BY FIDELITY MHLANGA
THE Tobacco Industry Marketing Board (TIMB) has hiked weighing and auction floor charges, further eroding farmers’ earnings.
The fee was raised from US$4,50 last season to US$7,70 per bale this season, much to the chagrin of farmers who felt that their earnings were being squeezed.
Apart from weighing and auction fees, other deductions incurred by farmers include tobacco levy (0,75%), TIMB stop order levies (0,8%) and the Ministry of Agriculture levy (USD$0,875c per kg )
“Subsequent to the circular of March 19, auction floors submitted a request for a further review of weighing and auction fees and of floor-clearing charges payable by buyers.
In the interim, the board has fixed weighing and auction fees at US$7,70 per bale and floor-clearing charge at $0,65 per bale. Both charges are payable in RTGS dollars at the prevailing interbank rate,” TIMB said in a circular dated March 22, 2019.
The circular had pegged weighing and auction floor fees at RTGS$12 per bale.
An industry source told NewsDay that the move by TIMB would affect the viability of tobacco farming, adding that pegging fees in US$ was in violation of Statutory Instrument 33 of 2019 which orders that prices should be charged in RTGS dollars.
The sources said TIMB had not consulted with stakeholders in coming up with a decision that ultimately affects growers’ livelihoods.
“Earlier in the week, TIMB announced auction floor charges at a fixed RTGS$12 per bale, later now to US$ 7,70 per bale. At a rate of 1:3 to the US$, this is a sudden increase to RTGS$22,50 per bale! The increase in auction charges will affect growers’ viability and would impact negatively on growers US$ retention entitlements,” said a source.
“TIMB has allowed auction floor charges to be US$-based payable in RTGS at ruling interbank rate on days of sales. This is in direct violation of SI 33 of 2019, where all local goods and services must be priced in RTGS$.”
Contacted for comment, TIMB spokeperson Isheunesu Moyo attributed the increase in auction fees to an upsurge in the cost structure at the auction floors.
“As regulators we consider the viability of all stakeholders. The cost structure of auction floors has gone up as a result of what we expect of them, such as those related to the new payment system, among others,” he said.
At a time tobacco sold via auction floors is estimated at 20%, fear abounds that the increase in charges could further reduce volumes, driving more growers to contract floors where charges remain low.
“Surely, this is penalising the growers wanting to sell on auction floors and push them to contract floors, where charges are lower,” an insider said.