US$ 60m fund to help tobacco growers

THE tobacco sector is set to create a Tobacco Production Localisation Revolving Fund with an initial injection of US$60 million to support growers during the forthcoming season.

The seed money is set to fund the production of 60 million kg of tobacco in the 2021/22 season.

Most of Zimbabwe’s tobacco is produced under contract and this has been threatening the auction system.

Auction floors deal with less than 6,5 percent of the crop while contract floors receive almost 93,5 percent.

Many farmers are growing tobacco under contract farming where they are assured of funding, some back-up and generally higher prices compared to those selling at the auction floors

Briefing stakeholders on the state of preparedness for the 2021/22 season, Lands, Agriculture, Fisheries, Water and Rural Resettlement Minister Dr Anxious Masuka yesterday said local inputs content will be funded by the Agriculture Finance Corporation (formerly Agribank).

“The foreign currency to finance the foreign content component required to import inputs will be sourced from the auction system,” he said.

The Tobacco Industry and Marketing Board (TIMB) will recover its support through a stop order system, a development that will enhance Zimbabwe’s value addition to tobacco and increase the net benefit to the revolving foreign currency earnings.

Minister Masuka said the TIMB spearheaded the Tobacco Input Credit Scheme (TICS) but was now being weaned off so it could concentrate on its mandate of regulating.

“We are bringing in the private sector on board as a way of weaning off the TIMB so it can go back to its oversight role,” he said.

TIMB chief executive, Mr Meanwell Gudu, confirmed the developments.

He said the US$60 million was meant to capacitate the local tobacco industry in line with localisation of tobacco funding.

“With the limitations on access to funding from the banks because of lack of collateral, most farmers are now opting for contract farming. That is why tobacco sales on auction floors have declined.

“There are plans to keep the auction system running. There are plans to ensure farmers have access to more funds at their disposal, with the Government offering that support through the recently launched AFC and TIMB also rolling out the Tobacco Input Credit Scheme (TICS) to capacitate the farmers,” he said.

Meanwhile, farmers have sold 196 million kg of tobacco worth US$544 million.

This is an increase from the 172 million kg worth US$428 million sold during the same period last year.

Contract floors have recorded high volumes of 183,9 million kg worth US$509 million while 12,3 million kg worth US$34,8 million went through the auction system.