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Exchange rate haunts tobacco farmers

24 May, 2020 - 00:05 0 Views
Exchange rate haunts tobacco farmers

The Sunday Mail

Sunday Mail Reporter

Farmers have called on Government to urgently address the issue of currency instability as tobacco growers’ earnings are being eroded by inflation.

Tobacco went on sale on April 27, with farmers getting 50 percent of earnings in United States dollars and the remainder in local currency at a fixed rate of US$1 to $25.

Latest figures from the Tobacco Industry and Marketing Board (TIMB) show that 28 million kilogrammes of tobacco worth US$60 million had been sold by last week.

However, seed and fertiliser suppliers are pegging inputs at parallel market exchange rates.

Last week, parallel market foreign exchange rates went haywire, with mobile money transfer rates at between US$1 to $60 and $70 from about US$1 to $40, while the greenback traded at an equivalent $40 in cash from about $30.

As the currency volatility bites, farmers have been lobbying for a floating exchange rate or payment of a revised higher retention threshold of 75 percent in foreign currency to beat inflationary pressures.

Zimbabwe Farmers Union (ZFU) executive director Mr Paul Zakariya said tobacco farmers were hard hit by the loss of value of the local currency.

Farmers are urging the Reserve Bank of Zimbabwe and the Ministry of Finance and Economic Development to consider their concerns.

Repeated efforts to get a comment from the RBZ Governor Dr John Mangudya and his deputy Dr Kupukile Mlambo were fruitless yesterday as their mobile phones went unanswered.

Finance and Economic Development Ministry spokesperson Mr Clive Mphambela said he was not aware of the recommendations from ZFU and TIMB over the farmers’ concerns.

“I cannot comment on this issue because I haven’t seen the letters,” he said.

Mr Zakariya said:

“Pegging the fixed exchange rate at US$1 to $25 is not sensitive to the realities on the market.

“Something has to be done because suppliers are not pegging prices using the official rate.

“This means that farmers’ earnings have been reduced.”

Mr Zakariya said if the RBZ cannot deal with currency stabilisation, as it is appearing that there is no solution in sight, they must consider other alternatives.

“We cannot go for another week with a fixed rate as prices of goods and services are skyrocketing at an alarming rate.”

TIMB chief executive officer Dr Andrew Matibiri said the board had forwarded the concerns of farmers to Government.

“The matter is being looked into by the authorities, as you would appreciate that the currency problems are not just affecting tobacco farmers, but the whole economy,” he said.

The golden leaf is estimated to sustain over 100 000 households in the country.

This year, tobacco sales are projected to take a 20 percent plunge after reaching an all-time high of 258 million kilogrammes last year.

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