As the tobacco selling season in Karoi, Mashonaland West province, Zimbabwe, commences, the anticipation among local businesses and the community skyrockets, signaling a bustling period of economic activity. However, beneath this hive of activity lies a troubling reality for the tobacco growers, who face significant challenges threatening the very viability of their livelihoods. Despite the critical role they play in the tobacco industry, a pillar of Zimbabwe’s economy, these farmers are ensnared in a cycle of debt and diminishing returns, largely due to policies and practices that severely limit their financial gains.
The Zimbabwe Tobacco Growers Association (ZiToGA) has raised the alarm over the foreign currency retention system enforced by the Reserve Bank of Zimbabwe (RBZ), which mandates that farmers are compensated with a mere 25% of their earnings in foreign currency, with the rest paid in the rapidly devaluing local currency. This policy has placed the farmers in a precarious position, as the bulk of their production costs require payments in United States dollars, leaving them with insufficient funds to cover these expenses and eroding their profits.
Moreover, the tobacco marketing season has exposed farmers to further vulnerabilities. Predatory pricing by merchants, who exploit the farmers’ desperate need to sell their crops, compounds the issue, leaving them with little to no financial empowerment. The situation is aggravated by the contract farming system, which, while intended to provide farmers with the necessary inputs on credit, has instead led to a dependency that undermines their autonomy and economic sustainability.
ZiToGA has called for urgent action from the government, the Tobacco Industry Marketing Board (TIMB), and other stakeholders to reform the current forex retention policy and implement measures to ensure fair trading practices. Proposals include state-controlled, interest-free loan schemes for tobacco growers, similar to those in place for cotton farmers, to alleviate the financial burdens they face.
Efforts are being made to address some of the challenges. TIMB spokesperson Chelesani Tsarwe highlighted initiatives such as partnering with Hwange Colliery to provide coal for tobacco curing and working with AFC Bank to offer crop insurance to small-scale farmers. These interventions aim to reduce production costs and protect farmers from risks, contributing to the overall goal of enhancing the sector’s viability.
In addition, TIMB is fostering a centralized production initiative to support small-scale tobacco farmers in Mashonaland West, encouraging the transition to formalized commercial enterprises. This project exemplifies the broader ambitions of transforming the value chain, aligning with national development strategies and the vision for an improved economy by 2030.
However, the path to reform is fraught with challenges. The RBZ’s stance, as indicated by spokesperson Kumbulani Shirichena’s call to await the upcoming monetary policy statement, suggests a cautious approach to altering the forex retention threshold. This stance, while understandable from a monetary policy perspective, underscores the need for a balanced approach that considers the immediate and long-term needs of the tobacco farmers.
Tobacco farming in Zimbabwe is a critical economic activity, contributing significantly to the nation’s foreign currency earnings, with annual revenues reaching around US$1 billion. Yet, the disparity between the industry’s success and the farmers’ plight is stark. The current system, characterized by inadequate financial returns, exploitative practices, and a lack of support for sustainable growth, has left many tobacco farmers in a state of abject poverty.
The situation calls for a concerted effort from all stakeholders involved in the tobacco industry to address the systemic issues plaguing the sector. By revising the forex retention policy, improving market transparency, and offering better support mechanisms for farmers, there is a potential to not only enhance the economic well-being of the tobacco growers but also to ensure the long-term sustainability and growth of the industry as a whole.
As the discussions continue and stakeholders seek solutions, the hope is that the coming seasons will bring not just activity and anticipation to the farming town of Karoi but also a renewed sense of empowerment and prosperity for the tobacco growers who are the backbone of this critical industry.
Source: Newsday
