Tobacco 2023/24 season preparations at advanced stage

The Tobacco Industry and Marketing Board (TIMB) says preparations for the 2023 /24 season are progressing well with six new contractors having been licenced.

About 90 percent of tobacco produced in Zimbabwe is funded by large merchants who also engage smaller contractors – commonly known as surrogates – to contract farmers on their behalf.

With the licensing of new contractors, the number of merchants has risen to 45.

“For the 2022/23 season, we had 39 contractors and we renew their licenses annually. However, for the 2023/24 season, we have already licensed six new contractors,” TIMB spokesperson said.

According to industry players, the recent move by the Reserve Bank of Zimbabwe (RBZ) to scrap the requirement that compelled merchants to source offshore financing would see more indigenous contractors supporting farmers.

Last month, the central bank scrapped the requirement that compelled merchants to source offshore financing to support the production and buying of green leaf from contracted farmers. About 95 percent of tobacco production is financed using offshore loans under contract farming.

The development is expected to boost funding of tobacco using local money and is in line with the Tobacco Value Chain Transformation Plan, which seeks to raise localization of tobacco funding to 70 percent by 2025 to keep more value in the country.

The TIMB, in partnership with local banks, is also working on a scheme to provide funding to farmers in line with the Government’s thrust to increase local funding of the crop.

Some local banks have been reluctant to extend credit to farmers due to a lack of security but the proposed model seeks to enable growers to access the loans even without collateral.

A total of 98 217 hectares of seedbed area have been sown, compared to 84 985 hectares sown during the same period last year.

“The 1st of September 2023 marked the earliest date for planting of irrigated tobacco, and currently, growers are discing and preparing ridges for the transplanting of hardened seedlings,” said TIMB.

As part of the preparation, the TIMB has put in place key strategies to tackle the issues of mis-invoicing and transfer pricing that have been negatively impacting the tobacco industry.

These include the compliance administrative framework that was adopted in 2021 and the setting up of a new compliance administration department.

TIMB said the framework will ensure all contracting companies fund farmers with inputs that are within the approved cost ranges as guided by the prevailing input costs set by the Ministry of Industry and Commerce.

“Before contracting commences, all interested companies submit their commitment documents, which show their capacity to contract, which include proof of funding, the unit cost of inputs to be given to farmers, and the interest component to be charged.

“Such commitment documents are then vetted by our Compliance and Licensing Committee, which will inspect all of them, and if any are found to be in violation of the board’s compliance standards, they will be rejected and no approval for contracting farmers will be given.

“Only those who have passed the board’s vetting process will be approved, and with such a process in place, the board has no room that allows for growers to be shortchanged through transfer pricing and misinvoicing, among other issues,” the board said.

Meanwhile, TIMB said 51 695 growers have registered for the 2023–24 season and is encouraging registered growers to renew their grower numbers.-herald