Farmers/govt in stand-off over fixed exchange rate

Blessing Zulu/Augustine Mukaro

THE crisis-ridden tobacco sector has found no respite from the government which has reneged on its promises to save the sector from collapsing.



ace=”Verdana, Arial, Helvetica, sans-serif”>The impasse between the government and tobacco farmers over devaluation has resulted in a sharp decline in tobacco deliveries to the auction floors Zimbabwe Tobacco Association marketing information executive, Rodney Ambrose, said government had not honoured its promises to farmers.


“The government promised farmers that it will review the exchange rate every three months,” Ambrose said.


Farmers are not happy with the exchange rate of $824 to the US dollar, and want this increased to about $1 600 to the greenback.


“The minimum exchange rate that farmers require is $1 600 and this should have been done long back,” said Ambrose.


Farmers said inflation had pushed up production costs, and most farmers obtained their inputs on the parallel market at exchange rates of up to $5 500.


Tobacco growers were hoping that the new exchange rate would be announced after the supplementary budget on August 21. Finance minister Herbert Murerwa has remained mum on the issue of devaluation. In early July, farmers, through their representative body, the Tobacco Industry Marketing Board, wrote to the Ministry of Finance calling for a revision of the exchange rates but there has been no response.


Ambrose said farmers were only being attracted to the floors by the favourable price.


“The top leaf is selling at US285c per kg. This is very attractive and farmers are selling their crop after grading,” he said.


Farmers had been holding on to their crop hoping that the exchange rate would be reviewed but this has not happened.


Production has declined by about 40% since the start of government’s controversial land seizures.


Auction floors are not being fully utilised at the moment. Only four out of six auction floors are operating.


Ambrose said farmers had already communicated with the government on the need to devalue the Zimbabwe dollar to ensure viability. Tobacco has been the country’s biggest foreign currency earner until the inception of the often chaotic land reform programme in 2000.


There are now fears that production will hit record lows this year due to ever-increasing prices of inputs.


Prices of basic inputs such as fertilisers, chemicals, seeds and fuel for draught power have increased by at least 300% over the past three months.


“One bag of ammonium nitrate fertiliser now costs $45 000, up from $18 000,” one newly resettled farmer in Gutu-Mpandawana area said.


He said another stumbling block was that the retail outlets and private tillage providers were not accepting either personal or travellers cheques, forcing most farmers to reduce the land under crop to very small pieces.


There are indications that tobacco output could be down to 60 million kg in the next season, compared to 70 million kg this year.