By Leopold Munhende
CABINET on Tuesday completely ignored pleas by tobacco farmers, to be paid in US dollars instead of a RTGS$, whose value is depreciating at an alarming rate on both the formal and informal market.
Government abandoned the system in which farmers would be paid all their earnings in hard currencies, instead adopting one in which they would get only 30 percent in US dollars with the remaining 70 percent paid to farmers in RTGS$ at a prevailing interbank rate.
The payouts are also subject to the two percent tax. The farmers last week pleaded with government to intervene and save them from unscrupulous merchants and traders as well as the suspension of the transactional tax.
Some farmers have resisted selling their tobacco in RTGS$, but government claims prices would firm up.
Addressing journalists at the traditional post Cabinet media briefing, Tuesday Information Minister Monica Mutsvangwa suggested farmers should be patient.
“31 contractors and 36 auction floor buyers have been licensed to operate, there has been a gradual increase in daily deliveries at most selling points.
“Prices are expected to firm up after Easter holidays,” said Mutsvangwa.
Mutsvangwa’s comments showed Cabinet ignored the pleas altogether as there was no mention of the issue even in the prepared notes.
Farmers have tried to bargain with the Central Bank, to have their produce sold at a rate higher than the prevailing interbank exchange arguing they need to retool for next season but this has fallen on deaf ears.
Renowned Economist Ashok Chakravarti trashed government’s new system.
Chakravarti told State media that paying tobacco farmers in hard currency was the right thing to do, as their produce was being sold to foreign buyers who were bringing in the much needed US dollars.
“Farmers must actually receive these proceeds directly because this tobacco is being bought by external buyers who are bringing in the foreign exchange and that foreign exchange should go to the producers.
“I am not in agreement that the 70 percent or the portion that is supposed to go to producers does not go to them directly because,” said Chakravarti.
“That will be right the right thing to do (paying farmers in foreign currency) and that will incentivise them.”
Government’s attempt at killing the parallel exchange market by floating the Bond Note on the interbank market has not achieved desired results, with the exchange rate also continuing on an upward trend from the USD1: RTGS$2.50 at introduction to between RTGS$3.00 and RTGS$3.30.