Farai Mabeza, Senior Staff Writer 
PLAYERS in the tobacco industry are bullish about the country achieving the 200 million kg production following a good agriculture season, improved availability of inputs and increased hectarage.
However, there are still lingering questions over the foreign currency retention ratios and exchange disparities which farmers fear would worsen side marketing.
This comes as the government has mandated the Tobacco Industry Marketing Board (TIMB) to grow the sector’s annual production to 300 million kg, depending on global demand.
TIMB confirmed that the country was on course to meeting its 200 million kg target.
“With the way the 2021 season has been progressing, we are hopeful we will attain that target. As of day 31, we had received just above 106 million kgs of tobacco,” TIMB chief executive Meanwell Gudu said.
At the same time, the price of the golden leaf has also gone up, cheering the farmers.
This week a kg of tobacco was being bought at US$2,68 compared to US$2,30 last year. The price is expected to firm due to a high quality of crop, especially by small holder farmers.
“Prices paid to date are encouraging. However we expect prices to firm up much more as better qualities of tobacco are delivered.
“We estimate the national average to reach US$3,20 per kg given the good quality on offer when compared to previous seasons,” Zimbabwe Tobacco Association (ZTA) president, Rodney Ambrose, told The Financial Gazette this week.
“The marketing season has settled down well, though there were a few challenges relating to timely payment of sales proceeds by some contractors.
“The TIMB has intervened in serious cases and appropriate action has been taken,” Ambrose added.
Tobacco Farmers Union of Zimbabwe (TFUZ) president, Believe Tevera, acknowledged that production had increased, but stressed that the disparity between the official exchange rate and the black market was hitting the farmers’ earnings – with many many of them resorting to side marketing for more viable returns.
Farmers surrender 40 percent of their foreign currency earnings to the central bank at the official exchange rate of about US$1 to $85, while on the black market the greenback is going for around $125.
“Most of them are diverting the crop to the side market so that they are also left with something,” Tevera said.
This will see debts owed to contractors being carried over to the next season, according to Tevera. This comes as TIMB says 80 people have been convicted and fined for side marketing.
“The impact of side marketing is that the farmer fails to get the full value for their crop as the prices offered are very minimal.
“In the same vein, the farmer will then default in loan repayment, thereby shortchanging the contractors as well who will fail to recover the money invested to the farmers.
“In the long run, if the cycle continues, the contractor may fail to borrow more money to fund the farmers because of outstanding debts.
“This will ultimately lead to reduced funding for the farmer thereby reducing tobacco production for the country,” Gudu said.
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