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Obert Chifamba

Agri-Insight

THIS past week, a message indicating that some tobacco contractors were contemplating demanding collateral from farmers seeking to produce the crop under contract was posted a tobacco farmers’ WhatsApp group leaving the group members at their wits’ end. 

It was easy for the message to generate such anxious moments given that more than 90 percent of the country’s tobacco is currently being produced under contract.

The bulk of growers fall under the communal category that naturally does not have the capacity to self-finance their operations. 

The message, which was posted by one of the group’s members indicated that the contractors’ decision had been necessitated by high defaulting rates by farmers with the former owed something in the region of US$60 million, which had been accruing over the seasons.

Indications are that farmers are not producing enough quantities to generate cash that can allow them to both repay loans and remain with something for their own survival so they are reportedly employing various tricks to avoid paying the entire amounts owed. 

In the event that the message is authentic and not part of the usual rumour mongering that social media platforms have come to be associated with, then there will be a big problem that will have far-reaching implications on many things.

It means many farmers may fail to grow the crop if they had not been servicing their debts properly while the national drive to be producing 300 million kilogrammes or more of the golden leaf by the year 2025 may be heavily compromised. 

What makes it very painful is the fact that the country is just a stone’s throw away from beating the target after grossing 297 million kilogrammes in the 2023 tobacco marketing season, which has since raised hopes of the target being surpassed this coming season. 

While this may seem like a move to prejudice farmers of an opportunity to better their socio-economic realities, it also reflects badly on the farmers for they would not have been honest in their dealing with their contractors.

One thing for certain is that contractors are in business and farmers need to repay loans to allow them (contractors) to maintain the financing facility alive and growing to accommodate more beneficiaries.

High defaulting rates will obviously run the facility into the ground. 

It is, however, refreshing to note that Government is currently pushing for the localising of tobacco financing to enable farmers to get more revenue while reducing the exporting of money through loan repayments made to external financiers. 

One other way of making life easier for the farmers is by way of reviving the auction system with the Government getting involved in mobilising for the crop’s production.

This will enable farmers to produce free tobacco and more benefits than they are currently taking home since the contracted crop has a lot of transfer pricing. 

Maybe the situation could also improve if something in the mould of the Government’s inputs programme concept can be adopted for tobacco to help the growers.

The current scenario is one in which some farmers are spending the whole season working on a crop whose entire earnings will go towards servicing the debt and leave them clutching at thin air after selling it.

The bulk of the earnings will go to the contractor and in worse case scenarios, even fall short of fully servicing the debt, which worsens the farmer’s situation. 

However, contractors are also not saints in this whole fiasco. 

There have been rampant reports of some of them not being transparent in their dealings with farmers with the commonest complaint being that most of them did not disclose the value of the inputs and services they will be offering at the signing of agreements.

It is alleged that most farmers get rude shocks on the amounts they owe at the time of marketing their crop when the contractors make their deductions. 

In some cases, farmers are complaining that they are being charged for services they never received or being made to pay for inputs that would have come very late into the season, which in the end compromises the quality and value of the crop.

Some of the contractors are alleged to be smuggling in services the farmers would not have signed for and making farmers pay for them, which is unethical when one considers how a genuine contractor-contractee relationship should work. 

The Tobacco Industry and Marketing Board (TIMB) — the regulatory and advisory statutory board whose functions include controlling and regulating the production, marketing and exporting of tobacco has since professed ignorance of the matter saying they had not received any such complaints from farmers. 

TIMB, however, took the opportunity to encourage farmers to repay their loans with its spokesperson, Mrs Chelesani Tsarwe adding that they did not govern the conditions of contracts between contractors and growers. But in the interest of both farmers and contractors, TIMB will be coming with a standardised contract, as a long-term strategy to ensure the two parties dealt with each other professionally. 

One thing that is coming out of the contract challenges farmers are dealing with every season is that most of them do not seem to be taking time to read and understand the contracts they sign as long as they receive the funding and inputs they need. 

Whatever happens after they get their inputs and funding seems to fall under the proverbial bridge that they ‘will cross when they come to it.’ 

This therefore calls for more efforts in availing information on the subject through various campaigns. Of course this is one of TIMB’s key result areas since it oversees the production and marketing of the crop. 

One way or the other, the issue of contractors demanding collateral will pass through TIMB’s corridors of information before it is actualised, that is, if it is true so this will allow the board to give its opinion on the matter. 

The decision TIMB will make on the matter should be one that leaves both parties happy because it has to factor in all the possible implications of either rejecting it totally or coming up with a solution that pacifies the current tension, if any. 

If not handled properly, issues like this normally form the watershed of side-marketing or even the complete abandonment of the crop by some growers, which will not be good for the economy.

While whipping errant farmers into line, TIMB must also find a way of addressing the perennial matter of poor prices, which may also be contributing to defaulting by farmers who upon realising that their crop would not be able to fetch enough to repay their debts, will choose to under declare their yields and sell part of it to other buyers. 

 After all is said and done, let us hope the message in question was just one of those social media skits and will die a natural death.