Illegal buyers feast on desperate farmers

July 8, 2020


A cartel of buyers are feasting on desperate tobacco farmers by offering 100% payment in United States dollar for the golden leaf as side marketing
intensifies, Business Times has learnt.

This has left tobacco contractors in a lurch who are failing to recover funds invested in inputs procurement.

The side marketing comes after the Reserve Bank of Zimbabwe (RBZ) insisted that tobacco farmers should retain half of their receipts in foreign
and the remainder in local currency at the prevailing interbank rate.

Business Times heard this week that the illegal buyers are buying the golden leaf at US$1.20 per kg, depending on the quality.

Industry regulator, Tobacco Industry and Marketing Board (TIMB) said a full scale clampdown on these dealers has seen some illegal buyers arrested and arraigned before the courts for prosecution.

“Such buyers are clearly illegal and their acts are criminal.

Farmers who participate in these illegal activities are also committing criminal offences.

The industry has managed to get some of these illegal buyers and acceding farmers arrested and successfully prosecuted,” TIMB chief executive Andrew Matibiri said.

RBZ has been in endless talks with tobacco farmers on the foreign currency retention where farmers have always been advocating retaining 100% sales payment in forex while RBZ has maintained the 50% forex payment threshold.

RBZ governor John Mangudya was quoted by this publication citing that there was room for negotiations and his door remained open for discussions with tobacco farmers.

Last year, tobacco exports tumbled 7% to US$846.7m from US$907.8m due to unfavourable tobacco selling regimes. Tobacco is the second highest forex earner after gold.

Last year, RBZ proposed 20% of offshore loans for the production of the crop and 10% for value addition while the investor gets 70%.

Prior to the land reform programme, 1 500 large-scale tobacco farmers of about 4 500 commercial farmers (predominantly white) produced
97% of tobacco in 2000, but the number of indigenous smallholder farmers had risen to 110 000, producing around 65% of the crop by 2013.

In 2019, Zimbabwe’s tobacco growers mostly smallholder farmers produced 258 million kilogrammes of tobacco which is the highest figure produced
during post-independence.

Last year’s output was a 2% improvement on the previous year’s output of 253 million kgs. On average tobacco earns the country over US$ 1bn.

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