Zimbabwe Farmers' Union

ZFU hosts Tobacco growers’ representatives

26 Feb 2020

By Adeva Machiso Gwenzi

In preparation for the 2019/2020 tobacco marketing season tobacco growers’ representatives decided to meet early and strategise on how to lobby and advocate on behalf of the farmers.

Following challenges surrounding the previous marketing season, the Zimbabwe Farmers’ Union hosted representatives from, Zimbabwe Tobacco Association (ZTA), Zimbabwe Commercial Farmers’ Union (ZCFU), Zimbabwe National Farmers’ Union (ZNFU),Tobacco Association of Zimbabwe (TAZ) and Tobacco Farmers’ Union Trust (TFUT) to device collaborative efforts on how best to mitigate challenges faced in the 2019 marketing season.

The 2019 tobacco marketing season saw the introduction of a two-tier payment system, farmers were to receive 50% of their payment in their RTGs account whilst the other was going to be deposited in their Nostro FCA account.

According to a press statement issued by the Reserve Bank of Zimbabwe on March 15 2019, “Tobacco sale proceeds shall be deposited into the growers’ RTGS$ bank accounts and Nostro FCA bank accounts, Tobacco growers shall be paid 50%, after deduction of the USD loans, in United States Dollars, and the proceeds shall be deposited in the grower’s Nostro FCA bank accounts. The balance of 50% of the net sale proceeds shall be credited into the grower RTGS$ bank account,”

The Tobacco growers, however noted that there were challenges with this payment system as most of the farmers were not properly alerted and were not familiar with it.

“The payment system was very complex to the farmers and due to the pressing needs, some farmers had to spend the ZWL$ payment before it was converted to the USD retention component.”

The payment system proved to be time consuming as well, farmers made several trips to the bank to process payments.

It was also noted that there were strict measures to utilise the nostro funds, farmers were to provide invoice for imports and they could not use the funds for local payments.

This resulted in many farmers liquidating the USD retention to ZWL$ thus the real value of the USD was lost since liquidation was done using rate for the day of the sale whilst the market prices were following the parallel market rates.

Farmers also had challenges in accessing cash because Banks had limited supply of both the local currency and the USD cash component.

Given the challenges mentioned in this article and more, tobacco grower representatives will strengthen their lobby and advocacy work by engaging the relevant policy makers and present their position papers and recommendations.  

In the last marketing season, ZFU and other grower representatives successfully negotiated for the USD component increament from the 30% suggested by the RBZ to at least 50%.