Nine Zimbabwean tobacco contractors have collapsed in the past year due to cutthroat competition, according to the Tobacco Industry and Marketing Board (TIMB).
“There is a lot of competition in the contracting space in terms of pricing,” TIMB CEO Meanwell Gudu told The Zimbabwe Independent. “If a contractor does not pay the correct price, that contractor will not get tobacco. Last year, we had 42 companies, and now, we have 33. Some of them have fallen by the wayside because they could not compete.”
Once characterized by auction sales, Zimbabwe’s tobacco trade is now dominated by contract growing, with up to 96 percent of leaf tobacco being produced under agreements between buyers and farmers.
More than half of the $748 million earned by Zimbabwe’s golden leaf farmers in 2020 was pocketed by contractors, mainly big foreign corporations that repatriate the hard currency back to their countries, according to critics.
Last week, Gudu also said the TIMB was set to crack the whip on tobacco “side marketers”—buyers who illegally purchase leaf from farmers contracted with other organizations—with stiff penalties that will see offenders serving up to six month jail terms.