Tobacco prices remain subdued as merchants grumble

Source: Tobacco prices remain subdued as merchants grumble – NewsDay Zimbabwe April 17, 2019


TOBACCO prices have remained subdued as merchants are not happy with the arrangement the Reserve Bank of Zimbabwe (RBZ) has put in place regarding the recovery of loans advanced to farmers, an official has said.

The RBZ directed tobacco farmers to pay 70% of the loan amounts they sourced from merchants in United States dollars, while the balance would be settled in RTGS dollars.

The move came after tobacco farmers, through various member associations, had complained to the central bank and the Agriculture ministry that merchants were demanding that farmers repay their RTGS$ loans in hard currency.

Tobacco Industry Marketing Board chair Monica Chinamasa yesterday told parliamentarians during a tour of the auction floors that the issue of prices was stemming from unresolved matters with merchants.

“Before the 1:1 rate was scrapped, there was no problem. It worked out. The merchants have borrowed offshore to fund inputs here, but this time around, they are not allowed to take all the money in US$. You see you go into a business, but when that business environment changes, you sit down and say ‘am I making money’?” Chinamasa said.

“The (Finance) minister (Mthuli Ncube) has to sit down with the merchants and agree what is good or fair to both. As it is, they are not sure and they are not keen to buy. If I am in business and I am not happy, do you think I will give you money? No. The merchants wrote to the minister in October and the minister has done nothing until now.”

Farmers who spoke to the NewsDay were crying foul over a litany of problems, chief among them, the low prices being offered at the auction floors, amid revelations that tobacco merchants were not keen to buy due to disgruntlement over the recovery of loans.

“I am pained that all my six bales were bought at less than $1,80/kg. I wonder what method they are using to grade, because my tobacco is not bad quality,” Magarret Jeffreys, a farmer from Chiendambuya, said.

“I opened my nostro account with Agribank, but I don’t know how I am going to get the US$. I don’t know how we will get forex. They are not explaining to us how I will get forex,” Sunday Chimhore, another farmer, said.

Sarah Dube, a tobacco farmer of 15 years, said she sold seven bales of tobacco on April 1 at one of the auction floors, but has not received payment yet.

“They said I will get money after seven days, since there was something wrong with my sales sheet. They also said something was wrong with the system, but I don’t understand why they opened the floors without enough preparation. I went back to Rusape and returned after seven days, but they told me the money would reflect today, (yesterday),” Dube said.

Another tobacco farmer said the process of filling forms to apply for forex was tedious and lacked transparency.

“They said you must show proof that you want to buy something in forex to the RBZ.

“I don’t trust the whole process. It is better to just have my money in RTGS. I don’t even know whether I will get that money,” he said.

Acting chairman of the Parliamentary Portfolio Committee on Agriculture Tafanana Zhou said farmers raised genuine concerns, adding the committee would deliberate on the concerns before making recommendations in Parliament.