GOVERNMENT is battling to find a viable strategy to fund thousands of cash-strapped tobacco farmers that have been manipulated by foreign corporations bankrolling their farming operations, businessdigest heard last week.
Agriculture deaputy minister Vangelis Peter Haritatos, who spoke ahead of this week’s start of the 2021 marketing season, said while a shift towards various forms of domestic funding would be imperative, the government was ill-equipped to fund tobacco farmers.
However, huge payments demanded by contracting firms, the majority of them foreign, have thrown farmers into a vicious debt trap, with only US$150 million out of about US$600 million generated by farmers annually flowing into the country.
Contractors hold off the rest, which is then channelled towards servicing debts.
The Zimbabwe Tobacco Association estimates the number of farmers struggling to shake off the debt trap at 99% of the tobacco farmers.
The Tobacco Industry Development Support Institute for Southern Africa says apart from charging huge interests, contractors were taking up to one year to pay farmers, who have been forced to sell off assets including cattle to survive.
Haritatos said the government was determined to end the controversial funders’ reign in Zimbabwe, but first a stronger, viable and sustainable funding model had to be found.
“The problem is that a lot of currency raised by tobacco farmers is taken out because of these loans,” he said.
“But (changing the model) it’s a process that requires a lot of money as you know. We are confident that we will get the story correct. We want to see more farmers involved, especially small-scale farmers. But more importantly we want quality produce.
“We want our farmers not just to produce millions of kilogrammes, but high quality tobacco.
“We are moving past production but we are looking at productivity and efficiency. The days of exporting raw materials need to come to an end.
“We have had encouraging meetings with the tobacco industry where they have pledged more value addition in Zimbabwe,” Haritatos added.
Contract growers constitute 96% of those who planted tobacco this season.
Last week, the State-run agricultural lender, Agribank said it was exploring a range of options including injecting foreign currency denominated loans for exporters to boost the farming sector.
“The bank will continue to support exporters in agriculture, as well as its value chain and thereby contribute to foreign currency generation for the country,” acting chief executive officer Elfas Chimbera said.
“The bank grew its sugarcane market share in the Lowveld and targets to expand its presence in the region. The bank also introduced loans in foreign currency mainly targeted at exporters in the agricultural value chain.
“The bank will continue to finance crops, that is, tobacco, cotton, soya beans and horticulture. A number of farmers in horticulture covering macadamia, fruits, flowers and avocados, among others benefited from the bank’s financing in 2020,” he added.