A tobacco contractor, Victory Services, has been suspended from buying tobacco from its contracted growers in Rusape after failing to pay farmers on time.
The Tobacco Industry and Marketing Board (TIMB), suspended the firm after 22 farmers said they sold their crop in April but had not received their money by Friday last week.
The company is said to have had challenges with its offshore funds which were reportedly coming from Mauritius.
Last week, restless farmers went to the floors demanding their money and vowed to stay on the premises until they received their payments. The situation got better after the intervention of TIMB officials, who directed the company to give its growers money so they could go back to their farms as staying at the floors would expose them to Covid-19.
TIMB chief executive Dr Meanwell Gudu said they had received reports from farmers and had given the company some days to pay farmers their money or risk having their licence withdrawn.
"We have received a report from farmers and we have since suspended Victory Services from buying tobacco in Rusape. They said their money was coming from Mauritius and we gave them some days to give farmers their money.
"Victory Services are not going to buy tobacco from farmers until they prove to us and the Reserve Bank of Zimbabwe that they have mobilised offshore funds.
"We have given them some days to make sure they pay farmers and failure to do so, we will withdraw their licence and farmers will sell to a contractor of their choice," he said.
Victory Services director Mr Zephania Shamba confirmed they had challenges with their offshore funds which had delayed but were working on rectifying the issue.
"We had some challenges with our offshore money and also our systems were giving us challenges. We have since started paying farmers their money," he said.
Some of the affected farmers claimed their inputs costs were double deducted and other costs for fertilisers were increased to US$1 000 per hectare and US$500 per half hectare, when they had been supplied with inputs whose cost was way below that.
The bulk of the tobacco in Zimbabwe is grown under contract where the contractors offer growers inputs and buy all the produce from the growers at the stipulated price.
Upon selling the crop, the contracting company deducts the money for its inputs from the total amount earned by the grower through a stop order facility, and farmers get the balance.
Of late, there has been an increase in the number of contractors who have been accused of underfunding farmers and over charging on inputs.
To curb operations of fly-by-night contractors that had come on board, TIMB introduced stringent measures so that tobacco growers will not be short-changed and contractors will be guaranteed of their returns.
Tobacco contractors are now required to support a minimum of US$500 per half a hectare and US$4 000 per hectare for small-scale and large-scale growers respectively, as the TIMB moved to safeguard the integrity of the contract system. The minimum packages include seed, fertilisers, chemicals, tillage, harvesting, curing and marketing resources.
Contractors are also now required to provide proof of commitment or intent to the TIMB by June 30 of every year and failure to do so will lead to their suspension from contracting growers for that season.
All contractors will also be required to submit to TIMB a complete schedule of inputs and their costs by June 30 and failure to do so will lead to suspension for that season.
Contractors are supposed to submit copies of legally binding contracts by September 30 of every year and proof of inputs distributed either paid up invoices or payment plans with suppliers.
All contracted growers without accompanying signed contracts will be de-contracted. In addition, TIMB requires contractors to submit a list of all contracted growers including their contact details by November 30.