Tinashe Makichi /Livingstone Marufu
A veil of opaque operations is clouding operations at the country’s tobacco auction floors after side marketing heightened in the country’s multi-million dollar industry following the proliferation of a group of unregistered buyers who are now targeting desperate golden leaf farmers.
Following the announcement made by the Reserve Bank of Zimbabwe on the foreign currency thresholds for the cash crop, some farmers are now withholding their deliveries from the auction floors citing underhand dealings by some merchants and low prices.
Information gathered by Business Times shows that this has created opportunities for some buyers who are buying the crop from farmers in United States dollars before reaping significant yields after reselling the product. It is also understood that this comes after there has been a deadlock between farmers and official buyers on the price of the golden leaf.
Tobacco is the country’s second largest foreign currency earner after gold.
Official figures show that for the 116,3 million kilogrammes so far sold on Day 43 on Friday last week, farmers grossed US$210,9 million at an average price of US$1,81/kg against US$410,7 million earned during the same period last year after 142,2 million kg were sold at an average of US$2,87/kg.
Consequently, farmers are opting to sell their crop to side-marketers where there are no expenses compared to floors where there are a lot more expenses and taxes.
Currently, the official tobacco market is offering US$1,81/kg but the farmer is offered 50% of that amount in forex but in the Nostro account and the rest in RTGS dollars while unscrupulous buyers are offering US$0,85 in hard currency, hence farmers are opting for the cash payment.
Business Times has gathered that buyers engaged in side-marketing have since created an alternative sales floor outside Tobacco Sales Floor—one of the country’s floors– where most farmers risk losing their golden leaf as the price debate rages on.
This has resulted in some tobacco farmers selling their green leaf in exchange for the elusive greenback.
Over the years auction floors and contractors have been losing big amounts of tobacco to side-marketing and the situation could even be worse this season when the prices are at all-time low.
However, a lot of questions have been raised on who is supplying those buyers with foreign currency when the country is in forex crisis and in the event that they buy the tobacco, where are they selling the tobacco to and at what price.
A farmer interviewed by this publication, said they choosing to engage tobacco dealers because of the price being offered by official buyers and also the fact that the dealers were offering hard currency.
“It is sad that the floors have been captured by dealers and because farmers are desperate for hard currency, they end up selling their tobacco outside TSF.
“What the dealers are offering is not much but at least they are giving us foreign currency compared to the RGS$. We don’t have an option anymore and we are forced by desperation to engage these dealers. The sales are usually done in the full glare of law enforcement agents,” said the farmer who requested anonymity for fear of victimisation.
Disappearance of tobacco bales
It has also been established that there has been mysterious disappearance of thousands of tobacco bales at TSF.
Farmers who spoke to this publication confirmed that, bales have been disappearing at TSF citing that some staff member as being behind this act.
“Personnel at TSF know exactly what’s going on with our bales and are playing dirty tricks.
When contact for comment, TSF managing director Mary Machingaidze denied accusations but said the company would carry out some investigations into the matter.
TIMB inefficiency exposed
Earlier this year Tobacco Industry and Marketing Board (TIMB) vowed to bust all illegal activities in the sector. TIMB chief executive Andrew Matibiri said the regulating board is still devising new methods to ensure that these acts would come to an end.
“We have investigated the raised issue and found them to be true but when we summoned the accused people to courts, most cases were dismissed on the basis of lack of concrete evidence.
“We are, however, going to carry out further investigations and see how we can independently deal with dodgy dealers.
“Suspension and expulsion could be an effective way of dealing with them,” said Matibiri.
Matibiri said TIMB has also investigated a number of cases that are affecting the tobacco industry including the Premier Tobacco Auction Floors where the auction floor personnel charged farmers for tobacco offloading at the floors.
TIMB is still investigating with judgment expected in the few coming weeks.
With subdued tobacco prices having characterised this selling season, the country is likely to get just US$400 million from the targeted US$1 billion.
