Zimbabwean farmers demand full dollar retention

Zimbabwean farmers demand full dollar retention

Zimbabwean tobacco farmers are asking the government to allow them to retain 100% of their dollar income during the upcoming marketing season, the Herald reported.

Previously, the Reserve Bank of Zimbabwe announced that in the 2023-2024 tobacco growing season, only 75% of tobacco growers’ sales revenue will be paid in foreign currencies. The remaining 25% will be settled in local currency at prevailing interbank market interest rates.

This ratio is lower than 85/15% in the 2022-2023 season.

Zimbabwe Tobacco Growers Association (ZTGA) president George Seremwe said tobacco growers need to retain all foreign currency earnings as their production costs are also foreign currency-based. Seremwe said it was difficult for farmers to make a profit amid the current fragmentation.

Rodney Ambrose, chief executive of the Zimbabwe Tobacco Association, agreed: "Tobacco production costs have been dollarized by 90 to 100 per cent. The 85 per cent retention rate last season helped improve growers' viability, Especially given the leveling off of tobacco prices and increasing production costs."

"Contractors lend almost 100 per cent of their loans to farmers in foreign currency and any retention rate below the current 85 per cent will have a negative impact on growers' viability."

Victor Marilanica, chairman of the Tobacco Farmers' Union Trust, said: "Unfortunately, the 75/25 split undoes the gains made and we hope this policy will change in February 2024. Last season's 85% split The retention rate is not enough for farmers, so we hope to achieve 100% foreign exchange retention rate by the 2024 marketing season."

Under the Tobacco Value Chain Transformation Plan, Zimbabwe aims to sustainably produce 300 million kilograms of flue-cured tobacco by 2025. In 2023, the country's farmers produced 296 million kilograms and earned $897 million.

A November 10 report from the Tobacco Industry and Marketing Board (TIMB) showed that the number of registered tobacco growers fell by a quarter during the 2023-2024 season.
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