Tobacco is the country’s top foreign currency earner, racking in at least US$1 billion per annum. Tobacco farming has been playing a key role in alleviating the plight of rural small-holder farmers and sustaining the national fiscus.
But the trading of the golden leaf has been marred by several challenges such as collusion, side-marketing, cash shortages, among others.
With the opening of the 2020 marketing season drawing near, NewsDay (ND) business reporter Fidelity Mhlanga spoke to Tobacco Industry and Marketing Board (TIMB) chairperson Patrick Devenish (PD) to get insights about their state of preparedness, among other issues.
ND: You were appointed TIMB chairperson in May last year, what issues have been dominating your desk?
PD: The board is pursuing three key objectives: (1) to ensure that the board fulfils its main role of being the regulator of the tobacco industry. Tobacco is critical to the Zimbabwean economy and disciplined regulation is key to its success. (2) To ensure that the industry, including all stakeholders, is sustainable. This means we need to reduce our dependence on certain chemicals, indigenous hardwoods for curing and adopt good agricultural practices.
Our global customers keep us under the spotlight and failure to manage these critical issues could cost us business in the future. (3) To ensure viability of all tobacco growers, smallholder and large scale. Growers have been bombarded with different costs from taxes to the cost of running generators to increased input costs. The crop grew from less than 50 million kilogrammes in 2012 to 260 million kilogrammes last year because it is a profitable business, people will not grow tobacco if it is not profitable.
ND: As we approach the 2020 marketing season, what new things can stakeholders expect at the floors?
PD: We expect business as usual with ongoing improvements in all facets of the industry.
ND: What is the state of the tobacco crop at the moment?
PD: Following the good rains over the past few weeks, the crop has improved substantially. However, it is still too early to make a definitive call.
ND: How many farmers have registered to grow tobacco this season?
PD: About 145 864 have registered this year as compared to 169 875 last year.
ND: I understand that farmers want to be paid in United States dollars, what is the position of the Reserve Bank of Zimbabwe (RBZ) from the engagements you have had so far?
PD: The RBZ is working with stakeholders to agree on a system that is fair to all participants in the value chain. We expect this to be acceptable to all players.
ND: Do you now have the date for the opening of the 2020 tobacco marketing season?
PD: A meeting with all stakeholders will be called soon to determine this. The late start to the rains means that the selling season will almost certainly start later this year.
ND: What measures are being put in place to ensure that collusion does not occur at floors?
PD: TIMB officials have a mandate to control this.
ND: Last year, tobacco prices were the poorest in many years, what was the reason behind this?
PD: There were several reasons for this. The crop was undoubtedly affected by drought, the change in functional currency prejudiced several stakeholders and some of our major customers were in a somewhat overstocked position.
ND: In 2017, TIMB introduced the e-marketing system that sought to weed out collusion and corruption, but it was blighted by many hiccups. Can you explain what really affected the system? Are we going to see the system being reintroduced?
PD: Tobacco is a lucrative commodity which attracts these issues, but TIMB and all stakeholders are constantly improving and upgrading their systems and operations with the objective of protecting the primary producer.
ND: Deliveries at the auction system have been slowing down in favour of the contract system. What is the reason for this? Are there any corrective measures being taken?
PD: With banks no longer able to lend money to farmers, this role has now been taken up by the merchants. In order to recover their money, they need to buy the tobacco produced. We expect the situation to change as bankable 99-year leases are perfected.
ND: It has become the norm that farmers experience nightmares in understanding the tobacco marketing processes. For instance, last season the apex bank authorised that farmers get 50% of their earnings in US dollars, but the process was marred by lack of transparency and communication. As such some failed to redeem their forex. Are farmers getting enough education on policy issues affecting them?
PD: We believe that the work being done by the RBZ and all stakeholders will remedy the situation.