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Agriculture Specialist Writer
THE agony of anticipated disparities in the exchange rate has turned into joy as tobacco farmers purchase inputs for the upcoming summer season using the local currency (ZiG) at the official bank rate from most input retailers.
This comes as farmers have pocketed US$531 million from the sale of the golden leaf by Day 48.
Seventy-five percent of their earnings are coming in United States dollars being deposited into their foreign currency (Nostro) accounts with the balance coming in local currency, the ZiG.
The Reserve Bank of Zimbabwe (RBZ) standardised the US dollar retention in Nostro accounts to 75 percent in line with the retention level for other market players.
Zimbabwe Tobacco Growers Association (ZTGA) chairman Mr George Seremwe yesterday said most tobacco farmers were rounding up their grading and selling their crop at both auction and contract floors, with some doing land preparation for the upcoming season.
“It is quite encouraging that a lot of farmers who sold their crop are buying their inputs for the upcoming 2024/25 using their ZiG component from leading input stockists at official rates. We hope these purchases will extricate farmers from the bondage of contractors and increase profitability of their crop,” he said.
Farmers in different tobacco groups are also sharing the same sentiments, as they are purchasing inputs in local currency.
They are optimistic of expanding their hectarages especially after forecasts indicated that the 2024/25 summer cropping season will experience normal to above normal rainfall associated with La Nina.
Zimbabwe Commercial Farmers Union (ZCFU) president Dr Shadreck Makombe yesterday commented that it was a mixed bag scenario, as some retailers accepted the ZiG while others only wanted US dollar.
“This is a mixed bag with some input stockists accepting the US dollar only while some, especially parastatals like Kutsaga and TIMB, are accepting payment for their services in ZiG.
Meanwhile, statistics released by the Tobacco Industry and Marketing Board (TIMB) show that farmers had cumulatively sold tobacco worth US$530 949 316 by day 48 under both the auction and contract system.
This was, however, a 14 percent drop from the US$616 562 378 earned on the same date in 2023.
The volume of the leaf sold declined by a wide margin of 27 percent from 205 522 107 kilogrammes in 2023 compared to 150 783 198 this year as a result of the El Nino drought that caused a yield slump.
Self-financed growers have delivered 8 730 115 kilogrammes of tobacco worth US$31 739 115 to the auction floors at an average price of US$3,64 per kilogramme.
This represents six percent of all tobacco sales to date.
Contracted farmers account for the remaining 94 percent of all deliveries after they sold 142 053 083 kilogrammes valued at US$499 210 202 at an average price of US$3, 51 per kilogramme.
The average auction price is US$0,13 higher than that for the contract for every kilogramme sold.
The highest auction and contract sale prices have remained constant at US$5,07 and US$6, 99 per kilogramme respectively. The lowest price for both floors has remained static at US$0,10 for a kilogramme.
Earnings from current sales of both auction and contract floors are now 59 percent of the total 2023 earnings value of US$897 million aided by the 17 percent surge in the average price from US$3 to US$3,52 per kilogramme by Day 48.
Online Reporter