Tobacco farmers owed by merchants for the crop delivered last season will receive their balances by end of this week, with the Tobacco Industry and Marketing Board (TIMB) vowing to ensure a similar situation does not occur this year.
Failure to pay the farmers on time, TIMB chairman Mr Patrick Devenish warned, tobacco merchants risked heavy penalties, suspension or cancellation of their licenses.
Mr Devenish said this during the official opening of the 2023 tobacco-selling season presided over by Vice President Constantino Chiwenga at the Tobacco Sales Floor yesterday. The auction price opened at US$4,35, up from US$4,20 last year.
In his remarks, VP Chiwenga underscored the need for orderly marketing of the "golden leaf" and encouraged merchants to pay fair prices to sustain the viability of the growers.
The contract floors will open today.
"We are aware some growers have not been paid since last season," said Mr Devenish. "Agreements have been made with responsible tobacco companies and plans are in place to ensure the growers are paid by this weekend."
Last year, TIMB blacklisted some tobacco merchants after they failed to pay the farmers for deliveries made. In terms of the law, payments should be made within 48 hours after the sale.
For farmers who defaulted on loans after side-marketing their tobacco, recovery measures were in place. The most affected merchants were those who got the inputs through the Tobacco Inputs Credit Scheme, which is administered by TIMB.
Mr Devenish said the industry and the Reserve Bank of Zimbabwe have jointly put in place measures to ensure tobacco growers get the full value of their crop and are paid on time.
"To enforce, we stand guided by the contractor's compliance administration framework. All tobacco merchants and contractors have signed it and have been aware that they are obliged to pay growers within 48 hours of the sale completion," he said.
"Therefore, we encourage tobacco growers to notify TIMB if they are not paid within 48 hours.
Mr Devenish said the TIMB would this season enhance compliance to curb sidemarketing.
"In the past years, complaints were leveled against the transparency in our contracting system, adhering to agreed terms and executing obligations responsibilities timeously. Reports of collusion by merchants and maneuvers to re-handle tobacco bought cheaply from farmers were also brought forward.
"I am happy to notify you that our inspectorate unit has been expanded and is now armed with S1 77 of 2022 prohibiting side marketing as well as the contractor's compliance agreement. Errant behaviour will become an issue of the past," said Mr Devenish.
"We will instill discipline and restore order in the tobacco industry," Mr Devenish added.
Contract sales for this year will be conducted in Harare and five decentralised facilities in Karoi, Rusape, Marondera, Bindura and Mvurwi. About 230 million kg are expected this year, from 212 million last year, according to the TIMB crop assessment.
Speaking at the same event, VP Chiwenga said Zimbabwe was working towards accelerating the localisation of tobacco funding to 70 percent by 2025. He said the Cabinet had already approved a US$60 million facility to support the initiative.
VP Chiwenga also said the country was targeting to raise output to 300 million kg by 2025.
The level of value addition and beneficiation would be raised from 2 percent to 30 percent. This would help expand the industry to a US$5 billion sector in the next two years.
"As the 2023 marketing season takes off, the Tobacco Industry and Marketing Board should enhance transparency and fair tobacco sales at contract and auction floors, including analysing, recommending, improving and facilitating equitable...sharing of expenses and profits throughout the tobacco value chain," he said.
"That being said, the Government hopes that all stakeholders in the tobacco marketing process have planned for a smooth season with no bottlenecks while ensuring fair pricing and timeous payment to farmers," VP Chiwenga added.
Some farmers who spoke to this publication said while the opening price was fair, the authorities should ensure the tobacco growers were paid on time. "It doesn't make any sense to be told that your tobacco has fetched a good price and the money doesn't come," one farmer said.
"We know several farmers who haven't been paid for tobacco delivered last year and we are very concerned because we haven't been getting support from the authorities. That destroys confidence."