Zimbabwe: Fresh Deadlock Over Tobacco Transportation Fares

TRANSPORT firms shipping Zimbabwe's golden leaf to the markets say tobacco auction floors have refused to pay them in foreign currency, even after the Reserve Bank of Zimbabwe (RBZ) gave them the green light to do so.

However, the central bank last month gave transporters and farmers room to negotiate the mode of payment

The stand off followed a series of crunch meetings where the Tobacco Transporters Trust of Zimbabwe (TTTZ) pressed for payments in forex.

But 10 days into the marketing season that started this month, frustration has been running high, with transporters telling Standard Business that even after agreeing with farmers, the tobacco auction floors who effect the settlements had been converting their dues into Zimbabwe dollars.

"We want to thank the RBZ and TIMB (Tobacco Industry Marketing Board) for the permission they gave us to charge in United States dollars for transporting tobacco," TTTZ president Rutendo Sande said on Friday.

"However, our problem is that some companies are defiant.

"They are refusing to pay transporters in US dollars even after farmers and transporters agreed.

"These companies are converting the money into RTGS (real time gross settlement system).

"We are appealing to these companies to stop interfering in deals between farmers and transporters.

"Government said transporters and farmers should agree on payments."

In a letter to the RBZ last month requesting permission to charge in foreign currency, the TTTZ said transporters were importing spares in foreign currency.

After operating through rugged countryside terrain for many years to bring tobacco to the markets, these vehicles had aged and replacements were urgently required, the transporters said.

They said vehicle acquisitions also required foreign currency.

The TTTZ said several services in Zimbabwe including tolling fees on highways were now being charged in foreign currency and directives compelling them to trade in Zimbabwe dollars would throw the sector into a quagmire.

RBZ governor John Mangudya subsequently approved their request.

"Tobacco growers are free to pay for transportation services using either foreign currency or local currency, whichever is convenient to them," Mangudya said.

This year's tobacco sales have generated US$49,9 million in the first nine days of trades ending Wednesday last week, TIMB data showed on Friday.

Trade from both contracted tobacco auction floors sales had generated US$24,5 million during the same period last year.

The data indicated that transporters had shipped 19,97 million kilogrammes during the period, representing an 83% gain from 10,8 million kg delivered during the comparable period last year.

The TIMB said tobacco had so far been sold at an average price of US$2,50 per kg, which is 8,24% firmer than last season's US$2,27 per kg.

Deliveries of the crop continued to be skewed towards tobacco grown under contract.

The data indicated that 18,45 million kg valued at US$46,2 million had been received by Wednesday, compared to 1,52 million kg worth US$3,62 million that had been delivered through the auction floors.

Growers are this year getting 60% of their money in foreign currency and 40% will be converted at the prevailing auction exchange rate on the day of sale and paid in local currency.

This year's output is expected to reach 200 million kg compared to 185 million kg last year.

More From: Zimbabwe Standard

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