Tobacco farmers to retain 50% forex

FIDELITY MHLANGA

THE Reserve Bank of Zimbabwe, in conjunction with the Tobacco Industry and Marketing Board, has said golden leaf growers are set to retain 50% of their sale proceeds in forex and the money will not be liquidated when this year’s marketing season commences.

In a statement yesterday, the two authorities pointed that the foreign currency entitlements for growers shall be treated as free funds and may be retained in their foreign currency accounts for an indefinite period.

While no date has been set for the kick-starting of the marketing season, it is anticipated to commence in the next few weeks.At a time banks do not have adequate cash, the central bank said the 50% will be converted at the applicable exchange rate and cash will be available for farmers to pay for pressing demands.

“Tobacco growers who have been contracted loans in foreign currency shall pay the loans in foreign currency and upon such sale of the tobacco, the foreign loans shall be payable and deducted from the proceeds of the sale of the tobacco and thereafter 50% of the sale proceeds shall be paid in foreign currency and the other 50% will be converted at the applicable exchange rate on the day of sale and paid in local currency,” read the statement.

“The 50% foreign currency portion shall be paid directly into the grower’s foreign currency bank accounts (FCAs) and the 50% local currency portion directly into the grower’s local currency bank accounts or e-wallets on the day of sale.”

The two authorities said tobacco growers will be required to adhere to the stipulated booking requirements for selling tobacco at the auction or contract floors and tobacco growers without booking tickets for the day’s sale shall not be permitted to offload their bales at the auction or contract floors.

While growers were entitled to 50% forex last season, the money was liable to liquidation to local currency after three months. Due to lack of transparency, scores of farmers failed to follow up on their forex earnings and ended up withdrawing cash in devaluing local currency.

“To facilitate adequate preparations and importation of inputs for the next growing season, the foreign currency entitlements for growers shall be treated as free funds and may be retained in their FCAs for an indefinite period. For the avoidance of doubt, holders of such funds are permitted to conduct inter FCA transfers or effect foreign currency payments without any restrictions and the FCA balances will not be subject to any liquidation requirements,” read the statement.

The authorities said farmers who require cash to settle immediate essential requirements such as transport expenses and other incidentals shall have access to cash at a rate of ZW$1,50 per kg of green leaf tobacco sold, up to a maximum of ZW$2 000. Cash withdrawals may be reviewed as the selling season progresses.
Zimbabwe is the world’s sixth largest tobacco grower and the crop is one of the top forex earners, raking in at least a US$1 billion annually.