BY FIDELITY MHLANGA
Zimbabwe’s tobacco sales have plunged 85% with deliveries reaching only 1,6 million kg in the first 10 days of trade compared to the 10,9 million kg sold last year, statistics from the industry regulator, the Tobacco Industry and Marketing Board (TIMB) have shown.
A TIMB update released on Tuesday show that tobacco worth just $2,8 million has been sold in the 10-day period since the marketing season started, a marked decline from the $30,2 million achieved over the same period last year.
Furthermore, prices prevailing at both auction and contract floors at an average of $1,73 per kg are 37,7% lower than last year’s, which average at $2,77 in the comparative season.
Most farmers who had anticipated to pocket a fortune have been discouraged by a Reserve Bank of Zimbabwe (RBZ) directed payment arrangement, which states that the golden leaf growers will be paid in real time gross settlement dollars and given an option to use 50% of net earnings to buy forex at the prevailing interbank rate.
In his monetary policy statement in February, RBZ governor John Mangudya promised to pay the farmers 50% of their sales in hard currency.
“Farmers are not in a hurry to sell. There is also inconsistent policy regarding access to and determination of 50% USD entitlement. Most contractors are yet to start receiving their tobacco. Many were waiting for the circular,” a tobacco company official said.
Bullion Leaf managing director Persistence Gwanyanya said a number of ordinary farmers do not measure up to the complexity of the transaction dynamics in tobacco today.
“A number of them will find it difficult to understand the exchange control directives,” he said.
“Now, that process is too complicated for farmers and I see most of them foregoing their retentions, as the process is not in favour of those farmers who don’t earn more from their tobacco yet they have pressing needs for money, and the daily limit of US$50 is inadequate to meet their foreign currency requirements per sale.”
Last season, the country recorded the highest output of 252 million kg and earned $800 million.