eBusiness Weekly
Farmers prejudiced by as much as $4 million
Talks open on an out of court settlement
Livingstone Marufu
Private tobacco farmers could have been prejudiced nearly $4 million by contractors who fraudulently contracted them and bought their commodity at low prices.
This comes after the Zimbabwe Farmers Union (ZFU) engaged lawyers to look into the complaints raised by farmers after they were forced to sell their “golden leaf” for a pittance to corrupt merchants who registered growers without their knowledge.
The private farmers would be turned away from the auction floors because the data base would show that they are contracted growers.
The farmers have alleged the process of de-contracting as frustrating and end up selling to the merchants.
Companies that have been caught in web include Ethical Leaf Tobacco, Boost Africa and Agritrade Leaf Tobacco but their portion of prejudice could not be established.
While the executive director of ZFU Paul Zakariya declined to discuss the matter as it is still with their lawyers, official sources with knowledge of the investigation said preliminary indications have shown that private farmers could have been underpaid through this practice by as much as $4 million since last season.
“I can confirm a prejudice was established but I cannot go into details because the lawyers are deciding on how we should proceed with the matter,” Mr Zakariya said. But concrete findings are available for arguments in the court of law.”
Out of court settlement
The sources said after evidence was presented to merchants on how they underpaid desperate farmers’ prices lower than they could have fetched on auction floors, the parties were now looking on how affected producers can be compensated.
“As we speak there are serious negotiations going on as to how much money could be compensated to the affected farmers but preliminary calculations are suggesting that an amount of between $3 million and $4 million,” said one official who declined to be named. “What I don’t know is if the merchants could really compensate.
“But they have been given two weeks to pay of the lawyers will pursue the matter at courts.”
Industry players say the contractors, should never have average prices below that of average auction floors.
The TIMB price matrix, if followed, makes it impossible for contract average prices to be below auction floor average price.
According to TIMB regulations, contractors are supposed to pay a minimum of the auction floor average for any grade.
However, these provisions to protect the vulnerable farmer, most contractors have been paying average prices, which are below auction floor average prices.
This essentially means they have not been following the TIMB Price Matrix.
TSF accused of shielding contractors
The Zimbabwe Stock Exchange (ZSE) Tobacco Sales Floor, which owns Tobacco Sales Floor which houses some of the contractors, has blamed contracted farmers for trying evading contractors.
“Our investigations so far indicate that some contracted farmers may have tried to circumvent the regulated system set up by TIMB and tried to sell direct on our independent tobacco auction floor, the TSL head of agriculture cluster Peter Mujaya said.
“This gives rise to side marketing which, as a matter of principle, we do not condone. Where this was picked up, such farmers’ bookings were turned down.
“The TIMB booking system has a window that shows the status of each tobacco farmer by grower number.”
Analysts say the sheer disregard of orderly marketing of tobacco by TSF and the errant merchants with no consequence is now creating a chain of reaction which has resulted in other merchants, fighting for the same crop, setting up their own structure to divert auction tobacco since some of these merchants were doing it with impunity.
The regulator in the dark
While incidents of farmers being turned away at auction floors on grounds of being contracted growers as per TIMB booking system were prevalent at the start of the season, the TIMB previously declined to have dealt with “matter of that nature.”
Efforts to get a comment from the TIMB on the latest development were fruitless.
