The chaos prevailing at the tobacco auction floors in which farmers are struggling to get their money from banks is a cause for concern, particularly for a constituency which has invested time, money and effort to generate foreign currency for the economy.
Comment: NewsDay Editor
The tobacco industry remains a significant player in the economy by virtue of being one of the largest foreign currency earners.
It should be noted that last year alone, the tobacco industry produced close to $1 billion. Despite such a huge contribution, government is failing to put in place measures that ensure farmers are paid timeously in order to incentivise growers and stimulate consistent production of the golden leaf for the future.
We believe if farmers are paid timeously, they will have more time to prepare for the next season, and, hence, increased production.
Despite the harsh operating environment, tobacco has become a lucrative cash crop, luring farmers due to the availability of contractors and a better market compared to maize and other crops.
Tobacco production last year peaked at 202 million kilogrammes and is projected to reach 205 million kg in 2017.
Notwithstanding the marginal growth estimated in production, there has been a lot of dissatisfaction from the farmers. Farmers are failing to access their funds despite a government directive for banks to priorities tobacco farmers by way of making available a daily maximum of $1 000 in the first sale and $500 in subsequent sales.
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Questions remain over the viability of the government’s directive in light of the cash shortages which have been facing banks since last year.
This week, we carried an article where Reserve Bank of Zimbabwe (RBZ) governor John Mangudya said the central bank was working with banks operating at the auction floors to ensure they are well-resourced to be able to pay tobacco farmers $1 000 at the first sale. This is a welcome move by RBZ to the well-deserving tobacco farmers.
Government was, last week, forced to suspend the introduction of a 10% withholding tax on tobacco farmers without tax clearance certificates following an outcry from tobacco farmers’ associations.
Introduction of the tax would have placed an additional burden on the farmer who has to pay a number of taxes.
Tobacco farmers are the exporters and this is why they benefit from the 5% export incentive.
The tobacco exports help to stabilise the country’s nostro balances, which will go a long way in unlocking the foreign payments logjam. The precarious foreign currency position requires all agencies of government to incentivise the few remaining exporters.
Tobacco farmers should spend most of their time in the fields and not “waiting for Godot” at banks to get their money.
If tobacco farmers are well served, this will ensure an improved yield going forward. They are the goose that lays the golden eggs.
Therefore, government should take tobacco farmers seriously.
