Tobacco farmers start drawing from US$60m facility 

Source: Tobacco farmers start drawing from US$60m facility | The Sunday Mail

Kudakwashe Ruzive

Hundreds of smallholder tobacco farmers will next month start drawing financial support from a US$60 million production support facility that is being finalised by Reserve Bank of Zimbabwe.

It is being set up to support tobacco production through domestic financial resources. This follows an outcry last season over the alleged ensnaring of local farmers into debt by foreign merchant contractors.

Tobacco is one of the country’s biggest foreign currency earners and is mostly grown by smallholder farmers.

Tobacco Industry Marketing Board (TIMB) public relations officer Ms Chelesani Moyo told The Sunday Mail that the facility will be ready soon.

“The disbursement of the US$60 million revolving fund facility by the Reserve Bank of Zimbabwe is still to be rolled out,” she said.

“Stakeholders in the tobacco industry are expecting the fund to be made available before the end of March 2022 to allow for amply time to prepare for the 2022/ 2023 tobacco season.

“This fund can support 50 000 hectares with the potential of producing 60 million kilogrammes of tobacco as we move towards achieving the 2025 goal of producing 300 million kilogrammes of tobacco and a US$5 billion industry by 2025.”

Zimbabwe Farmers Union executive director Mr Paul Zakariya said the fund will protect farmers from unfair practices by foreign merchants.

“Like in many other value chains, farmers need to be freed from unfair contract farming arrangements which do not guarantee grower viability,” he said.

“Besides, most, if not all of the contractors, rely on foreign-based finance to contract local growers.

“This means that the unprocessed leaf is exported and thus the potential for value addition evades us.

“Locally-funded tobacco production will make it possible for value addition to take place within our borders.”

Zimbabwe Commercial Farmers Union president Dr Shadreck Makombe described the fund as a game-changer.

“With the US$60 million facility, farmers can become self-dependent and this will also be good for the local tobacco auction floors.

“Most of our farmers will be in a position to self-finance in future,” said Dr Makombe.

About 95 percent of tobacco farmers are funded by contractors.

“These recover their money by obliging farmers to sell their crop to the merchants at a set price.

In previous seasons, contractors were accused of underfunding farmers while deducting amounts not commensurate with their investment from the farmers’ earnings from the crop.

More than 140 000 farmers are engaged in tobacco production, while close to one million people are directly dependent on the golden leaf.

Tobacco generates 30 percent of the country’s foreign currency, bringing in over US$600 million annually.