Zimbabwe tobacco farmers demand US dollar sales

Ominous Tobacco Field at dusk. Notice two iny windmills visible on the horizon
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Tobacco farmers want the Reserve Bank of Zimbabwe (RBZ) to simplify access to the US dollar component of their proceeds, including a portion to be withdrawn in cash, ahead of the opening of this year’s marketing season.

The tobacco marketing season usually starts in March. Last year farmers were paid half their earnings through their Zimbabwe dollar accounts with the remaining half being deposited into their Foreign Currency Accounts. However most farmers faced difficulties in accessing their hard currency due to their failure to appreciate the processes involved.

The farmers in their requests are represented by the Zimbabwe Farmers Union, Tobacco Farmers Union Trust, Tobacco Association of Zimbabwe, Zimbabwe Tobacco Association, Zimbabwe Commercial Farmers Union. The farmers challenges were spelt out in a letter detailing their requests for the 2020 selling season that was sent to the Reserve Bank of Zimbabwe, Tobacco Industry and Marketing Board and the Ministry of Lands, Agriculture, Water and Rural Resettlement last week.

The farmers complained of “significant loss of value of tobacco proceeds during the 2019 tobacco marketing season, which left many tobacco growers exposed to reduced profitability, inability to retool for the 2020 season, increased contract farming for input support, the multi-tier pricing, and the inability to access 50 percent US dollar retention and inability to access cash as per the RBZ guidelines among others.

“The farmers want full resolution of the outstanding US dollar nostro amounts from last season and the 2008 US dollar Tobacco Treasury Bills. They want all their US dollar sales proceeds, after US dollar loan repayments, paid into growers nostro accounts by the contractor, not the RBZ, and be paid via commercial banks at point of sale, on day of sale.”

They want no limits on when they liquidate their nostro accounts, they want a favourable exchange rate when retooling, and they want to be able to convert a minimum of US$600 per sale from nostro funds to cash.

“We look forward to our usual engagement with you in order to ensure a smoother, successful and viable 2020 tobacco marketing season,” said the farmers in a letter to the RBZ.

Meanwhile tobacco registrations have declined by 14 percent. According to the TIMB statistics, by December 31, 145 725 tobacco growers had registered for tobacco as compared to 169 772 during the same period last year. The decline in the tobacco registrations has been attributed by tobacco experts to the challenges faced by farmers last season.

Last year farmers delivered a record 259 million kg up from 253 million kg in 2018 despite challenges that affected production and marketing of the crop.