adminSamuel Kadungure Farming Reporter
PROBLEMS with payments to tobacco farmers have ignited anger and frustration among many small-scale growers who are now pressuring the authorities to revert to the old system of being paid cash at auction floors.
Farmers are being short-changed by banks that do not have efficient Straight Through Processing (STP), resulting in amounts credited through the Real Time Gross System (RTGS) taking long to reflect in their accounts.
STP is a system used by financial institutions to speed up the handling of transactions which passes electronically entered information on without subsequently requiring its manual re-entry.
One of the benefits of STP is a decrease in settlement risks. This is because a shortening of transaction-related processing time will increase the probability that a contract or an agreement is settled on time.
The Reserve Bank of Zimbabwe and Tobacco Industry Marketing Board directed that all tobacco growers to be banked, a move that had a debilitating effect on farmers as they fail to access both payment and cash on time.
TIMB board chairperson, Mrs Monica Chinamasa, downplayed the issue arguing that farmers were amplifying it.
“Is that an issue if they are getting paid? I think we should not overplay that card (delays in payment) because they eventually get paid,” said Mrs Chinamasa.
TIMB spokesperson, Mr Usheunesu Moyo, said focus should be on improving the new system other than reverting to the old one.
“We are working on improving the new system whose advantages far outweigh the few challenges we have encountered. We are engaging the Reserve Bank of Zimbabwe in trying to perfect the system. The new system has largely been a success and our focus is on improving it as opposed to reconsidering the old system. Attempts to revert to the old system may disrupt the current operations which are smooth sailing,” said Mrs Moyo.
Tobacco Association of Zimbabwe president, Mr David Mutasa, contradicted Mrs Chinamasa, saying the prevalent arrangement, which has left hordes of growers stranded at the auction floors after failing to get their vouchers and payment on time, was unacceptable and counter-productive.
Mrs Mutasa insisted that delays in processing payments were derailing farmers’ plans to return to the fields immediately to finance ongoing harvesting and grading operations.
“Farmers are grappling to open accounts, to get paid on time and to access cash from banks and this has left lots of them stranded and wasting precious time that should be spent in the fields waiting for payment at the auction floors,” said Mr Mutasa.
“This is unacceptable, it is the resource poor small-scale farmer who is being sacrificed. It is their operations that will at the end of day suffer since they are the ones responsible for the supervising of the harvesting, curing, grading and bailing back home. They do not have extra labour and leaving them stranded for five days is worrisome. This matter should be resolved at all costs. We are bitter, uncertain and unsure if there will be money tomorrow, yet that money is desperately needed to finance operations and settle debts back home,” said Mr Mutasa.
Zimbabwe Farmers’ Union wants some farmers with problematic banks to be paid cash upfront until such a time that the systems challenges have been rectified.
ZFU director, Mr Paul Zakaria, on Monday said they met RBZ, TIMB, Bankers Association of Zimbabwe and tobacco buyers demanding that farmers be paid cash.
“We have observed that money credited to accounts with certain banks was taking unnecessarily long to reflect and in cases where it does, the banks have no cash and farmers cannot withdraw it.
“Some banks have no STP systems that allow the money transferred through RTGS to reflect within a reasonable time. We are pushing authorities to revert
to the old system growers are paid cash until the affected banks have efficient systems.
“We can revert to the new system when things normalise, but at the moment we cannot hold onto a system that is producing unintended consequences, farmers must be paid cash so that they can go back to their homes,” said Mr Zakaria.
Farmers can call ZFU on toll-free number 08080172 when they feel short-changed at tobacco auctions.
RBZ Governor, Dr John Mangudya, said demand for cash was being fuelled by civil servants’ salaries and bonuses as well as cash payouts to small-scale gold miners and tobacco farmers.
“The reason why we are where we are today is because we are a consumptive economy. We need to have a mindset change (to) transform this economy.
“We need to produce before we consume. Our current account balance is negative and the bottom line is that Zimbabwe is consuming more than what it is producing so it means we need to have more production,” he said.
Dr Mangudya said Zimbabwe was an attractive source of foreign exchange from the region.
“There is need for policies that attract retention of foreign exchange into Zimbabwe and not only policies which attract people to take foreign currency from Zimbabwe,” Mangudya said.
In an effort to mitigate the cash challenges, the RBZ Governor, said the banking sector had imported a total of $263 million between January 1 and April 6 this year.
“As the RBZ, we have injected cash of $145 million over the past three months from January 1 to April 6 that has got into the market and that money we don’t think is circulating as the way it should circulate. Banks have imported $118 million during the same period, but that money is not there in the banks,” said Dr Mangudya.
An estimated 34 000 bales went under the hammer by Thursday at the three main auction floors.
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