TIMB explains 75pc forex retention modalities, urges farmers to report unfair practices 

Edgar Vhera Agriculture Specialist Writer

THE 25 percent local currency portion for tobacco farmers will be applied to the net sales proceeds after settlement of levies and other marketing costs and not on the farmer’s gross earnings, the Tobacco Industry and Marketing Board (TIMB), has said.

The board’s comments come in the wake of reports that some farmers had complained that the 75/25 percent foreign and local currency retention ratio was being effected on their gross earnings before the deduction of costs as stipulated by the Reserve Bank of Zimbabwe (RBZ).

TIMB acting chief executive officer, Mr Emmanuel Matsvaire yesterday reiterated that anything carried out in the contrary to the stipulated formula was not permissible and those affected needed to approach the board for assistance and redress of the matter.

“The correct position that the board communicated at the onset of the season was and still is that the United States dollar retention was standardised at 75 percent in line with the retention level for other market players. This effectively means that the 25 percent will be paid to tobacco growers in local currency,” said Mr Matsvaire.

In an earlier communique to farmers and other stakeholders in the tobacco industry, Mr Matsvaire was quoted as saying: “Reference is made to a letter received from the Reserve Bank of Zimbabwe (RBZ) dated January 29, 2024 referenced EXP/REBZZWHA/2024/001954; the US$ retention was standardised at 75 percent in line with the retention level for other market players. Given that the 25 percent to be paid to tobacco growers in local currency is applied on the net sale proceeds after settlement of all loans, levies and other marketing costs, the net effect of this arrangement is that the tobacco grower shall effectively have a foreign currency retention, which is higher than 75 percent.”

He added that the 75/25 percent foreign and local currency split would apply with liquidation only applicable on net of the proceeds.

Meanwhile, the aggrieved farmers had alleged that the 75/25 split was being effected on gross proceeds with the total local currency from the liquidation deposited into farmers’ local currency account and levies and other marketing charges deducted from the foreign currency component.

A sales sheet from one disgruntled farmer shows that she delivered eight bales weighing 419 kilogrammes and grossed US$1 659, 72. The 75/25 foreign and local currency split was applied on this gross amount resulting in a split of US$1 244, 79 and local currency of $7 860 614, 50. The whole local currency amount was deposited into her local currency account while the weighing and auction costs, commission, levy, afforestation levy, bank and service charges were then deducted from the United States dollar portion culminating in her receiving US$969, 41 in her Nostro account.

This shows that she only received 58 percent of her earnings in United States dollars contrary to what the TIMB directive is saying on the matter.

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