TIMB vows to bring sanity to industry

THE Tobacco Industry and Board ( TIMB) is working on plans to help farmers who have not been paid by merchants to get their money in a bid to bring sanity to the industry.

It will also facilitate the recovery of money invested by the merchants to support farmers.

This comes as the regulatory board has banned three more merchants for failing to pay tobacco farmers.

Last week, the TIMB board endorsed the suspension of Voedsel, one of the leading tobacco firms for failing to pay farmers in the past two seasons.

According to the TIMB, suspended merchants owe farmers about US$ 1,6 million.

Upon delivery of tobacco at the buying floors, farmers are supposed to be paid in 48 hours.

“Smallholder farmers represent about 65 percent of the growers and we don’t want them to be vulnerable… so we will make sure that they get their money.

“We have suspended companies that have failed to pay to ensure sanity prevails,” Patrick Devenish, the chairman of the TIMB said in an interview Tuesday

Mr Devenish also said farmers owed merchants a “substantial amount” and a plan was being worked on to help merchants recover the money.

“We represent the interest of farmers and merchants and we want to make sure the matter is resolved,” he said.

“However, we are going to do it in a manner that won’t financially suffocate the farmers,” said Mr Devenish.

He however could not disclose how much the merchants are owed by farmers.

Poor investment recoveries normally result when farmers sell tobacco to contractors who would not have funded them, a practice commonly known as side marketing.

The practice has led many companies to fail to recover their investments, resulting in some scaling- down funding.

Industry players have warned if the practice is allowed to continue, merchants would be left with no option but to pull out.

About 95 percent of small- scale farmers are funded by the merchants under contract schemes.

“The current f unding model of tobacco is the same used to fund cotton since the deregulation of the industry in 1995,” Carlos Tadya, a Harare- based analyst said in an interview.

“Because of proper regulator y enforcement, it worked. However, from 2005, the marketing of cotton became chaotic because of side marketing, and many merchants either downsized or closed. The notable casualty of the side marketing was Cargill, which shut down around 2011 because of poor recoveries.

“The same may happen to the tobacco industry in the absence of orderly marketing.”

Tafara Zvevamwe, a Harare- based agricultural specialist said the “clean- up exercise on the merchants’ side” was a step in the right direction to bring normalcy in the sector.

“What the TIMB need is to broaden the regulatory f ramework to ensure compliance so that we can only have merchants with good reputation and get rid of those who are not following the trading rules,” said Mr Zvevamwe in an interview.

“Once it is done, farmers will have limited chances to do side marketing. That will isolate such farmers.

“The effect of failing to control side marketing is that we will drive away investors,” said Zvevamwe.

In a recent note to stakeholders, TIMB said some tobacco growers have not been paid and this has affected the preparation for the 2022/ 23 season. The last sale of tobacco for the 2022 tobacco marketing season was October 21.

A total of 212,7 million kilograms of leaf tobacco had been sold at a value of US$ 650,3 million.

This is an increase compared to 211,1 kilograms sold during the same period in 2021 at a value of US $ 589,6 million.

The TIMB said it was working with its parent Ministry of Lands, Agriculture, Fisheries, Water and Rural Development to bring order and sanity to the industry as it seeks to achieve a US$ 5 billion industry by 2025.

“Orderly marketing remains fundamental to the continued success of the tobacco industry,” it said.

According to t he Tobacco Value Chain Transformation Plan, approved by the Cabinet in 2021, local funding of tobacco has the potential to maximize net export proceeds.