Tobacco side-marketers cornered
THE noose has been tightened on unscrupulous elements fueling side marketing of sponsored tobacco — with perpetrators now facing jail — following the gazetting of Statutory Instrument 77 of 2022 which outlaws the rampant practice.
The law, which came into effect last week, prescribes that anyone who fuels the practice is liable to a fine not exceeding Level Five or imprisonment for upto six months or to both.
The culprit may also be ordered to compensate the prejudiced contractor three times the loss suffered.
The Tobacco Industry and Marketing Board (TIMB) announced the ban of side marketing and its consequences if the terms are breached.
“Tobacco contractors are now required to obtain a contractor’s licence in terms of the regulations. All manner of side marketing is prohibited. We trust that all stakeholders will abide by the new regulations and join TIMB in creating a viable and orderly market,” reads the statement.
Side-marketing is a form of contract default where a contracted tobacco grower sells his or her tobacco to a third party in breach of a legally binding contractual agreement which states that the produce shall only be sold to the contractor who financed its production.
Side-marketing is also a form of breach of the law when auction tobacco is sold other than through auction floors in breach of S40 of the Tobacco Industry and Marketing Act (Chapter 18:20).
A study conducted between March 2008 and June 2013 discovered that low price offered to farmers, poor yields and farmers’ greed were the main drivers of side-marketing in Zimbabwe’s tobacco industry.
Tobacco contracting companies were also found to be charging high interest rates or administrative charges on loans extended to contract farmers.
The study recommended that contracting companies offer above-market prices for contract tobacco, while Government spearhead training programmes for farmers to ensure higher yields.
The research also recommended that specific legislation on contract farming be provided to ensure that both farmers and companies’ interests are protected.
Tobacco is a specified crop, governed and produced under the Tobacco Marketing and Levy Act Chapter 18:20 (Revised Edition 1996) – with TIMB acting as the regulatory authority.
Each grower, contractor, buyer or merchant must be registered with TIMB to operate.
Tobacco growers are mandated to sell their produce to licenced buyers only, but the new breed of merchants enticing farmers are not registered.
Tobacco Farmers’ Union Trust president, Mr Victor Mariranyika said there is need to curb side-marketing through laws that empower and protect tobacco growers’ interests.
He said growers are often compelled to sell their produce to registered buyers who impose hostile conditions, thereby forcing many into side-marketing.
“We encourage crop and animal farming diversity, but tobacco has a high value return and contributes significantly to the GDP (25 percent) and 50 percent value of agricultural export.
“As farmers, we should fight for a fair share value of our crop. We are happy that the Government has gazetted SI 77 of 2022, something that we have been lobbying and advocating for over the past three years.
“This statutory instrument defines and legalises tobacco contract farming and marketing. As a union, we will roll out education programmes to empower our farmers to understand and use the instrument to realise value for their crop.
“Growers try to find means and ways of survival under hostile conditions imposed by off-takers, forcing them to sell to whoever they believe serves them better. The first step should be to set a minimum entry price of tobacco which is production cost driven.
“The second step is to suspend current contractual agreements which are skewed against farmers. Farmers need to be given a fair share of proceeds, which is sustainable. Most inputs supplied by contractors are far below sufficient input requirements and are overpriced, thereby leaving farmers heavily burdened,” said Mr Mariranyika.
Zimbabwe Farmers’ Union executive director, Mr Paul Zakariya said this development will ensure sanity and integrity on the market.
“If the farmer is contracted and given adequate resources and paid on time, then it is a very welcome development. Contractors who do not pay must be penalised because they force farmers to resort to side-marketing,” he said.