Tobacco farmers expect more forex

Source: Tobacco farmers expect more forex | The Herald

Tobacco farmers expect more forexDr Matibiri

Elita Chikwati

Agriculture Reporter

Preparations for the 2021 tobacco marketing season are at an advanced stage, with tobacco growers expecting improved earnings.

Farmers want an increase in foreign currency retention from 50 percent to between 70 percent and 80 percent.

In the 2020 tobacco marketing season, farmers were paid half of their money as free funds deposited into a US dollar account, while the other half was paid into local currency bank accounts at the official exchange rate.

That only worked well after the introduction of the forex auction system, which finally put a market-related exchange rate in place giving farmers full value.

Farmers unions have since written to the Tobacco Industry and Marketing Board (TIMB) making proposals for the payment modalities.

The opening date of the selling season will be deliberated once the payment modalities are concluded, together with an assessment of the board on adherence to legislation on minimum support packages provided by contractors to growers.

In a letter to the TIMB, farmer representatives said they had also engaged the Reserve Bank of Zimbabwe asking that payment modalities continue to be managed by tobacco contractors and the TIMB as happened last year.

“The tobacco grower representatives engaged the Reserve Bank of Zimbabwe through a letter dated 22 January 2021 and the following demands were made; US dollar retention levels to be increased to 80:20, no limit on liquidation periods, access to USD cash at a minimum of US$0,50c per kilogramme sold and access to local Z$ cash as per RBZ regulations,” reads the letter in part.

Farmers also said it was critical for the TIMB to finalise the assessment on the adherence to minimum support packages provided by the contractors to growers as they feel that not all contractors are compliant.

“It is also important to audit the value of the input packages provided to growers,” said the farmers.

TIMB chief executive Dr Andrew Matibiri on Thursday said they had received indications from farmers that they want to retain about 70 percent foreign currency.

Dr Matibiri said the opening dates for the marketing season had not been finalised as the board was still waiting for submissions from stakeholders.

“TIMB has submitted proposals on Covid-19 protocols to the Lands, Agriculture, Fisheries, Water and Rural Resettlement Ministry for consideration. We are still to finalise on the payment modalities and we have to consult on the submissions. Farmers are demanding 70 percent forex retention and we will wait for feedback from the RBZ,” he said.

Zimbabwe Farmers Union director, Mr Paul Zakariya, said farmers were expecting an improvement with respect to pricing and payment modalities.

“Hope is in the air that audit by TIMB on level of support will bring positive results as it relates to monetary value to the farmers.

“Farmers have also engaged RBZ to improve payment modalities. Last season, the bulk of the crop was bought at US$1 to $25. A lot of value was lost due to exchange rate distortions. Farmers have also requested for a review on foreign currency retention, from the current level to 80:20 ratio.

“This is also in line with the rising costs of inputs, spares and labour. With the Covid-19 restrictions and lessons from last season, farmers are expecting a smooth marketing season.

“Hopes are high that sales will be decentralised and this to include the decentralisation of banking services.

“With the good rains, the crop size is huge and farmers are expecting a better season in terms of income,” he said.

The 2020 tobacco marketing season opened late in April and coincided with the Covid-19 lockdown.

The number of people at the floors was limited and not all farmers were allowed to attend sales. Some merchants decentralised their auction floors or made other arrangements to have local deliveries.

This helped in reducing the number of people at the floors in Harare.