Tobacco farmers will retain 70% of their proceeds in United States dollars and get the balance in local currency.
THE Tobacco Industry Marketing Board (TIMB) has urged growers not sell their local currency component on the parallel market to obtain United States dollars as authorities have put in place measures to stabilise the local unit.
The call was made by TIMB acting chief executive officer Emmanuel Matsvaire last week ahead of the tobacco selling season due to kick off on Wednesday.
Tobacco farmers will retain 70% of their proceeds in United States dollars and get the balance in local currency.
“Growers are advised against engaging in the sale of the 30% local currency component on the parallel market. The Reserve Bank of Zimbabwe (RBZ) has indicated that measures have been put in place to preserve the value of the local currency through maintaining a robust tight monetary policy, anchored on adequate foreign reserves to back the local currency and open market operations and this has resulted in stabilised local currency (ZiG),” Matsvaire said in a statement.
He said tobacco growers would be enticed to invest in their local currency.
“To further enhance value preservation, tobacco growers shall also have the option to invest 5% of their local currency component in a United States dollar-denominated deposit facility through their respective banks and only access the proceeds when needed at the prevailing willing buyer-willing seller interbank exchange rate,” Matsvaire said.
The call comes after the RBZ advised that payment for the forthcoming tobacco marketing season will be pegged at 70% in foreign currency while 30% will be in local currency.
“Tobacco growers are encouraged to establish accounts with financial institutions of their choice to facilitate payments through the official banking system,” Matsvaire said.
Economist, Masimba Kuchera, said inflation would not be tamed by statements made by the RBZ not backed by sound policies.
“Inflation cannot go away with letters and threats. The economy can only be fixed through political will to do the right things. We are not doing anything to bring confidence to our local currency. People will end up going to the parallel market since there are loopholes in our economic revival fundamentals,” Kuchera said.
He called for tobacco value addition to generate more revenue for the country.
“We need to add value through selling finished tobacco products rather than selling them raw as it makes farmers poorer. We need proper economic policies and confidence-building measures to ensure that people have faith in their currency,” Kuchera said.
There have been concerns over under-invoicing by a few international exporting companies dominating the sector.
Zimbabwe Tobacco Growers Association president George Seremwe urged authorities to bail out farmers through a maximum retention facility.
“Generally, local farmers are sponsoring tobacco wholly in foreign currency including labour that is paid partly in US dollars. Our appeal to the authorities is to have 100% retention for growers. They spend the money locally, so we hope in the future it will be considered,” Seremwe said.
“We appeal for an increase in tobacco buying scale so that it boosts farmer’s commitment to the production of the golden leaf. Our costs of production have been fairly high so we are appealing to buyers and merchants to increase buying scale. Good quality must be paid well.”
Tobacco is one of the country’s largest foreign currency earners, generating US$1 billion last year.
