TIMB nullifies 20 000 tobacco contracts
The Tobacco Industries and Marketing Board (TIMB) has nullified 20 000 contracts entered between tobacco farmers and contractors on the basis that the deals were exploitative as they short-changed growers in terms of quantity and value of farming inputs.
There are about 145 000 farmers contracted to grow tobacco by many firms this season and nearly 14 percent of them did not receive enough inputs from the merchants.
Realising how this was going to dent efforts to empower farmers and realise meaningful returns in foreign currency for the country, the TIMB ordered that the 20 000 affected farmers be given an option to sell their crop to the auction system or to merchants of their choice.
TIMB chief executive, Dr Andrew Matibiri, confirmed the development.
He said the TIMB carried out a validation exercise to ascertain the value of inputs and quantities given to farmers this season and was shocked by the level in which the farmers were being short-changed.
The tobacco regulatory body found that several tobacco merchants over-declared the value of inputs and the number of farmers supported.
Under the new contract regulations, tobacco contractors are required to provide inputs worth US$1 000 per hectare for smallholder farmers and US$4 000 for large-scale growers. However, some investigations by the Sunday Mail Business, revealed that small holder farmers were receiving some inputs in the region of US$500 per hectare, a move that affected the quality of the yields and farmers’ income.
The sector earns the country close to US 1 billion annually in foreign currency and the TIMB feels the rewards would be higher if the contractors played the game according to the book.
“We have completed the validation exercise and we established that 14 percent of the growers were not given enough inputs,” said Dr Matibiri. “The growers will now have option to sell to contractors of their choice or to the auction. The affected contractors will recover their little monies through a stop order system.”
However, worries remain alive that the collapse of the auction system would subject farmers to price manipulation and more exploitive contracts by the cash rich merchants.
Zimbabwe, which ranks among the world’s largest producers of the “golden leaf”, has a dual marketing system where the produce is sold through both auction and contract.
Over the years, the auction system, which determines minimum grade prices for contract sales, has been declining, with 96 percent of the crop now being sold through contract.
This year, only 4 percent of farmers self-funded, while the majority were financed by contractors. While the de-contracted farmers have an option to sell their crop through the auction system, it is very unlikely due to Covid-19 induced travel restrictions.
Zimbabwe has only three auction floors in Harare, Boka Auction Floors, Premier Tobacco Floors and Tobacco Sales Floor.
“Most contractors have decentralised and it will be easier for farmers to sell their tobacco to nearest contract floors,” said a commodity analyst with a local research company.
Tobacco farmers planted nearly 7 000 fewer hectares this season than last year, but the drop would be offset by projected higher output expected due to good rains received in all tobacco farming regions.
Tobacco is the country’s largest single foreign currency earners after gold, with exports raking in US$736 million in 2020 after more value-added products in the form of cut rag and cut stems were exported to mainly China and South Africa compared to a year earlier.–ebusinessweekly.co.zw
