Tobacco farmers warn of slump in output

LIVINGSTONE MARUFU

 

Government’s failure to address funding and retention issues could affect tobacco production at a time the economy is looking up to the golden leaf to provide more foreign currency receipts, the Zimbabwe Tobacco Association (ZTA) warned this week.

Tobacco is the economy’s fourth largest foreign currency earner after platinum, diaspora remittances and gold.

Government has promised to avail US$60m  to tobacco farmers this year but funds have not been released forcing the farmers to turn to the predatory  merchants and contractors who lend them money for inputs but charge punitive interests on the principal amount.

They deduct their dues at the auction floors, leaving many farmers taking home very little or negative balances as some debts are carried forward.

ZTA chief executive officer, Rodney Ambrose,  told Business Times: “Addressing funding and the retention and exchange rate is paramount to ensuring viability and sustainability of the tobacco industry, not just that of growers. If not adequately addressed, production will decline.”

He added: “Overall plantings of this crop may  also be down due to seasonal labour constraints. We don’t anticipate a significant increase in hectares or growers this season and as such the only variable will be yields.”

Ambrose said farmers continue to face serious viability challenges as 60/40 forex retention remained in place.

“For those who sold early – midseason there was realisation of some value of sales proceeds. Growers who sold in the last half of the season experienced a rapid loss of value of their sales proceeds as US$ components of input costs increased and the retooling rate and official rate variance widened.

“Looking forward, a minimum US$ retention of 80% is required for the upcoming season,” Ambrose told Business Times.

He said  farmers were awaiting further guidance on how  they can access the promised US$60m facility.

They are concerned government was taking time to release the funds at a time thousands of growers have already fully committed themselves to contractors.

Tobacco Industry and Marketing Board CEO Meanwell Gudu said the Lands, Agriculture, Fisheries, Water and Rural Resettlement ministry was spearheading the plan.

“The issue is now before the Lands, Agriculture, Fisheries, Water and Rural Resettlement ministry and the update will come from there but we aim to ensure strategic interventions are prioritised in the tobacco value chain transformation plan to ensure localisation of tobacco funding.

“This is to ensure retention of the foreign currency that accrues to the country through tobacco exports,” Gudu said.

Farmers’ output, they claim, have not been creating sufficient returns to repay the loans in full and at least take home something significant.

This implies that the pressures on tobacco farmers are significant and the situation has left most tobacco farmers living on the margins.

Farmers claim that the debt levels are now unsustainable with some having ballooned to critical levels.

The debts some farmers have been building up in the past few years.

About 90% of growers are now 100% US$ borrowed from their contractor, implying no new US$ comes into the country until US$ loans are repaid.

With over 95% of the country’s tobacco production being contract farming, the bulk of the money will go back towards the payment of their obligations.

 

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