TOBACCO farmers, who are battling to access exorbitant inputs, are demanding that the government pays them in foreign currency before the next selling season starts so as to cushion them from currency volatility ravaging the economy.
This came at a time non-contracted farmers are battling to procure inputs whose prices have skyrocketed beyond the reach of many.
Tobacco outperformed initial projections by 5%, with the output reaching 250 million kilogrammes in 2018, well in excess of the previous all-time high of 235 million kilogrammes achieved in 1999.
Zimbabwe Tobacco Association chief executive Rodney Ambrose told NewsDay that farmers need an upfront incentive in line with the current economic environment.
“Without a doubt, the incentive, if going to be in effect in the 2018/19 season, has to be reviewed in line with the economic environment that may be prevailing during April/May 2019. Farmers are facing a number of viability challenges and the right framework must be in place well before any proposed opening of sales next season,” he said.
During the just-ended season the central bank was paying farmers half of their money in US dollars. Tobacco, one of the country’s biggest forex earners, raked in a total of $725,9 million, which is 30% higher than the $547 million realised in 2017. As such, Ambrose believes tobacco farmers who are principal generators of foreign currency need fair economic recognition.
“With the separation of RTGS FCAs and nostro FCAs [foreign currency accounts] and key inputs soon only to be purchased only through nostro FCAs, tobacco growers should be awarded a portion of their sales into nostro FCAs,” he said.
Despite being key forex generators, the central bank through the mid-year monetary policy statement early this month prescribed that tobacco producers would retain 20% of their foreign currency proceeds, with the rest going to the central bank.
According to the policy, gold producers retain 30% of export proceeds; and platinum, diamonds and chrome producers 35%.
The apex bank has been allocating forex for fuel and pharmaceutical products, among others.
Appearing in Parliament on Monday, Finance secretary George Guvamatanga did not respond to the question from legislators whether farmers were going to paid through nostro foreign currency accounts.
While growers under contract have received their required inputs for this season, Ambrose said uncontracted farmers were facing a torrid time in buying inputs.
“For many farmers not under contract, this is a major issue. However, a fair portion did buy some critical inputs using their proceeds during the selling season. For those trying to source inputs and re-tool now, it is a very difficult task,” he said.
Federation of Farmers’ Union president Wonder Chabikwa said: “Now we face a huge challenge with unstable prices, yet we have done our seasonal budgets. Farmers are now subjected to volatile input prices and availability, with some suppliers demanding US dollars or cash,” he said.