News in depth: ‘It’s a grand heist’: Contractors, insurance firms fleece tobacco farmers

Investigations by this publication in conjuction with the Voluntary Media Council of Zimbabwe have shown that the scams go deeper than the ordinary contract that the farmer is supposed to sign as they also involve shadowy insurance firms, which allegedly make unauthorised deductions from a farmer’s sale.


SCORES of tobacco farmers in Karoi, in the last auctioning season, lost numerous properties running into thousands of dollars to debt collectors after failing to settle their contractual obligations in a complicated case involving apparent scams that have now sucked in Agricultural Technical Extension Services (Agritex) officers.

The affected farmers are up in arms as they see their properties being undervalued in ongoing efforts to recover debts on behalf of tobacco contracting companies.

Investigations by this publication in conjuction with the Voluntary Media Council of Zimbabwe have shown that the scams go deeper than the ordinary contract that the farmer is supposed to sign as they also involve shadowy insurance firms, which allegedly make unauthorised deductions from a farmer’s sale.

But in most cases, the deductions are in the name of the contractor, thus shielding the insurance firm behind the deduction.

This lack of transparency has aggravated the monetary burden on the farmer, who, in turn, is left with nothing after making efforts to settle the debt.

At the centre of the heist are Agritex officers, who are custodians of farmers’ details, but are allegedly conniving with the tobacco contractors to use those details without the consent of the farmers.

It has been established that these officers enter into agreements with contractors on behalf of farmers.

The farmers receive inputs from the officers without signing any agreement.

In some instances, it is alleged that other benefits which the farmers are entitled to do not reach the intended beneficiaries.

It has been established that an Agritex officer in ward 16 in Doma, Mhangura, has since been relocated from this area following some of these allegations.

“It has become a common trend in this area, where you have the Agritex officer signing your contract on your behalf,” one farmer said.

“By the time you go there, he will tell you he had already signed and submitted. But you are the one who then settles the loan.

“You are not even sure of the inputs. For example, there are iron sheets that we are supposed to be given to put on our tobacco barns.

“Our officer would take them and we never got them.

“We are glad that he was recently transferred and the new one hasn’t shown any such traits.

“The previous one (name supplied) was not delivering our material, but we were not sure how to handle the situation.

The farmer said he and his colleagues had not signed up for insurance.

“We haven’t signed up for it,” he said.

“We were advised where to go and sign up so that when you encounter some problems such as hailstorm or your tobacco barn burns down, they will cover you.

“So we are yet to sign, but along the way, we have noticed that some farmers have been having insurance deductions which they did not sign for.

“Some say they have had deductions from their invoices and you wonder how they get those details.

“We really need help in this area.”

Another farmer, Lovemore Maseve, said he had not been able to recover a US$450 insurance deduction made last year.

“I am a farmer with Voedsel Tobacco Company,” he said.

“These are the people who deducted money from my payment.

“They never told us they were going to make insurance deductions.

“A number of people have been going through that. I haven’t been able to recover that money to date.”

A perusal of Voedsel’s Facebook page confirms that the company has been having issues with farmers.

“Voedsel stop being fraudulent,” posted one farmer, “three weeks after sales, no vouchers, no payments, yet you make overzealous charges.

“Stop stealing from farmers, it’s not easy to be a tobacco farmer.”

It has also emerged that contractors are fleecing farmers by not disclosing the amounts the farmers are supposed to pay back in the contract document, rather producing a separate acknowledgement of debt agreement.

Karoi farmers, who spoke to The  Standard, said the problem was far-reaching.

As Zimbabwe’s economy continues to decline, most farmers have been left with no choice, but to operate through contracts which offer them inputs while they pay later.

While the country rakes in more money from tobacco, the growers have remained poor and heavily indebted to the contractors, whose number have increased over the years.

Onhardt Tobacco Private Limited’s 11-page tobacco contract does not indicate the amount owed by the farmer to the company.

A separate acknowledgment of debt is signed upon receiving the inputs.

The same applies to the Mashonaland Tobacco Company contract.

Several of the farmers were in agreement that the acknowledgment of debt does not state how much the farmer is required to pay back.

It states, rather, the inputs per hectare which the contactors have their own way of valuing, without stating the amount in the acknowledgement.

While most of the farmers contracted by the various tobacco contracting firms admitted that they had failed to settle their obligations, they were, however, not willing to speak on record because this was the time of the year when they usually receive fresh inputs.

Some farmers pleaded for assistance in having them signed up despite outstanding amounts owing to the firms from previous seasons.

They said they could not afford the cost of the inputs on their own.

In worst case scenarios, farmers usually find the insurance clause, as incorporated in the contract agreement, too long to grasp, while not stipulating any figures.

The uninformed farmer just signs the contract, while expecting to access the inputs immediately.

The farmers have often been left poorer at the end of the season as the contractors arbitrarily set the buying price, which is not stated in the contract.

Caught in between going for high prices and a clause prohibiting side marketing, farmers have thus been struggling over the years.

The Tobacco Industry and Marketing Board (TIMB) says it is ready to look into these issues.

“As TIMB, we are not informed on cartels operating in this manner,” a spokesman said.

“However, we are happy you have brought this to our attention.

“If you can provide more detail, we are ready to start an investigation into the matter and bring the criminals to book.”

The regulator also said the Stop Order Act was only effective against farmers who signed contract forms acknowledging debt in line with the laws of the country.

He said that TIMB upholds the law and it assists in all necessary investigations and even provides witnesses in the courts of law.

TIMB said that tobacco growers who do not fulfil their obligations risked killing the tobacco industry, saying it was ready to do everything within its power to ensure a sustainable tobacco industry where contractors fulfil their mandate to growers while the growers pay back after selling their crop.

This implied that growers who did not sign any contracts cannot be arrested as there will be no evidence of their borrowing.

According to the TIMB, farmers’ debts are calculated by the contractors who distribute farming inputs with the regulator mandating a minimum inputs package of US$1 000 per hectare and US$4 000 for small scale and large scale growers, respectively.

The TIMB said interest rates differed from contractor to contractor and from season to season.

Contractors, however, entered into an agreement with individual farmers on the amount they are giving and they both approve by signing the contract.

While questions sent to Agritex acting director Stancilae Tapererwa drew no responses, Lands, Agriculture, Fisheries, Water and Rural Resettlement ministry permanent secretary John Basera referred all questions back to TIMB.

The Insurance Council of Zimbabwe (ICZ) said it was not aware of these cartels.

“ICZ is not aware of any reports of fraudulent activities related to tobacco insurance for contract farmers; neither has it received any reports,” said ICZ public relations and marketing manager Ringisai Batiya.

“ICZ is also not aware of any unregistered insurance companies that are in operation.

“If possible, may you please provide us with specific information to facilitate investigations on the matter?

“May you also clarify if these registered and unregistered ‘insurers’ are brokers or agents of insurance companies or insurance companies?”

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