for job creation and economic development…however they too are not immune to forex shortages and the economic environment, their cost of production is going up everyday and making their products noncompetitive.

So in the short run, bring the SA manufacturers and they will take the offer with both hands…more revenue growth. They are doing it anyway through Musina and Joburg.

They will sell products at a fraction of what we are witnessing around town. They will enjoy economies of scale through importing in bulk( without paying duty)…remember the duty is paid by customers when they exit the established EPZ premises.

Who will cry the loudest?
Cross border traders,
Local manufacturers and retailers,
Buses that ferry cross borders,

Who will smile the widest?
Consumers enjoying a wide variety of goods at low prices,
ZIMRA as there will be less smuggling,
Employees employed at such facilities,
SA companies seeing opportunities,

This can be a great entry route of foreign investment as innovative local companies can partner with South Africans. More foreign companies can be excited by the opportunities and set up here. As long as they can bring products, sell in forex and able to remit it….they will flock to the new opportunities.

Of course there will be an uproar from the local business community who stand to lose out as customers will even be able to buy and resell at cheaper prices than most local shops. They will have to innovate and adapt or die….

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Diaspora Matters

SHOULD TOBACCO FARMERS BOYCOTT SELLING TOBACCO?

fodya

The Tobacco selling season started on the 20th of March with a lot of high expectations. However, this was not to be as there has been a lot of grumbling and gnashing of teeth when it comes to the pricing. The auction floors namely TSF,Boka and Premier tobacco are usually a hive of activity this time of the year but this year it’s a different story. The average selling price has ranged between 1.20 – 1.70 Dollars, perhaps I need to specify here that the prices are in United States Dollars and not ZWL at the time of selling. The other day whilst I was at TSF auction floor I got to talk to a farmer Mr Kainama from Karoi who was fuming with anger as 5 of his 7 bales had been rejected. The ones that had been bought had been bought at 0.20 and 1.98 USD each. After listening to the farmer narrating his story, I was then prompted to write this article with the hope that other farmers could benefit as well.

Let me first start by mentioning that opinions expressed here are my individual opinions and should not be misconstrued as otherwise. After having a lengthy chat with Mr Kainama, I then found out that the tobacco he had brought was from last year. The farmer had decided to hold on to his tobacco at the end o the 2018 selling season as he felt that the prices were too low. It is an open secret that most merchants towards the end of the season would have met their required kilograms of tobacco hence demand will be low, so the prices take a nose dive too. Anyway, back to our farmer. Mr Kainama went on to explain that he put his tobacco into storage until this current selling season. He also realised that some insects had invaded his tobacco whilst in storage and he had tried to sun dry as pick the insects. It is very important to know that the guys buying tobacco at the auction floors are adequately trained and have a very good eye for such irregularities. This was an automatic reason for the rejection of this farmers bales.

Most farmers are encouraging each other to hold back their tobacco from the auction floors with the hope that the current prices will change. Naturally as the season progresses the prices are set to improve slightly as more buyers come forth. This has been the trend in previous seasons, but we don’t know how this season is going to be like.

Most farmers especially communal farmers do not consider the risks associated with long term storage of tobacco. Firstly, it is important to note that long term storage of tobacco requires a permit from TIMB. Secondly and most importantly before you consider storing your tobacco for extended periods which is not advised you need to invest in pest control. The tobacco beetle and tobacco moth the most devasting pests in tobacco storage can destroy your tobacco significantly. It is important to also note that once these pests are found in your tobacco at the auction floor TIMB is notified immediately. TIMB may go to the extent of blocking your growers’ number effectively banning the farmer from selling. The farmer will then be required to get a certifying letter from a registered fumigating agent that indeed they have fumigated which is costly. Mould is another huge risk, it will occur when tobacco is stored for extended periods in conditions with 15 % humidity and above.

It is quite important for the farmer to take into consideration all these points and take the necessary precautions. However, for 90% of the farmers who can not afford proper storage facilities which have been fumigated, which also have pest traps etc it may be better to send your tobacco to auction. I know some are probably reading this and are saying “Hatidi kunohodesa fodya”, loosely translated to we don’t want to go and give away our tobacco. However, It is important to look at this issue from a business perspective, in my opinion you stand to loose more by keeping your tobacco in storage especially if you know that you don’t have proper storage facilities.as the loses may be 100%. Consider this before you decide to hold back your tobacco think of the possible consequences. Lastly farmers are urged to avoid doing business nemaGweja, (middleman), good tobacco sells yega. Food for thought.

Emmanuel D.N Dube  (ZIBN Agriculture correspondent)

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