Some dealers in Harare are taking advantage of desperate cash-hungry farmers, buying tobacco from them at low prices and later reselling the golden leaf at the tobacco floors at much higher prices.
BY FIDELITY MHLANGA
This follows failure by banks to give farmers the stipulated first sale $1 000 cash and $500 on subsequent sales. The Reserve Bank of Zimbabwe and the Tobacco Industry and Marketing Board (TIMB) ordered this payment system at the beginning of the 2017 marketing season.
While the cash being offered by these middlemen is far less than the actual value of the crop, some farmers are taking this option instead of enduring the pain of waiting for days to get cash at banks.
“Farmers are desperate for cash and they don’t want to wait for days at the auction floors. I give them $150 for a bale and then I get inside the floors where I pay buyers $20 so that the crop fetches $4,99 per kg. That way I get $500 for the same bale of tobacco,” a source privy to the practice said.
The source said the dealers were always liquid and were ever ready to give cash for the tobacco they bought from desperate farmers.
“After the money has been put into the dealer’s account, they then look for cash from cash dealers where they easily pay the 10% commission that the cash dealers demand,” the source said.
The dealers are said to obtain growers’ numbers from TIMB with such false projection that they would produce 300kg of tobacco this season. While TIMB says it has registered 82 000 farmers this year, that figure becomes questionable given the number of fake farmers involved.
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A second scenario is whereby the dealers collude with the floor buyers to reject tobacco from farmers on false “poor quality” grounds. Such distraught farmers would then have no option but to sell their “poor” crop to the waiting dealers who pay them a pittance before making a killing inside the tobacco floors.
The electronic tobacco auctioning, touted as a way to root-out such corrupt collusion, has failed dismally, forcing auction floors to revert to the manual auction system.
Standardbusiness visited auction floors last week and saw several such dealers at work and also witnessed an incident where a dealer pounced on a desperate farmer whose tobacco had been rejected ostensibly on poor quality grounds. In this particular incident the tobacco was put on a scale, and following one-sided negotiations, the tobacco was sold at a measly 40 cents per kg. This happened at the Tobacco Sales Floor (TSF).
So lucrative has the tobacco dealing practice become that one buyer who has mastered the skill well and now has a growers’ number, even got a RBZ 5% incentive amounting to $3 800 this year, earned from last year’s “sales”.
“I was approached today by someone saying they are offering to buy my tobacco for cash, so I told him that I am not selling tobacco,” a Hurungwe farmer Maxwell Mupanedenga told Standardbusiness at TSF last week.
A visit by Standardbusiness at tobacco auction floors established many farmers were accepting the offers from the dealer buyers.
“My first delivery of tobacco was last Saturday and my CABS account was credited with $200 but up to now I have not managed to withdraw any cash. Sometimes you think it’s better to sell to these private buyers because they pay cash which is not affected by any deductions,” said a Centenary-based farmer who declined to be named.
So serious are the cash shortages that anti-riot police had to be called-in to quell protests at TSF last Thursday.
When this paper arrived at the floors on Thursday, workers were busy repairing the damaged steel doors and all entrances were locked.
Zimbabwe Commercial Farmers Union president Wonder Chabikwa, said failure by RBZ authorities to avail adequate cash had bred problems for farmers.
“Farmers are now spending three weeks at the auction floors and it’s sad. This has bred a system of corruption which is affecting the farmer. Some buyers are going as far as Mutoko, Marondera to buy tobacco with cash, but this has disadvantages to the farmers as they are being paid less than the actual value of their crop,” he said.
RBZ governor John Mangudya said last week that he had met with banking executives to chart the way forward in light of the cash constraints at the auction floors.
“We sat down with banks at the start of the season and we set farmers’ withdrawal limit at $1 000 at first sale and $500 for the subsequent sales. We met again with banks on Tuesday to review the situation on the ground and we then told banks that where it is possible, let’s give what we promised the sector and where it’s not possible, we expect the farmers to understand,” Mangudya said.
TIMB spokesperson, Isheunesu Moyo said farmers must desist from selling tobacco to dealer buyers.
“We have been educating farmers not to sell tobacco to unlicensed buyers. If tobacco is rejected, it must be sent for re-handling by qualified people. We are against the illegal buyers. We urge farmers to report to TIMB or to the police. These are criminal activities and must be reported,” he said.
