Tobacco farmers have rejected the 30% foreign exchange retention announced by the Reserve Bank of Zimbabwe (RBZ) governor John Mangudya yesterday in his Monetary Policy Statement.
A fortnight ago growers’ associations and the Tobacco Industry and Marketing Board met with Mangudya where he agreed to review forex retention levels.
However, after the 30% forex retention announcement, tobacco farmers convened in Harare for a crunch meeting last night, where they dismissed the retention threshold as unacceptable. The golden leaf farmers have therefore threatened to hold on to their crop while demanding fresh talks with Mangudya.
Rodney Ambrose, the Zimbabwe Tobacco Association president, said the tobacco farmers would stick to their old demand of getting above 50% forex retention level.
“Tobacco farmers have started gathering tonight (yesterday) to discuss the way forward following Governor Mangudya’s 30% forex retention level announcement. The meeting is likely to spill into Thursday (tomorrow) where we will table our submissions back to the governor,” Ambrose said last night.
“Given the discussions we had with him, we thought he would give a better figure than 30%. We would like to meet Mangudya to finalise the position, otherwise most of our members would withhold their crop until the retention level is reviewed,” Ambrose added.
If not resolved on time, the issue is likely to affect the opening of auction floors in mid-March.
The much awaited monetary policy statement did not address tobacco farmers concerns, instead it gave tobacco merchants an 80% forex retention level to continue bringing more forex.
Though it makes sense that the bringers of forex should get significant amounts of foreign currency, tobacco farmers think that they deserve better than 30%.
Wonder Chabikwa, the Zimbabwe Commercial Farmers Union president, said the RBZ should push the retention level to 40% to capacitate the farmers.
“I still maintain that though farmers need foreign currency to sustain operations, we also need the other economic sectors to utilise these earnings to continue with their operations,” Chabikwa said. “The government needs forex to import fuel, but how can we get fuel for farming under various programmes when we have taken the whole 100% forex from tobacco sales? We just need the RBZ to increase the forex retention level to 40% to avoid unnecessary disturbances ahead of the tobacco marketing season.”
Joshua Nyamukacha, a tobacco farmer at Saratoga farm in Goromonzi, said farmers should get 100% of their proceeds to improve productivity.
“I don’t know how RBZ works, but the idea of giving farmers 30% forex retention against 80% retention by tobacco merchants is just wrong as we are the ones who toil and sweat to produce the forex for the country, and we don’t get anything for it,” Nyamukacha said.
“If people hear about $800m earned from tobacco, they think we are rewarded for our work but we have always been poor and there seems to be no way up. If this happens, it will not be a surprise to see growers’ figures going down or go the cotton way,” Nyamukacha warned.
Over the past decade, tobacco has been the single largest forex earner used to address the country’s liquidity challenges due to a lump sum paid by international buyers who mobilise an average of US$900m per season.
The RBZ is hoping that the tobacco-selling season, which traditionally kicks off in mid-March, will help ease the crippling foreign currency crisis bedevilling the economy.
Buoyed by last year’s tobacco output of 252 million kilos, 168,847 farmers registered to grow the crop this season, which is a 49% jump from the 113,619 farmers last season.
TIMB is projecting a tobacco output of over 260 million kg from 252 million kg obtained last year. But the disagreement on the retention level could stand in the way of progress if the central bank does not resolve it soon.