Tobacco players deny price fixing

Published: 12 hours ago

Major tobacco merchants have rejected allegations of price manipulation in the current marketing season, insisting that low prices are being driven by global supply pressures and weaker demand rather than unfair market practices.

A senior executive from an international buying firm, who declined to be named, said pricing trends reflect broader global dynamics rather than deliberate suppression.

"There is no manipulation in pricing. It's oversupply and declining demand," he said, adding that criticism from some stakeholders reflects a misunderstanding of international commodity markets.

He further argued that some expectations among farmers were unrealistic given the quality of certain deliveries. "If you take a cow's ear to an abattoir, how much do you expect?" he remarked, suggesting that lower-grade tobacco was affecting overall returns.

Another buyer said the industry is facing a global surplus, warning that increased production in some markets is overshadowing output from Zimbabwe. He also accused authorities of "firefighting" after encouraging higher production volumes despite earlier warnings of market saturation.

The remarks come amid growing concern over depressed prices, with some state media reports alleging that surrogate companies may be influencing market dynamics.

However, local firms operating in the sector defended their role, saying they support small-scale farmers and contribute significantly to rural employment.

An industry insider said these companies employ more than 2,000 seasonal workers and provide financing to farmers who often lack collateral and are excluded from large-scale merchant funding.

"Surrogates take that risk. They bring marginalised communities into the economy," the insider said, adding that profits largely remain within Zimbabwe.

He also argued that smaller buyers increase competition in the sector, helping to stabilise prices. "Without them, large merchants could easily collude to suppress prices," he said.

Globally, countries such as China, India and Brazil dominate tobacco production, contributing to a supply surplus that has weakened demand for Zimbabwe's crop.

Farmers have meanwhile expressed frustration over low prices at the start of the marketing season, with some opting to withdraw their bales in line with Tobacco Industry and Marketing Board (TIMB) regulations that allow growers to reject unsatisfactory offers.
- newsday

Tags: Tobacco,