MTHANDAZO NYONI TOBACCO farmers this week demanded to receive 100% of their proceeds in United States dollars, saying input costs were rocketing due to high inflation and exchange rate volatilities.
They spoke as the Tobacco Industry and Marketing Board (Timb) said auction floors will open on March 30, a day before contract sales kick off on March 31.
The bulk of the tobacco will be sold through the contract system after 118 465 farmers produced tobacco under funding from the private sector.
About 4 530 were self-financed growers, according to Timb statistics.
These will sell their produce through the tobacco auction floors.
The Reserve Bank of Zimbabwe said in February that tobacco farmers would be paid 75% of their sales proceeds in foreign currency.
The remaining 25% would be paid in the local currency, converted at the prevailing auction exchange rate on the day of sale.
However, farmers told businessdigest that the 75% was inadequate.
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“Expectations are that we retain 100% United States dollars (USD). Input costs were very high. Everything was paid in USD including labour,” Commercial Farmers Union of Zimbabwe president Shadreck Makombe said.
“Contractors need to improve funding per hectare. The dry spell has affected most late crops and most farmers will have challenges in repaying loans.”
Top quality tobacco grades for premium brands are likely to remain unchanged at between US$3,5 per kilogramme and US$5,40 per kg, according to the Timb. The Zimbabwe Tobacco Association (ZTA) said, in its latest newsletter, the forex retention level of 75% “will sadly negate all the anticipated positives for the season hence diversification and identification of alternate crops to tobacco remains key for all growers”.
“Demand for Zimbabwe’s flavour tobacco remains very high. However, it is poor, inconsistent monetary policies that are hurting the local industry and impeding its growth,” ZTA said.
Tobacco Association Of Zimbabwe president George Seremwe said farmers were expecting the Timb to iron out problems that affected farmers last season.
“We have had a situation last year where contractors failed to pay farmers. To date, some of the farmers have not been paid. We do not expect that situation to happen. We don’t expect the same contractors to be buying tobacco this season until they fulfil last year’s obligations,” he said.
“We expect that the grading and pricing system to be uniform. We cannot have one contractor paying one grade higher than the other. We want that to be addressed as well.”
Seremwe said following a bad rainfall season, the quality and value of tobacco had been compromised.
He said buyers should consider this drawback when buying the tobacco.
Seremwe said the Timb must remove cartels within the tobacco industry.
“We all know that this sector is regarded as one of the heavily infected with cartels. This should end. We want sanity in the tobacco industry and I urge Timb to make sure that all these things negating the industry are eliminated,” he said.
A total of 210 million kgs of the golden leaf were delivered at the auction floors in the last marketing season, generating close to US$1 billion.