By Ndafadza Madanha
TOBACCO farmers will from the next auction season receive foreign currency for their crop following pronouncements made by Reserve Bank of Zimbabwe (RBZ) governor John Mangudya in his monetary policy statement.
However the tobacco farmers like their cotton counterparts will only retain 20% of their export proceeds which will be deposited in their Foreign Currency Accounts and be available to them on demand at their respective banks.
“For the avoidance of doubt, foreign currency in the Nostro FCAs pertains to free funds, diaspora remittances, international organisations’ remittances, portfolio investment inflows, loan proceeds and export retention proceeds. It is also essential to note that all exporters retain 100% of their export proceeds with the exception of gold producers that retain 30% of export proceeds; platinum, diamonds and chrome 35% and; 20% for tobacco and cotton producers,” said Mangudya.
According to the Tobacco Industry and Marketing Board (TIMB) as at 15th August 2018, cumulative tobacco output amounted to 248.2 million kilograms, which is 35% higher than what was sold during the same period in 2017. The 2018 output raked in a total of US$725.9 million, which is 30% higher than the US$547 million realized in 2017.
Agricultural economist Peter Gambara said the move while welcome should also be extended to maize farmers as they play a key role in saving the country foreign currency and ensuring food security.
“One implication of that statement is that for tobacco farmers, come selling time this season, all their money will be real forex and they can direct it to their Nostro FCA accounts, unlike last year when they got $300/sale in US$.
The RBZ’s thinking is that exporters should keep or control their sale proceeds, and tobacco farmers are one such group. We export 98% of our crop.
This argument is unfair on the maize farmer though, because when they produce enough to feed the country, they are saving the country forex, therefore they should also benefit from the saved forex. This Monetary Policy statement was not well thought through, it was a rushed one and leaves a lot of questions unanswered and creates new ones as well” said Gambara.