Tobacco farmers seek late start to auction season
TOBACCO farmers are pushing for the tobacco marketing season to be opened at a later date to allow farmers to finalise the harvesting of the crop and to put in place logistical arrangements before the season kicks off.
For authorities who rely on exports of the crop for foreign currency inflows, an earlier date would mean more liquidity for an economy which is hard pressed for foreign currency.
Tobacco is Zimbabwe’s second biggest export earning commodity after gold.
Zimbabwe Commercial Farmers’ Union (ZCFU) director Jeremiah Tevera, who attended a meeting with the Reserve Bank of Zimbabwe (RBZ) and Tobacco Industry and Marketing Board (TIMB), said the farmers had proposed that this year’s tobacco marketing season’s opening date be pushed to March 21.
He said while the curing of tobacco was under way, some farmers still need to finalise other logistical issues before selling their crop.
“We, as tobacco associations, proposed that this year’s tobacco marketing season be opened on March 21, but government and the RBZ wanted an earlier date. But we analysed the implications of that and we said we want March 21,” Tevera said.
At the meeting held Tuesday, the RBZ succumbed to pressure from tobacco farmers and agreed to increase the foreign currency retention threshold from 30% to 50%.
In the Monetary Policy Statement last week, the central bank had pegged the tobacco farmer’s foreign currency retention at 30% and 80% to tobacco merchants, drawing a backlash from farmers.
“I think it was noble for the RBZ to yield to our pressure. We argued a valid position that our farmers’ production costs have been going up. Our position was 60%, but they have agreed to move from 30% to 50%. It was not the best of our interests, but a move of 20% is remarkable,” Tevera said.
RBZ governor John Mangudya confirmed the increase of the farmer’s retention threshold and also justified the 80% given to merchants, saying the bulk of that money would be spent as advancements of inputs to farmers.
“We agreed with the tobacco growers for retention of 50% of net tobacco proceeds. The 80% for the merchants is not retention per se, but funds brought in advance to support tobacco contract farming,” he said.
As of February 22, the number of tobacco farmers had grown by 44% to 170 842 from 118 338 last year.