A feeling of uneasiness has gripped farmers in Zimbabwe's huge tobacco plantations.

Despite the abundant harvest, they are in a perilous position since debt has kept them in a cycle of enslavement.

For years now, farmers have been caught in a vicious cycle of taking out loans from tobacco companies to finance their operations.

The loans come with a catch — they are tied to a contract that requires the farmers to sell their tobacco exclusively to that company.

This year, again, the farmers find themselves unable to service their loans.

This means they are forced to sign another contract, effectively binding them to the company for another season.

Keep Reading

The threat of losing their properties or being taken to court hangs over their heads like a Damocles sword.

One such farmer, Rodwell Chapunza, tells of the stress and anxiety that the debt has brought upon him and his family.

"We work hard day and night to ensure a good harvest, but the debt just keeps piling up,” he said.

“It's like we are never going to be able to break free from this cycle."

Another farmer, Sarah Mtombeni, echoed Chapunza's sentiments.

"We are at the mercy of these companies,” Mtombeni said.

“They know we have no other choice but to sign another contract, so they keep raising the interest rates.

“It's a never-ending cycle of debt and servitude."

The situation is worrying not only for the farmers, but for the entire tobacco industry in Zimbabwe.

With fewer farmers able to afford to take out loans, the industry could suffer a significant blow.

According to the auction and contract tobacco seasonal sales figures from the Tobacco Industry Marketing Board (TIMB) for day 50, a total of 213,2 million kilogrammes of tobacco worth US$640,2 million had been sold, an increase of 51% compared to the prior season.

The cost per kg was US$3.

Contract sales made up US$594,3 million of the total, while the auction brought in US$45,9 million.

Zimbabwe Tobacco Growers Association president George Seremwe described the situation as gloomy and unsustainable.

“Farmers are not happy indeed and at the same time they are debt trapped,” Seremwe said.

“They could not service their loans this season, meaning to say they are automatically forced to go back into a contract to be able to service their debts.

“Otherwise they risk losing their properties or being taken to court, which is a very worrying situation in tobacco production.

“So, farmers did not gain any extra amount, though we have increased the volumes because we have no alternative crops which can replace tobacco above being debt trapped.

“Debt trap is kind of difficult to come out of.

“If we had other alternative crops which can service the loans, most of the farmers may be desisting from growing tobacco.”

Seremwe said even though volumes have increased, prices remained extremely low on both auction and contract floors against high cost of production.

“Farmers are debt trapped and it's going to be difficult and hard for them to leave the tobacco production because they need to maintain the relationship with the contractor and be able to pay back the loan,” he lamented.

“So, they don't have any other income or extra money to be able to finance the next coming season.

“So that's basically what is happening.”

As a way forward, Seremwe said farmers were busy looking for alternatives and ways of cutting the cost of production to make tobacco more profitable.

“We are appealing to the government to come up with subsidies and some incentives which will also enable us to cut on the cost of production to make the tobacco production profitable,” he added, noting that tobacco was one of the biggest foreign currency earners needing government support.

He, however, raised fears that most of the money generated from tobacco sales was only benefiting the contractors, not the country.

Most contractors are not local.

“I have got my doubts that the government is benefiting much out of this,” Seremwe said.

“It’s not getting much of the foreign currency which is being generated by tobacco. So that's also another worry.

“If it was beneficial then maybe we might see the money back in our hospitals, in our schools, but I doubt if that is happening.”

He said farmers also suspect that there is collusion at the auction floors where the price cap had been kept at US$4,99 for a long time.

“We are also appealing to them to stop the collusion and also try to pay reasonable amounts to the farmer,” Seremwe said.

“We suspect there is collusion because this US$4,99 ceiling on the auction floor hasn't changed and it cannot be called an auction if people are putting a cap.

“That cap .”

Zimbabwe Tobacco Association chief executive Rodney Ambrose told NewsDay Farming last week that: “The bigger concern to us at the moment is that the 15% Zimdollar paid to the farmers was at the official rate.

“Farmers have to retool at rates above $2 600, but they are only getting paid at the official rate.”

“Remember, that value that you see that is set by TIMB is not the value that is paid to the farmers.

“Farmers first have to repay their loans from last season, so most of that money actually hasn't been paid to farmers.

“Precisely, 80% of that money hasn't been paid to farmers. Farmers are still repaying their loans from last season.”

Ambrose said the fact that 80% of the value was going to loan repayment was a big challenge for tobacco farmers, adding that production costs have also been up 30%, which would affect production of the golden leaf.

Efforts to get a comment from the Ministry of Agriculture were fruitless.

The 2022/23 tobacco production season had 148 527 growers doing 117 928 hectares of tobacco as compared to 110 155 hectares of tobacco done by 122 841 growers in the prior period.

Zimbabwe produced 211 million kg of tobacco in 2021 and 212 million kg in 2022.

This year, the country projects to produce 300 million kilogrammes.

“We are appealing to the government to intervene, otherwise we are doomed as farmers,” said Chapunza.
Previous article
Currency crisis hits FCB capital
Next article
CZI ink US$300m industrial facilities