The ManicaPost
Samuel Kadungure Senior Reporter
TOBACCO farmers are primed for rich pickings this season as they will be paid 85 percent of their earnings in hard currency and 15 percent in local currency at the prevailing exchange rate.
The Tobacco Industry and Marketing Board (TIMB) on Tuesday made the announcement through its official Twitter handle.
Government has also introduced stringent statutory measures for growers and merchants to safeguard the integrity of the contract system so that farmers are not shortchanged while guaranteeing contractors’ returns on their investment.
The tobacco 2023 tobacco marketing season opens on March 8, 2023.
Last season, growers were paid 75 percent of their total earnings in USD and 25 percent in local currency.
In 2021, they were paid 60 percent in USD and 40 percent in local currency.
About 94 percent of tobacco is grown under contract farming, and farmers have been rooting for 100 percent retention, arguing that their foreign currency earnings are being drained while paying production costs charged in USD.
Due to the skewed arrangement, tobacco farmers are largely victims rather than beneficiaries of the contract system as contractors inflate USD prices of inputs, under-supply them with inputs required per hectare and make unilateral deductions on earnings of farmers, thereby leaving many in debt.
Tobacco Farmers’ Union Trust (TFUT) president, Mr Victor Mariranyika welcomed the new payment structure which seeks to improve the welfare of tobacco farmers.
“An increase in USD retention to 85 percent from the previous 75 percent is most welcome. It shows that Government is aware of the plight of tobacco growers and is willing to improve their welfare.
“We are also aware that Government is trying its best to keep the inflation rate as low as possible, so we welcome this season’s 10 percent increment,” said Mr Mariranyika.
He, however, said despite the increase, tobacco farmers will still accrue significant exchange losses as their production costs are wholly paid in USD.
“In terms of viability and sustainability, tobacco farmers are still losing. If you consider that all loans are paid in USD and over 90 percent of our growers are contracted, this means 100 percent USD input costs, hence the losses.
“The difference between the interbank and the re-tooling rate leaves them vulnerable to a loss not less than seven percent at every sale. This loss is silent, but felt by farmers as it impacts more on viability and sustainability.
“The business of producing tobacco will be a loss until the break-even point of 100 percent USD retention is adopted, and then we can factor in the price matrix,” said Mr Mariranyika.
Tobacco Association of Zimbabwe (TAZ) vice-chairman, Mr David Guy Mutasa also said the latest development is a positive move.
“The 85 percent is a positive move that we have been lobbying for a long time, and our hope is that with time, it gets to 100 percent so that farmers can re-tool and re-capitalise. A 100 percent retention can actually be an incentive to push more farmers to produce more and better quality tobacco,” said Mr Mutasa.
He said while the latest move is welcome, TIMB should make sure that tobacco farmers are paid on time.
“It is a positive gesture, yes, but we want all tobacco farmers to be paid on time — that is within the legally stipulated 48 hours. Tobacco merchants that cannot abide by this requirement must be blacklisted and deregistered. They should not be allowed to contract farmers without first paying them. Otherwise it becomes a free-for-all.
“TIMB must not abandon farmers at the critical juncture. Farmers are bitter that instead of protecting them, TIMB opts to sit on the fence, leaving them to be tossed around by buyers. Farmers expect a return on their investments, but if they are not paid it frustrates and pushes them out of business. Farming is a business, and it is the profit that keeps it going,” said Mr Mutasa.
In 2022, Zimbabwe exported tobacco worth US$650 million to China, a 25.3 percent increase, thereby reaching a new record.
Guided by the TIMB crop assessment in all tobacco producing regions, the country anticipates high tobacco yields.
