Chiwenga wades into tobacco chaos

…as Zim loses US$14bn in potential revenue


Vice President Constantino Chiwenga has stepped in to restore sanity in the chaotic tobacco industry and directed the Treasury to avail funding amid concerns of losing a huge chunk of value to tobacco merchants who return the foreign earnings to offshore lenders.

Speaking at the opening of the 2023 tobacco marketing season, Vice President Constantino Chiwenga told the delegates that the country and farmers should retain value from tobacco growing.

“It is disheartening that we export 98% of our tobacco in a semi-processed form which means we are exporting jobs and value,” Chiwenga said while also urging treasury to avail seed financing for the 2023/2024 season.

He said the country and farmers must benefit from the tobacco instead of exporting a huge chunk in raw form.

“We can achieve this by injecting seed funds and attending to enablers thereof. Then the next thing we want to do is to ensure that there is more value addition and beneficiation. We export 98% of our tobacco in raw form, therefore, exporting jobs and value,” he said.

Chiwenga said Zimbabwe is only getting US$1bn in export receipts from its 200m kilogrammes of tobacco yet the same tobacco fetches US$15bn on the international market after the value chain.

“l implore all value chain actors to combine efforts to spearhead the transformation plan through TIMB. Increase productivity to at least 2000 kg per hectare through vertical growth and loss reduction then improve the leaf quality too.

“Value add to over 30% from the current 2% of tobacco produced. We want more tobacco products produced in Zimbabwe, taking over the international market brands.

The Tobacco Industry and Marketing Board (TIMB) has since licensed Cavendish Lloyd to produce and process Shisha tobacco. Cutrag is in the process of constructing a processing plant.

Chiwenga said the government was aware of the concerns raised about growers facing viability challenges as a result of the increased cost of production and the Reserve Bank of Zimbabwe has been instructed to consequently increase the retention threshold to 85% from 75%.

This means all tobacco growers who will sell their tobacco at auction or contract floors this season will get 85% of their money in United States dollars and 15% in local currency.

Chiwenga said increased US$ retention will go a long way in cushioning the tobacco grower, increasing the viability, and helping improve livelihoods.

Government has been dithering on the US$60m tobacco local funding kitty leaving farmers at the mercy of merchants.

It is estimated that Zimbabwe is losing 85% of the total value to merchants who deduct their dues on the auction floors, leaving the country with no value from the golden leaf.

“The government has come up with the Tobacco Value Chain Transformation Plan which focuses on localising tobacco funding. As you are aware, the Cabinet has already approved a US$60m seed fund for the localisation of tobacco funding.”

TIMB chairman Patrick Devenish said the tobacco regulator has moved to address farmers’ challenges to have a smooth selling season.

“To start with, the industry together with the Reserve Bank of Zimbabwe have jointly put in place improved payment measures to ensure that tobacco growers get full value for their crop and are simultaneously paid within the shortest possible time. To enforce this, we stand guided by the Contractors’ Compliance Administration Framework,” Devenish said.

“All tobacco merchants and contractors have signed it and have been made aware that they are supposed to pay growers within 48 hours of sales completion.”

He said failure to adhere to stipulated payment timeframes attracts stiff penalties, suspension, or cancellation of operating licenses.

The tough measures come as some tobacco growers have not been paid since last season with Devenish saying plans are in place to ensure growers are paid in full.

Some growers have outstanding debts to contracting companies as well as TIMB for the Tobacco Inputs Credit Scheme (TICS) from the previous seasons.

TIMB intends to ensure those loans are paid back as well so that all players in the value chain operate profitably.

TIMB has licensed two auction floors: Tobacco Sales Floor and Premier Tobacco Auction Floor.

It has also licensed 25 “A” Class buyers and 32 contracting companies and sales will be conducted in Harare as well as five decentralised centres which are Karoi, Mvurwi, Bindura, Marondera, and Rusape.

The first bale weighed 113 kg and was sold for US$4.35 per kg.



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