Sundaymail Editor
Sunday Mail Reporter
TOBACCO farmers will now retain 85 percent of proceeds from the sale of their crop in hard currency, up from 75 percent, with the rest being paid in the local currency at the prevailing interbank market rate.
This year’s marketing season opens on March 8 for auction sales, followed by contract sales a day later.
The Tobacco Industry and Marketing Board (TIMB) has directed that farmers receive payments within 48 hours of selling their crop.
“Please, be advised that tobacco growers shall be paid 85 percent of their sales proceeds in foreign currency.
“The remaining balance of 15 percent shall be paid to the grower in local currency through bank transfers or other electronic means at the prevailing interbank rate,” said TIMB acting chief executive officer Mr Emmanuel Matsvaire in a letter addressed to tobacco stakeholders.
“The foreign currency payment to growers shall be the net foreign currency loans accessed for the purpose of funding tobacco production.
“The currency sales proceeds for tobacco shall be treated as free funds.”
Tobacco deliveries are expected to rise to 230 million kg this year, up from the 212 million kg in 2022. According to the latest weekly Agricultural Advisory and Rural Development Services (AARDS) report, farmers put 112 293 hectares under tobacco this season compared to 116 454 ha during the corresponding period last year.
The report also states that the area under irrigation increased by 2 percent from 17 867ha last year to 18 237ha this year.
Production of the golden leaf on dryland rose 4 percent from 94 426ha to 98 273ha.
Zimbabwe Tobacco Growers Association chairperson Mr George Seremwe said farmers welcome the new forex retention ratios.
“We appreciate the Government’s decision very much,” he said.
“Even though production is denominated in foreign currency, the increase of forex retention to 85 percent from the previous 75 percent is laudable.
“It is our hope that our local currency component will remain stable so that we get value for our money.
“We are happy because we are being treated the same as other exporters from other sectors, so there is no need for us to complain.”
Tobacco Farmers Union Trust president Mr Victor Mariranyika said the review was a welcome development.
“This is a welcome development, but viability and sustainability are under threat, as all loans and inputs are being paid for in foreign currency,” he said.
“If farmers try to convert their Zimbabwe dollar from the 15 percent portion into foreign currency, the value falls dramatically because most traders prefer to use the parallel market and not the official rate.”
Tobacco is the country’s second-biggest foreign currency earner after gold.
The Reserve Bank of Zimbabwe increased the foreign currency retention on domestic sales to 85 percent from 75 percent with effect from February 6 this year.
Online Reporter