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‘Tobacco industry revamp gains traction’

TOBACCO Industry and Marketing Board (TIMB) chief executive officer Meanwell Gudu (MG) replaced the TIMB’s long-serving boss, Andrew Matibiri, who is credited for steering the industry’s transformation which saw thousands of new small-scale farmers entering the sector. With the marketing season coming to an end, our business reporter Fidelity Mhlanga (FM) this week spoke to Gudu on the future of one of the country’s biggest foreign currencyearners. Gudu says he is confident of the future as the sector embarks on a critical industry value chain review process. He, however, says for now, focus is also on weeding out bad apples, who have manipulated farmers and driven them to abject poverty. Below are excerpts from the interview:

FM: You took over as TIMB CEO in April this year, coinciding with the onset of the marketing season. Tell us about your experience so far?

MG: It has been a busy season coupled with Covid-19 restrictions. But we have managed to pull through. My predecessor did well to grow the industry. My focus now is on improving the viability of growers, ensuring 100% compliance to regulations and ensuring that the industry has 100% compliance to sustainable tobacco production and good agricultural labour practice. In addition, the current tobacco farmers should diversify their sources of revenue by growing alternative crops. Those are some of the key issues I am hoping to address during my tenure as the TIMB CEO.

FM: What kind of changes have you undertaken within the tobacco industry so far?

MG: As a result of the Covid-19 pandemic, we managed to decentralise our operations as TIMB. For this season we had contract sales floors operating in Bindura, Mvurwi, Karoi, Marondera and Rusape. This went a long way in decongesting sales, which are normally only conducted in Harare.

FM: This year’s marketing season is coming to an end. So much happened, such as the Covid-19 third wave we are currently experiencing. What is your comment about the tobacco season to date?

MG: The season has progressed very well with the average price for this year being firmer by 12% as compared to what was paid last year. It means prices that were offered this year have been very good as compared to last season. The average price offered this year has been US$2,78 per kg as compared to US$ 2,48/kg last season. Of the 190 million kg of tobacco received to date, US$526 million has been paid out to farmers.

FM: There were reports of the spiking Covid-19 infections at tobacco auction floors, especially in Mashonaland West. Can you give us more detail about this?

MG: The new wave of Covid-19 has meant that the regulations put in place at the onset of the marketing season had to be strengthened and serious monitoring undertaken to ensure everyone complied. All stakeholders, participating in the marketing of tobacco are still being encouraged to get vaccinated in order to protect themselves and those around them.

FM: Tell us about the naming and shaming exercise that the TIMB undertook this season? Did you achieve the results that you wanted?

MG: The issue of side-marketing has been one of the challenges we have had to deal with during this marketing season. However, to date we have a total of 169 people who have been convicted and fined because of side marketing. This exercise of naming and shaming those responsible for side-marketing was aimed at discouraging repeat offending and deterring would be offenders. At the end of the day there is a need to bring sanity to the industry.

FM: What is the amount of tobacco delivered to date as compared to same period last year?

MG: As of Day 69, we had recorded a total of 190 million kg as compared to 164 million kg of tobacco received on the same day last year. We are on course to attaining the set target for this year looking at deliveries received to date.

FM: Contract buyers’ prices continue to decline compared to auction floor prices. What is the reason behind this?

MG: TIMB sales supervisors who oversee sales at contract floors ensure that there is fair pricing through enforcing the grade-price matrix even though the prices offered may be lower than at the auction floors.

FM: Contract floors are gaining ground against auction floors. There has also been a lot of unease about surrogate buyers.  What is your explanation to this as the regulator?

MG: As a result of constraints in the financing sector in the country, the third party suppliers have come in to close the gap left by the principal contractors who have found it difficult to offer funding to all small-scale tobacco farmers in need of financial support as they lack bankable collateral to borrow from financial institutions. Third party suppliers take the risk of funding small-scale growers, who ordinarily would not qualify for funding by principal contractors.

These growers include new growers or growers who were previously disqualified for default or lower productivity. During this season, the share of third-party contractors collectively is currently representing 18% of total sales. Third party suppliers do not buy the tobacco; it is the principal contractors who buy directly from the growers.

FM: Please give details on plans to transform the tobacco value chain system?

MG: Currently, there is a lot of work that is being done to transform the tobacco industry value chain. The Ministry of Lands, Agriculture, Fisheries, Water and Rural Resettlement is spearheading a plan to that effect and is working closely with TIMB and other tobacco stakeholders.

The objectives of the tobacco value chain transformation plan are to prioritise strategic interventions in the following areas; localisation of tobacco funding, value addition and beneficiation of tobacco, alternative crops to tobacco, market development and trade policy and regulatory environment.

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