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Elita Chikwati, Harare Bureau
The Reserve Bank of Zimbabwe Governor Dr John Mangudya has called on the tobacco industry to consider opening auction floors earlier, to ease the cash shortages being experienced in the country.
He said this at the official closing ceremony of the 2016 tobacco marketing season in Harare yesterday.
Last season, the auction floors opened on March 30, three weeks late as the season was delayed due to the El Nino-induced drought, which resulted in late plantings.
The floors usually open in February to cushion farmers from cash crises.
Dr Mangudya said during the tobacco off season, foreign currency goes down.
“We’ve long queues because the tobacco season is closed. We should at least open auction floors early to reduce the dry spell of foreign currency and ease cash shortages,” he said.
Dr Mangudya urged farmers to use plastic money instead of depending on cash transactions.
He said it was unfortunate that most people were interested in having cash when they could carry out other transactions through the use of plastic money.
Dr Mangudya said tobacco was one of the country’s major foreign currency earners.
The central bank came up with a five percent incentive for tobacco growers to promote production of the export crop.
“Farmers will get their money end of November. Tobacco farmers are the biggest beneficiaries of the export incentive. We should look after the goose that lays the golden eggs.
“The five percent export incentive will be deposited into the farmers’ accounts and they can use the money to buy inputs,” he said.
The Government recently awarded tobacco farmers an export incentive, which rewards the growers for generating foreign currency through exporting goods and services.
The incentive pays the farmer a bonus of up to five percent on the foreign currency generated. The incentive is paid in bond notes, which have the same value as the US dollar.
Dr Mangudya said the Government had also brought other initiatives to boost production and exports.
“We should increase productivity, and this is achieved in a good investment climate. We should take advantage of the ease of doing business policy measures put in place by the Government and also reduce costs of production.
“Let’s produce. We’ve plenty of good soils and minerals,” he said.
Agriculture economist Mr Midway Bhunu concurred with Dr Mangudya and said tobacco brought in money through exports.
He said the early opening of the floors could boost liquidity but said, it was not always the case as the decision when to export was made by the buyers who might decide to delay.
“I agree with the RBZ Governor that it improves money in circulation. It doesn’t necessarily mean hard cash, but people can transact using the money in their accounts,” said Mr Bhunu.
“Farmers should also be encouraged to develop a culture of saving. At the moment, all the people are interested in withdrawing all their money from the banks and few people are saving. Farmers should not always rely on cash.”
Farmers Development Trust director Mr Lovegot Tendengu expressed concern that while the tobacco sector was flourishing, 80 percent of the crop was being financed by contractors, a situation he said existed in the cotton industry before its collapse.
Mr Tendengu said the Government should also support tobacco production and not leave farmers at the mercy of contractors.
Agriculture, Mechanisation and Irrigation Development Minister Joseph Made said it was not fair to condemn contractors as they were critical in funding tobacco production.
He said there was need to have a strong monitoring mechanism to ensure they give farmers a full package of inputs at affordable prices.
Online Reporter