Tobacco contractor short-changes farmers
Contract tobacco farming provides an allure to poorly resourced farmers in Zimbabwe, but then, contractors are short-changing thousands of them in more than one way.
On such contractor, according to investigations carried out with support from Information for Development Trust (IDT) — a nonprofit organisation helping journalists probe bad governance in Zimbabwe and Southern Africa — is Voedsel Tobacco International.
Voedsel says it is a “Zimbabwean wholly indigenous company” whose operations started in 2008 and has a Tobacco Industry and Marketing Board (TIMB) Class A buyer licence, which permits it to buy and export the golden leaf.
It joined the direct contract farming sub-sector in 2015, according to its website, “to enhance and ensure continued and reliable production of the Zimbabwean tobacco crop” and is licenced to purchase flue-cured Virginia tobacco directly from farmers.
As the contractor acknowledges, there has been a steep increase in contract farming and Voedsel describes itself as a “well-established and influential player” in the field.
According to TIMB, 39 companies were authorised to contract farmers for the 2021 tobacco season.
Under the direct contract farming scheme, farmers receive financial support, fuel, coal for curing and inputs such as fertiliser, chemicals and extension services.
They then repay the contractor from their produce.
In essence, the model is supposed to help small-scale farmers grow and improve their production.
Empty values
Generally, the small-scale farmers lack collateral and have little or no access to financing, and that is how contract farming becomes attractive to them.
But with little knowledge of contracts and no access to lawyers, farmers soon find themselves in murky deals that leave them literally worse off than they were in the beginning.
While Voedsel says its operations are framed on integrity and empowerment as its corporate core values, scores of contracted farmers feel otherwise.
And a young farmer, Munyaradzi Mbulayi, is one of them.
He ventured into tobacco farming more than five years ago with a lofty dream to become one of Zimbabwe’s biggest producers, finally signing up as a contract farmer with Voedsel in 2019.
But the road has not been that rosy for him, even though he still sticks to the contractor with the hope that his fate will improve in the future.
“At first, they paid well compared to other contract farmers, but now they give very low prices and delay payments. They haven’t paid for the tobacco I sold in July this year (2021),” he lamented.
According to him, while some farmers were getting US$2.83 per kilogramme in the second month of last year’s marketing season that normally starts in April, he and other farmers contracted by Voedsel were receiving US$2.75, a difference that is felt when you sell fairly huge volumes.
So, if you were selling a tonne of tobacco as a Voedsel supplier, the difference between you and a farmer going straight to the auction floor would be some US$700 sel is never in a hurry to pay contracted farmers.
Mbulayi says contract farming has so far not given him desired results, but without independent resources, he reckons he is hapless and, therefore, has no choice but to carry on with contract farming.
Even though the selling season started way back in April 2021, Mbulayi says he is yet to receive his money. In essence, it makes him captive to the contractor, just like hundreds of other farmers contracted by Voedsel and other companies.
“They (Voedsel) are already giving (farmers) inputs for the next season, and I just had to take them and be bound to another contract because I do not have money to buy my inputs since I haven’t been paid,” he said.
Mbulayi received inputs worth US$1,230.16 made up of 50kg bags of high compound fertiliser and six bags of ammonium nitrate fertiliser.
There is a silent — quite usurylike — layer to this, though. Voedsel inputs are given to the contracted farmers at higher prices than the average mark-ups on the market, and the contracted workers feel that this amounts to profiteering.
Available documents indicate that the contractor’s markup prices translate to as high as more than 30% of the prevailing market rates.
Voedsel owes the farmers lots of money. Below is a sample list of outstanding payments, with finer identification details withheld. The table reflects the old forex auction or interbank rate, which has since gone up.
Contract farmers get 60% of their proceeds in foreign currency, and the remainder in local currency at the prevailing official rate.
Prince Kuipa of the Zimbabwe Farmers Union (ZFU) traced the history of contract tobacco farming to the beginning of the new millennium when government embarked on the fast track land redistribution programme to redress ownership inequalities in farming.
“Tobacco production declined (following the fast track programme) and, in 2004, contract farming was introduced into the sub-sector. That’s when we started getting an increase in tobacco