- TIMB has suspended 550 grower numbers due to suspicions of side marketing
- Side marketing continues to be a problem in Zimbabwe despite the transition from an auction system to the contract growing of tobacco in 2004
- Side marketing is responsible for millions of dollars in losses annually and has the potential to collapse the tobacco industry
Harare-The Zimbabwean tobacco industry is facing challenges with suspected side marketing by contracted tobacco growers. As a result of this, the Tobacco Industry and Marketing Board (TIMB) has suspended nearly 550 grower numbers as part of an ongoing investigation into the use of fictitious grower numbers.
Side marketing refers to when contracted farmers sell their tobacco to third parties in violation of their contracts
TIMB’s acting CEO, Emmanuel Matsvaire has said that investigations into individual grower numbers will take time but that fines and bans from the sector are possible for those found to be breaking the rules. Side marketing is believed to be responsible for the loss of millions of dollars every year and has the potential to collapse the tobacco industry.
Although the TIMB cannot accurately ascertain the amount lost to side marketing every year, it is estimated that Zimbabwean tobacco exporters lost USD $57m in 2021 alone due to this illegal activity.
In 2004, Zimbabwe transitioned from exclusive tobacco auctioning to the contract growing of tobacco. Under the contract system, licensed tobacco buyers provide inputs to farmers, with the contractor or off-taker guaranteeing to buy the tobacco contracted at prices (per grade) equal to or higher than those prevailing on the auction floors.
Despite the promise of fair payment under the contract system, some growers and contractors engage in the illegal practice of side marketing.
The problem of side marketing is not a new one in Zimbabwe, with some licensed contractors buying tobacco from farmers who are not contracted to them. Compared to the auction system, the viability of tobacco farmers had significantly eroded as a result of the dual marketing system that is now dominated by contract floors.
Presently, there are over 65 contract floors around the country, with makeshift facilities presenting major transparency risks and compromising efficiency of tobacco marketing. The current state of affairs erodes the appetite for genuine investors to invest in modern marketing facilities in line with global trends.
While the TI MB has instituted measures to eliminate fly-by-night merchants, strengthen the marketing system, and encourage investment in value addition and beneficiation, there is some way to go. Stamp out side marketing by contracted growers remains a major priority for the regulator. TI MB has extended the role of its inspectorate department, which will conduct random inspections of farms, sales floors, and warehouses during the season, and work in partnership with law enforcement agencies to conduct intelligence-led operations
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