eBusiness Weekly
Hebert Zharare
Tobacco farmers are entitled to over $81 million in form of incentives from the Reserve Bank of Zimbabwe from 227 million kg of flu cured tobacco worth $655 million delivered to the floors as of Monday this week.
The apex bank releases the money for tobacco farmers’ incentives to financial institutions upon receiving data on farmers’ sales records from the Tobacco Industry and Marketing Board and payment is effected within 30 days.
However, there have been some complaints from tobacco farmers alleging the incentives were taking too long to be paid, while for those who received the money it was in part payment.
Speaking to Business Weekly recently, Reserve Bank of Zimbabwe governor Dr John Mangudya, said the bank has been religiously paying the incentives to the tobacco farmers.
“We pay the incentives monthly for example if a farmer delivers the tobacco on June 30, we pay by the end of July. Cotton farmers’ representatives said they wanted their members to be paid promptly on delivery and we are doing that. The TIMB said they want members paid a month after delivery of the crop,” he said.
How the system operates
When a tobacco farmer delivers tobacco at the auction floors or through the contract system and merchants, the data is collated and then sent to the TIMB.
The TIMB reconciles the records and then send the schedule to banks.
Said Dr Mangudya: “The banks are advised on farmers’ details by the TIMB, who will then copy it to us. We will then forward the money to those banks so that they will pay into the farmers’ accounts. So if there is a delay, it could be from floors sending the information to TIMB.”
The tobacco sector has become one of the major foreign currency earners for the country and efforts are being made to ensure the cotton sector is also supported so that it takes over from the golden leaf in earning hard currency.
Government through the RBZ in recent years introduced a 5 percent incentives for the exporters that was backed by a $200 m Afreximbank facility that was increased to 12.5 percent this selling season to motivate more farmers to grow more tobacco.
Tobacco earnings realised so far
Tobacco farmers have grossed $654, 6 million from 226, 6 million kg that have been delivered 73 days into the 2018 marketing season.
During the same period last year reports say farmers delivered over 170 million kg for $501 million, a $153 million gain from last year’s earnings.
The average price at the auction floors is $2,77 per kg against $2,91 being offered to contract farmers.
The average price is $2,89.
TIMB has projected an output of 200 million kg.
Tobacco Exports update
Zimbabwe has so far earned $184, 3 million after exporting 45,2 million kgs of tobacco to 49 countries, shy of 76 million on export earnings realised during the same period last year.
The TIMB say during the same period in 2017 the country exported 58 million kg, earning $260 million in the process.
The fall in tobacco exports to $184,3 million from $260 million represents 29 percent decline.
China, South Africa, Indonesia, Belgium and the United Arab Emirates are the main buyers of Zimbabwe’s Virginia tobacco crop.
Top buyer China accounted for over 7,8 million kg valued at $51,2 million while South Africa comes in second having bought 7,5 million kg valued at $22,2 million,” reads part of the TIMB’s latest weekly bulletin.
With an estimated 350 million smokers, China has been spending over $200 million per annum on Zimbabwean tobacco, regarded among the best in the world.
Indonesia has so far bought 5,8 million kg valued at $26 million.
Belgium has so far bought 4,7 million kg worth $15 million, followed by the United Arab Emirates, which has spent $7,8 million on 4 million kg.
Russia has bought 2,2 million kg worth $7,9 million.
Other main buyers of Zimbabwean tobacco are Vietnam, Hong Kong, Iran, Sudan, France, the Netherlands, Germany, Nigeria, Taiwan, Spain and Tanzania among others.
