Zimbabwe: Tobacco Growers See Red Over Non-Payment

Source from:  Financial Gazette (Harare) 10 January 2008 01/11/2008

ZIMBABWE'S tobacco farmers are battling to get foreign currency payments for tobacco auctioned in the last marketing season, industry sources indicated. The payment hitches have left farmers in a lurch, and could affect the current planting season. Tobacco farmers receive 20 percent of their receipts in foreign currency under central bank measures put in place last year to boost crop production. The tobacco farmers were asked to open foreign currency accounts (FCAs) during the past marketing season to allow for foreign currency deposits. Bankers interviewed by The Financial Gazette said the current payment problems had been triggered by delays in the release of foreign currency by the Reserve Bank of Zimbabwe (RBZ), which is trying to allocate the little foreign cash trickling into the formal market to critical sectors. Last year's irrigated tobacco crop is currently in the curing stage, but crop grown during the current season could be affected by the payment delays. Tobacco farmers said they urgently require significant cash to purchase coal, most of which is being imported because of supply constraints at Hwange Colliery Company, as well as for diesel to drive generators to pump water into the fields for the irrigated crop and for curing. Farmers said they were not satisfied with the explanation they had received from banks where they hold their FCAs, alleging underhand deals could be taking place in the banking system. "They have not given us sufficient explanation," a farmer said this week. MBCA managing director, Mberikwazvo Chitambo, whose bank, farmers claim, disbursed foreign currency to just a few growers, denied that banks were deliberately delaying the payments. "Do you know that I have to get the money from somewhere...Are you aware that where I receive the money for me to pay the farmers, the foreign currency is not (available)?" Chitambo asked. "This is a nation under siege, a nation that is trying to correct the situation. The economy has gone bad. Tobacco farmers are productive people and why should they spread such inaccurate information?" At the presentation of the mid-year monetary policy statement late last year, the governor of the RBZ Gideon Gono promised to settle outstanding FCA payments to tobacco farmers by October 31, 2007. He said beginning this season the current 20 percent FCA retention allowance to the tobacco farmers would be increased to 25 percent to bolster viability and help them with funds to procure critical inputs. Tobacco farming has continued to be a pivotal sector in terms of foreign currency generation, employment creation and contribution to Gross Domestic Product in Zimbabwe. The Tobacco Industry and Marketing Board statistics indicate that the country had generated US$167 million from the sale of 71,6 million kg of tobacco, while $5,2 trillion had been paid out to tobacco farmers as government support by October 4, 2007. Enditem