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Zvamaida Murwira Senior Reporter
PROBLEMS associated with contract farming have been exposed by a Centenary farmer who has sued Zimbabwe Leaf Tobacco alleging he ended up with a huge debt because of inflated prices of inputs and the usurious costing structure of the deal.
Tobacco farmer Mr Israel Chirangwana told the High Court on Friday that the structuring of the contract he signed was not consistent with public policy and applied an arbitrary costing structure.
High Court judge Justice Lavender Makoni reserved judgment in the case in which Mr Chirangwana is challenging provisions of the contract farming agreement which left him saddled with a US$50 000 debt.
The judgment is expected to act as a litmus test to agreements signed by financiers and farmers, as most farmers have in the past raised concern on how the contracts were structured in favour of the financing firms.
Advocate Thembinkosi Magwaliba, instructed by Mr Farai Chinhema, represented Mr Chirangwanda and argued that ZLT provided inputs to his client, but did not give information relating to their costs.
Adv Magwaliba said Mr Chirangwanda was surprised when the bill indicated he was indebted to ZLT to the tune of US$50 000.
He said the value of the inputs as ascribed by the contracting firm was not only double the market price, but was also above that prevailing on the parallel market.
“The manner in which the costing was done was never disclosed to the applicant,” said Mr Magwaliba. “It is never the intention of Government for contracting firms to make unmitigated profits. It’s patently unfair for a financier to trap a grower into a debt.”
It was submitted that the right for farmers to make an informed choice was taken away from them because they were never told the costs of inputs prior to their being delivered.
“Public policy in Zimbabwe would not allow international capital to take advantage of the new breed of farmers,” said Adv Magwaliba. “The contracting firm ought to have put all the material facts to the farmer.”
A bag of Compound C which was ascribed the price of US$61,30 was going for about US$30,65 on the official market, said Adv Magwaliba.
“In view of the fact that the fiscal and monetary authorities had put in place measures to cushion tobacco contracting firms, inputs would naturally cost less,” he said.
It was also alleged that ZLT supplied sub-standard coal to cure tobacco, something that contributed to low yields.
Mr Chirangwanda also wants the decision of an arbitrator giving an award in favour of ZLT to be set aside.
In response, Advocate Thabani Mpofu, representing ZLT, opposed the application and urged the court to dismiss it, saying Mr Chirangwanda had willingly and voluntarily signed the contract.
“The applicant has failed to establish that he had been fraudulently deceived into signing the agreement,” he said.
“He did not and still does not submit that he was deceived as to the content of the character of the invoice. He knew exactly what he was signing for and chose to sign the document for his benefit.
“He voluntarily entered into the contract and, therefore, clearly ought to be bound by the provisions of the contract.”
Online Reporter