Банкеръ Weekly

Briefs

TOBACCO PURCHASE PRICES TO GO UP

Tobacco purchase prices caused sparkles between the Ministry of Economy and the Ministry of Agriculture and Forestry. A week ago the Deputy Premier and Minister of Economy Nikolai Vassilev stated emphatically that the prices of tobacco and cigarette products won't be hiked before drafting a new strategy for the sale of Bulgartabac Holding and finding a strategic investor for the tobacco monopoly. On the other hand, the Minister of Agriculture and Forestry Mehmed Dikme had several meetings with tobacco-growers, promising them an increase of tobacco purchase prices and allocation of additional money from the Agriculture Ministry 's funds for payment on this year's crop.
Producers' major demand is that the purchase prices of unprocessed tobacco should be bound to production costs. The farmers demanded from Minister Dikme higher payment and a target cash subsidy for the purchase of this year's tobacco crop. The Association of Tobacco Growers in Bulgaria proposed to the Agriculture Ministry to work out a special programme for the branch's revival. According to the Association, the minimum purchase prices, set by the State, cover only 60% of the real productions costs for each kilogramme of the tobacco yield. It's particularly difficult for tobacco-growers to find money for purchase of seedlings, so that they could grow the crop throughout the year, people in the know claim.
Agriculture Minister Dikme promised to propose next week a new mechanism for determining the quality of tobacco, regulated by Ministerial Decree No 178, which would probably enter into effect in the beginning of 2001, although it was passed by former premier Kostov's cabinet on July 4, 2001. This, according to Minister Dikme, is done in order to avoid chaos during the purchase campaign. As the contracts for purchase of tobacco were signed back in the beginning of the year, each change in the prices would force producers and traders to sign annexes to them, which would result in a mess, the Agriculture Minister explained.
This year's tobacco yield is preestimated at some 40,000-45,000 tons by the Agriculture Ministry. If sowing of varieties, that are demanded on the West Europen markets begins, Bulgarian output might reach 70,000 tons in 2002.
Tobacco of the Virginia brand, which is the most popular in Bulgaria, is currently paid at BGL1.20/kg, while tobacco-growers insist on getting BGL1.50/kg. The difference of BGL0.30/kg will be probably covered by proceeds from the sale of 3,000 tons, owned by the Tobacco Fund.

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