According to the Independent, tobacco farmers in Zimbabwe are demanding 100 percent of their revenue be paid in U.S. dollars, rather than partly in foreign and partly in local currencies. Farmers point to higher input costs due to high inflation and exchange rate fluctuations.
The Reserve Bank of Zimbabwe says tobacco farmers will receive 75 percent of foreign currency sales. The remaining 25% will be paid in local currency, which will be converted at the prevailing auction rate on the day of the auction.
"Expect us to keep 100% of us dollars (USD). The input costs are very high. Everything is paid in US dollars, including Labour, "said Shadrake Makombe, president of the Commercial Farmers' Union of Zimbabwe.
"Contractors need to increase their funding per hectare. "The dry season has affected most late crops and most farmers will face challenges in repaying loans."
The Zimbabwe Tobacco Association (ZTA) said in its latest newsletter that the 75% forex retention level "will sadly negate all expected positives for the season, so diversification and identification of alternative tobacco crops remains key for all growers".
"Demand for Zimbabwean-style tobacco remains high. However, it is poor, inconsistent monetary policy that hurts local industry and hinders its growth, "ZTA said.
"Last year we had a situation where contractors failed to pay farmers," said George Seremwe, president of ZTA. "So far, some farmers have not been paid. We don't expect that to happen. We do not expect these contractors to purchase tobacco this season until they meet their obligations from last year."
"We want the grading and pricing system to be uniform. We can't have one contractor pay a grade higher than another. We want to fix that, too." The marketing season officially began on March 30.