‘Contract system enslaves tobacco farmers’

Tobacco contract farming is an agreement whereby tobacco buyers avail inputs to farmers with a view to buy all the tobacco the farmers produce under the contract at the same prices or higher than those offered at the auction floors.
THE Zimbabwe Tobacco Growers Association (ZiToGA) says the country’s tobacco farming contract system has failed to empower growers to be independent.

In a statement, the association noted that the system has failed to empower farmers, but rather has turned farmers into indirect workers for the contracting companies.

Tobacco contract farming is an agreement whereby tobacco buyers avail inputs to farmers with a view to buy all the tobacco the farmers produce under the contract at the same prices or higher than those offered at the auction floors.

The prevailing effects of the El Nino phenomenon across the country have thrown the contract farmers into quandary as poor harvests loom.

“The key producers (tobacco growers) have nothing to celebrate given that nothing has significantly changed compared with the previous seasons. The situation for this season was worsened by poor and unreliable rainfall patterns, which affected crop production, resulting in poor-quality tobacco and a huge decline in harvest,” the association noted.

“Considering that most farmers are under the contract system, the decline in the harvest will leave farmers with no bread on their tables but drowning in credit. The tobacco farming contract system in Zimbabwe has failed to empower tobacco growers to be independent, it has created farmers who rely on credit not viewing farming as a business and the system has turned growers into disguised workers for the contracting companies … growers are always in credit owing contracting companies huge sums of money which they cannot repay as companies charge exorbitant interest rates on their inputs straining the farmer who spends more than six months working on the crop.”

The association also revealed that the contracting companies were buying tobacco at very low prices despite that the crop will be of high-quality, hindering the farmers’ ability to continue producing without relying on the contracting companies.

“Worsening the situation, companies during the marketing season offer growers manipulatively low prices on their high-quality tobacco, not empowering the growers to continue producing,” it said.

“These companies are not worried about the welfare and financial empowerment of the key producers but mainly focus on making huge profits and self-enrichment. The system also compromises the independence of the growers as it strips off their powers to choose a market of their choice,” ZiToGA said.

Foreign currency retention for tobacco was also noted as another factor affecting the profitability of tobacco farming.

The association urged the Finance ministry to revisit the forex retention ratio taking into consideration the economic situation in the country.

“The issue of forex retention which was pegged at 75:25 will also negatively affect the profitability of the farming business to the ordinary growers as most or all production costs are in US dollars. The 25% component will be eroded by the parallel market rate which is currently trading at US$1: ZWL$20 000, almost double the official market rate,” the association noted.

“We recommend and urge the Finance ministry and the Reserve Bank of Zimbabwe to revise the forex retention ratio taking into consideration the real financial situation on the ground in our country to make sure that farming business is profitable to our farmers.”

ZiToGA urged the government to come up with monitoring mechanisms to make sure that contracting companies adhere to regulations and industry expectations to protect the growers from exploitation.

The organisation also encouraged the government to come up with interest-free loans to empower the growers and revamp the auction system to give farmers wide market choices.

“We urge and recommend government to come up with State-controlled interest-free loan input schemes specifically for tobacco growers just like what is being done in the cotton sector where the government is supporting cotton growers by giving them inputs to empower the growers and revamp the auction system leaving farmers with vast market choices,” ZiToGA added, while demanding to be included in crucial decision-making platforms and processes, especially on issues affecting tobacco growers.

It also requested the Agriculture ministry and Tobacco Industry Marketing Board to assist growers with skills development and training on tobacco production, financial management and the tobacco value-addition chain for the total empowerment of the producers and total ownership of the production process by the growers.-newsday