…as well as creation of a tobacco derivatives market
The local bourse and tobacco industry regulator has set in motion the process of mitigating funding and marketing challenges experienced by small scale tobacco farmers after signing a Memorandum of Understanding (MoU).
Tobacco is the country’s second foreign currency earner after gold, with China and South Africa being the major buyers of the golden leaf.
Other top buyers of flue-cured tobacco from Zimbabwe are the United Arab Emirates, Indonesia and Belgium.
The crop is mainly produced through the contract system where buyers provide the farmers with the inputs for tobacco farming. While the country is the largest producer of tobacco in Africa, at least 1.5% of the crop is channeled toward local processing, with the rest being exported in raw form.
However, the Tobacco Industry and Marketing Board (TIMB), the Zimbabwe Stock Exchange Limited (ZSE) and its subsidiary the Victoria Falls Stock Exchange Limited (VFEX) have signed a MoU which is expected to harness the tobacco industry’s potential.
In a joint statement, all parties noted that the signing of a MOU forms a basis for cooperation in the fundraising for Tobacco farmers, fundraising for local tobacco merchants, the compilation and distribution of tobacco production and marketing data.
Also paves way for the establishment of a tobacco derivatives market.
“The full implementation of this MoU is expected to result in increased productivity and smoother cash flows for small scale farmers and improved capacity for local tobacco merchants,” reads part of the statement.
Many of the small-scale farmers are struggling, impoverished by merchants who lure them into debt through contract farming – Harare