Side-marketing has threatened the tobacco juggernaut which hauled 212.7m kilogrammes during the 2022 tobacco marketing season from a projected 190m kg in a tough year amid fears the act could hamper multi-billion-dollar industry viability.
Over the years, farmers had been pushing for the review of foreign currency retention to around 85% to increase tobacco growing viability as mounting debts and high cost of production threaten the viability of the golden leaf.
With the monetary authorities remaining at a 75% forex retention threshold and the cost of production rising by 80%, farmers have resorted to side-marketing as most farmers are failing to pay their workers who have made the delivery to the auction possible.
Zimbabwe farmers are said to be getting U$0.15 per every US$1 with the tobacco merchants getting US$0.85 per US$1 which means tobacco growing is an expense to growers.
The Tobacco Industry and Marketing Board (TIMB) told Business Times that the huge defaulting rate is a cause for concern and steps are being taken to resolve those problems.
“At the same time, large amounts of money are owed to merchants by tobacco growers. Growers are urged to pay off their debts for inputs given by merchants.
“Together with the Ministry of Lands, Agriculture, Fisheries, Water and Rural Development, the Board aims to bring order and sanity to the industry to achieve a US$5bn industry by 2025. Orderly marketing remains fundamental to the continued success of the tobacco industry,” TIMB said.
The development comes at a time when TIMB deregistered 37000 errant growers who registered to grow the golden leaf but failed to deliver it to the auction floors.
The deregistration of growers was subsequently triggered by the operationalisation of the new compliance administration framework that TIMB has put in place for orderliness and addressing challenges affecting the sector.
A source close to the developments said side-marketing is the result of poor tobacco policies that are in place.
“As long as the authorities don’t put in place proper policies that support growers, side marketing will never end. As we speak, tobacco growers are going into the season with huge debts making tobacco growing less enterprising.
“To boost tobacco farming, monetary authorities should review forex retention so that the growers can get something out of their toiling,” a source said.
Tobacco growers were pushing for an 85% forex retention threshold but the Reserve Bank of Zimbabwe remained steadfast at 75%.
TIMB advised all stakeholders that the final sale of tobacco for the 2022 tobacco marketing season was October 21 2022 with both contract and auction floors closed.
A total of 212,711,370 kilogrammes of tobacco had been sold at a value of US$650,308,534.
This is an increase when compared to 211,100,219 kilogrammes sold during the same period in 2021 at a value of US$589,573,827.
The board appreciated the efforts of all tobacco growers who have put in the work to make the season a resounding success.
“However, we are aware that some tobacco growers have not yet been paid for tobacco sold during the 2021/ 2022 marketing season and this has affected timeous preparations for the 2022/ 2023 season.
“The board is working towards resolving the issue to ensure that all outstanding payments are disbursed,” TIMB said.
The board said tobacco growers who completed sales but have not received full payment are advised to call TIMB for assistance.
Over 4000 hectares have so far been planted under irrigated crops against over 3800 hectares planted during the same period last year.
The growers’ registrations went 32% up to 106 067 during the 2022/2023 summer cropping season from 80 069 registered in the same period last year.