Currency trade winds

Failure by the Reserve Bank of Zimbabwe (RBZ) to make a commitment about how tobacco growers will be paid during the forthcoming marketing season is causing uncertainty in the industry, according to a story in The Standard.

Industry players argue that the recent enthusiasm among farmers for growing tobacco is likely to be reduced if payments for tobacco are made in local currency or with a foreign-currency proportion that would not cover the costs of inputs priced in foreign currency.

Stakeholders in the tobacco industry are said to have met recently with senior officials at the RBZ to discuss the currency concerns ahead of the presentation of the central bank’s monetary policy statement (MPS), but with no immediate success.

Zimbabwe Tobacco Association (TAZ) CEO Rodney Ambrose confirmed the meeting had taken place and said the industry was now waiting for RBZ governor John Mangudya to present the MPS before deciding on the way forward.

Previously, the RBZ was said to have suggested that growers should be paid 80 percent of their proceeds in local currency and the rest in US dollars.

However, TAZ president Guy Mutasa said such an arrangement would be unsustainable as growers needed to use foreign currency to buy equipment.

Meanwhile, the Federation for Farmers’ Union president Charles Chabikwa said the Union was waiting for the MPS.

“What I know is that a meeting was convened by the TIMB, tobacco growers’ associations and the central bank, but nothing conclusive came out of it because the monetary policy statement is yet to be presented,” he said.

“But my personal view is that tobacco farmers want more than 20 percent and, if possible, 100 percent payments in foreign currency.”

Last year, tobacco growers were reportedly paid 50 percent in foreign currency.