HomeBusinessRBZ mobilises $28,5m facility for tobacco production

RBZ mobilises $28,5m facility for tobacco production

The Reserve Bank of Zimbabwe (RBZ) has mobilised a $28,5 million input facility for small-scale tobacco farmers as it gears towards boosting the country’s golden leaf production.


The facility administered by Tobacco Industry and Marketing Board (TIMB) is expected to go a long way in boosting auction systems which have been deteriorating over the years.

The sale of tobacco has been inherently twisted in favour of the contract system as farmers failed to procure their own inputs and this has threatened the survival of the auction system, widely seen as more transparent in price discovery.

“TIMB in a bid to continue to develop the tobacco industry have been building appropriate curing technology and installing irrigation systems. This season it has unveiled $28, 5 million from the RBZ for on lending to small scale farmers,” TIMB spokesperson Isheunesu Moyo said.

Tobacco is one of the country’s top forex earners raking in close to a $1 billion yearly thereby lubricating nostro accounts.
Under the facility, farmers will access funding for fertiliser, labour and fuel through the administration of Agribank and repayment will be through the stop order system lodged at point of sale.

“TIMB is disbursing full package of inputs to non-contracted tobacco farmers and all eligible farmers can access the inputs from TIMB while they can also access working capital component from Agribank branch nearest to them. Working capital is money for fuel and labour among others,” Moyo said.

He said the facility comes with an insurance component thereby covering tobacco farmers against natural disasters.

“For quite a number of small scale farmers, insurance of their crop is something they do not take seriously. The TIMB programme comes with an insurance component for the farmer in case of hailstorm, barn fire or loss through theft,” he said.

Zimbabwe Tobacco Association CEO Rodney Ambrose said the beneficiaries should be carefully chosen to ensure that there is no multi-sourcing of inputs and funding. He said beneficiaries must have a proven production history, good repayment history and no record of side marketing.

“We applaud the initiative as the facility allows a portion of the over 20 000 growers who are not supported through the contract system an opportunity to be better funded in order to achieve higher yields and improve the quality of their tobacco,” he said.

Ambrose said the initiative was set to shore up the auction floor system, which has been teetering on the brink.

“The initiative will also support the auction floors activities and revenues, which have been on a decline. Their volumes are at 18% of total throughput. We appeal to TIMB to finalise the full selection of beneficiaries in all districts as there are still farmers waiting for support,” he said.

One of the facility’s intended beneficiaries, Casper Muchetu, said this would enable farmers to sell their crop at any auction floor of choice.

“I am very happy with this programme. It avails adequate inputs and increases our viability. We are also not limited in terms of choices with regards to where we sell our tobacco. One can first survey the market and decide where to sell their produce,” he said.

Another prospective beneficiary, Josiah Chinoda applauded the move, saying it would boost the golden leaf production as the cost of inputs was very high.

“We encourage TIMB to embark on this programme early next season. The costs of their inputs are reasonable. One of the major challenges for us farmers is money to pay for labour and this programme covers this aspect,” he said.

In the outlook, TIMB will extend to large-scale farmers through provision of efficient curing facilities such as tunnel curing systems and centre pivots.

Treasury has moved in to offer incentives to the sector through a budget statement, which proposed to exempt registered buyers of tobacco from paying the 10% withholding tax effective January 1 2018 to ease the tax burden on farmers that are experiencing viability challenges.

The central bank has also increased the export incentive facility to 12,5% from 5% effective in the 2018 marketing season.

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