Small scale tobacco farmers to retain forex earnings indefinitely
By Ndafadza Madanha
SMALL scale tobacco growers with less than two hectares will be allowed to hold onto their foreign earnings from sales for an indefinite period according to a statement issued by the Reserve Bank of Zimbabwe (RBZ) and Tobacco Industry Marketing Board (TIMB).
The tobacco marketing season will commence next week.
Initially the apex bank in the Monetary Policy Statement (MPS) had announced that tobacco growers had to dispose their forex holdings within 90 days.
Also the forex retention threshold for tobacco farmers was increased from 30% announced in the MPS to 50%.
However, large scale tobacco farmers will be required to retain sales proceeds in their nostro FCA for a period not exceeding 180 days after which the balances will be offloaded onto the market at the ruling interbank exchange rate.
The joint statement also said tobacco growers will be entitled to make cash withdrawals equivalent of RTGS$0.50 per every kg of tobacco sold.
“in order to assist growers in accessing cash for incidentals at the point of sale, growers shall be entitled to withdraw cash equivalent to RTGS$0.50 per kg of tobacco sold up to maximum of RTGS$300. For instance a grower is entitled to withdraw cash amounting to RTGS$100 after selling 200kgs of the green leaf. Tobacco growers, who fail to access their cash entitlements on the day of sale as a result of logistical bottlenecks, shall be allowed to access their cash entitlements within 5days from the date of sale”.
Tobacco is a major foreign currency earner for the country and according to TIMB as at 15th August 2018, cumulative tobacco output amounted to 248.2 million kilograms, which is 35% higher than what was sold during the same period in 2017. The 2018 output raked in a total of US$725.9 million, which is 30% higher than the US$547 million realized in 2017.
This year output is expected to be affected by the EL Nino phenomenon which led to a below normal rainfall season though output is expected to be in excess of 200m kgs.