Story by Owen Mandovha, Business Reporter
TOBACCO farmers have welcomed the 85 percent foreign currency retention level recently announced by the Central Bank, saying it will cushion them against overheads charged in forex.
The Reserve Bank hiked the foreign currency retention ratio on tobacco payments from 75 percent to 85 percent, while the remaining 15 percent will be paid in local currency at the prevailing interbank rate.
Reacting to the adjustments as contained in the Monetary Policy Statement released this Thursday, a representative of the Zimbabwe Tobacco Association, Mr Mutandwa Mutasa applauded the move, saying it will sustain the operations and profitability of tobacco farmers.
“This is good news to farmers as they have been pleading with the Government to increase the foreign currency component. Many costs are now in US dollars and to cover such, you also need to realise more foreign currency from payments,” he said.
Golden Leaf Advisory chief executive officer, Mr Elias Maziwisa said the pleas of farmers to make adjustments demonstrates the government’s willingness to support the tobacco industry.
“Many tobacco farmers have been affected in terms of profitability by way of high operational costs as costs are now US dollar-denominated. It is a noble cause that the RBZ has seen it fit to raise the foreign currency retention ratio to 85 percent,” he said.
The Tobacco Industry and Marketing Board announced last month this year’s tobacco marketing season will open earlier than last year as tobacco farmers are expected to produce a record output of the golden leaf, where this year’s hectarage has increased by 5 percent compared to last year.