GOVERNMENT has availed a US$28 million loan facility to support small scale tobacco growers while maintaining the auction system to ensure buyers bid for the best crop.
The facility, to be administered by Agribank, is mostly aimed at reviving the tobacco auction system which had been overtaken by the contract system that usually offer set prices for the crop, a situation farmers are not happy with.
Agribank chief executive officer Mr Sam Malaba told The Sunday Mail that the bank had secured a substantial amount for tobacco farmers and to maintain the auction system.
“We have set up a special Tobacco Industry Marketing Board (TIMB) US$28 million tobacco facility which will support small holder tobacco farmers.
“The tobacco facility will support thousands of small-holder tobacco farmers to enhance productivity and maintain the auction system,” said Mr Malaba.
“Tobacco merchants and contractors will also access the Export Facility,” he added.
Agribank has a strategic business partnership with TIMB and Tobacco Research Board for enhanced support to the production of the golden leaf.
Earlier this year, Agriculture, Mechanisation and Irrigation Development Minister Dr Joseph Made said the existing contract companies were not going to be affected by the tobacco facility.
“We have realised that the bulk of tobacco is produced under contract farming and this has been affecting operations at auction floors losing business,” said Dr Made.
He said the move will not close the contract companies, but will assist small holder farmers who are not contracted to access finance to produce tobacco.
Dr Made said auction floors were collapsing and the Government saw it prudent to come up with a facility to assist small scale farmers who sell on the floors.
Tobacco production has been on the increase for the past years due to the favourable price offered by buyers through the auction system.
But of late, TIMB statistics show that the majority of the crop is now under contract farming.
Farmers sold 189 million kilogrammes of flue-cured tobacco during the 2017 marketing season with contract farmers contributing most of the deliveries at 158 million kilograms, while self-financed farmers weighed in with 31 million kilograms.
The country earned US$666,8 million from 123,7 million kilogrammes of tobacco exported to mainly South Africa and China during the 2017 tobacco selling season.
Last year, the golden leaf remained the highest foreign currency earner at around US$933 million, which was a marginal surge from US$855 million from the previous season.
This season, Mashonaland East Province leads other provinces in terms of the hectarage under flue-cured tobacco with 5 625ha out of the 15 296ha planted countrywide.
Mashonaland West tobacco farmers, who usually lead the pack, follow and have so far planted 3 828ha, Mashonaland Central 3 636ha and Manicaland 2 207ha.
The bulk of the hectarage, at 13 947, is under irrigation, while 1 349ha is under dry land.
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