Delinquent tobacco contractors, farmers must face the music

THE Tobacco Industry and Marketing Board (TIMB) recently took the ‘gloves off’ route and suspended a tobacco contractor, Victory Services, from buying tobacco from its contracted growers in Rusape after failing to pay the farmers on time.

TIMB took the decision following complaints by 22 farmers over the failure by the contractor to pay them after they delivered their produce in April, but had not received their money by last week.

Essentially, the company’s failure to pay the farmers after they delivered their produce to its floors was tantamount to a breach of one of its key contractual obligations, which was naturally expected to attract a penalty.

The company is said to have had challenges with its offshore funds, which were reportedly coming from Mauritius.

The desperate farmers ended up confronting the company, vowing to stay on the premises until their payments had been disbursed.

The situation only got better after the intervention of TIMB officials who directed the company to give the farmers some money so they could go to their homes, while their situation was being addressed.

Such a stand-off could not have come at a worse time than now when all unsanctioned gatherings are banned in the face of the Covid-19 pandemic that has ravaged economies and caused millions of deaths.

TIMB went further and ordered the contractor to pay the farmers without delay, lest the regulator would be left without a choice but to withdraw its licence.

It, however, boggles the mind to imagine that a contractor could already be facing challenges in paying farmers when the season is just beginning, especially when all stakeholders, including the contractors, had been preparing for the marketing season from as far back as last year.

In fact, contractors are expected to provide proof of commitment or intent to the TIMB by June 30 of every year and failure to do so will lead to their suspension from contracting growers for the forthcoming season.

Logically, contractors should also prove beyond reasonable doubt that they have the funds and the capacity to meet their end of the bargain and get the season going smoothly.

It is crucial to note that there was also a similar situation in Marondera and Karoi, with farmers going for some time without receiving their payments, which gives a hint that contractors are coming into the game inadequately prepared or are just in a collusion of some sort to rough up farmers a bit.

TIMB needs to find ways of tightening the screws a bit more and plug such loopholes to avoid a repeat of such situations in the future.

TIMB must not wait for things to come to head like what happened in Rusape, but deploy its personnel to monitor the goings-on at all floors, interacting with farmers to find out how they would be faring. This will enable the regulator to nip potentially disastrous situations in the bud before they explode and disrupt the flow of business.

It is encouraging to note that TIMB has since set in motion the process to bring order in the industry when it set regulations requiring all contractors to submit a complete schedule of inputs and their costs by June 30, failure of which would lead to the contractor being suspended for that season.

Contractors are further expected to submit copies of legally binding contracts by September 30 of every year and proof of inputs distributed either paid up invoices or payment plans with suppliers.

All contracted growers without accompanying signed contracts will be de-contracted.

In addition, TIMB requires contractors to submit a list of all contracted growers, including their contact details, by November 30.

And with such groundwork, it becomes difficult to understand how contractors would get to the marketing season without having made arrangements for the shipment of funds from their financiers to their accounts so that they can pay farmers timeously.

TIMB has since indicated that the suspended Rusape contractor will not be allowed to buy tobacco from farmers until it proves to them and the Reserve Bank of Zimbabwe (RBZ) that it has mobilised offshore funds for the purpose.

Additionally, TIMB has promised to cancel the contractor’s licence and allow the affected farmers to sell the produce to a contractor of their choice should the suspended contractor fail to meet the regulator’s requirements.

The seriousness and thoroughness with which TIMB moved to address the Rusape debacle should be replicated elsewhere so that contractors realise that it is crucial to level the playing field to allow farmers to break even after producing their crops under contract arrangements.

Similarly, farmers should also be penalised if they side market their produce instead of delivering to their contractors especially given that the bulk of the country’s tobacco is now being produced under contract arrangements.

Suffice it to say that in the Rusape case, the contractor might not have only failed to pay the farmers in time but might not have moved in to collect what farmers owe it transparently with some of the growers complaining of double deductions in which costs for fertilisers and other inputs were reportedly increased to $1 000 per hectare and $500 per half hectare, when they had been supplied with inputs whose cost was way below that.

This too is one contentious issue that many contractors have been accused of at one point or the other. The Zimbabwe Farmers Union (ZFU) last Friday confirmed dealing with many cases of that nature, with the executive director Mr Paul Zakariya saying they were handling many complaints in which farmers were receiving payment vouchers with deductions for services they would not have signed up for.

It is time TIMB up their game in enforcing laws that protect all players involved in contract arrangements to ensure there is order in the tobacco sector to attract more investors in the future.

No investor will be comfortable investing in an industry littered with fraudulent activities.

Cases of contractors underfunding farmers and later overcharging on inputs have of late been increasing with TIMB’s recently announced regulations expected to push all parties in a contract arrangement to play their cards transparently.

Contractors are now required to support a minimum of US$500 per half a hectare and US$4 000 per hectare for small-scale and large-scale growers respectively with minimum packages comprising seed, fertilisers, chemicals, tillage, harvesting, curing and marketing resources.-herald.co.zw