Obert Chifamba

Agri-Insight

THE recent discovery by the Tobacco Industry and Marketing Board (TIMB) that contractors were preying on unsuspecting farmers to falsify contractual agreements before swindling them of their well-deserved earnings reeks of a larger conspiracy that could have been running for years undetected.

Apparently, farmers have in recent seasons been feeling that something eerie was going on and were relentlessly voicing their suspicions that someone somewhere was siphoning them of their earnings for services they would not have signed for in their contractual arrangements. In most of the cases they would not help but suspect all players they knew to be involved in the tobacco value chain – floor owners, TIMB, Government and the merchants, just to mention a few of their potential faceless suspects.

TIMB’s discovery essentially feeds into a list of other situations that farmers have found themselves in and Government has had to intervene, for instance, the perennial cotton price wars that almost hounded many farmers into abandoning the crop.

Buyers seemed to be conspiring to offer prices that would not allow farmers to break even while in most cases they erect price ceilings that are never breached even if the quality of produce will be crying out loud for that.

There seems to be a growing trend that all service providers want to capitalise on the fact that farmers are price takers in most cases and do not fix prices for their products save for a few occasions yet they shut doors on possible price negotiations and impose their even if they do not allow farmers to remain in business. In all cases, the prices buyers offer do not take into account the costs of production farmers would have incurred and neither do they pause to consider that some of the globally set prices they force down the farmers’ throats are only viable in economies where the farmers receive subsidies.

But it is this chicanery by contractors that must be dealt with decisively so that all other conspirators and potential ones will learn a lesson and realise that they should treat farmers as partners in business.

It is sad to note that all swindlers find farmers easy to prey on and forget that without the farmers they will also not remain in business.

For now, it is only logical to forgive those who will conclude that contractors could have been doing this for years and that many farmers have in fact been making repayments for services they never received or asked for. The stark reality here is that TIMB may have taken it for granted that all was going well between the contractors and their clients yet the opposite was going down.

And the high prevalence of the problem every marketing season points towards some kind of conspiracy in which contractors may have been exchanging notes on ways to rip off farmers. Just like with contractors that stormed the cotton industry in recent years, tobacco contractors have been underfunding farmers but deducting substantial amounts of money from farmers’ earnings to the extent that farmers were simply producing the crop for the contractors to get into debts after the end of every season.

It is just not profitable to produce the golden leaf under such circumstances. TIMB’s latest decision to validate the value of inputs and quantities given to farmers every season is noble but should have been implemented long ago. Most of the errant contractors were not getting anywhere close to complying with the required minimum support levels for farmers.

It is, however, refreshing to note that under the new contract funding regulations the contractors now have to meet set requirements of providing inputs worth US$500 per half-hectare for smallholder farmers and US$4 000 for large-scale growers, which should naturally boost productivity.

Tobacco is the country’s second largest export earner after gold. This year, output declined to 183 million kg, a 27 percent drop from a record 252 million kg last year.

Essentially, the new funding regulations should help flush out errant merchants who have been inflating investment figures or registering growers who would have not have even approached them for funding or they would not have supported in the production process.

Some farmers have often complained of deductions they could not link with any services, which might also mean that someone somewhere could also have been giving contractors access to the growers’ data base from where they would randomly pick details of their victims.

About 95 percent of tobacco farmers are funded by contractors because the majority of them do not have collateral such as land titles to borrow from financial institutions like banks hence they are forced to go to contractors.

Under the contract arrangement, contractors recover their money from earnings through a stop order facility.

It does not require rocket science to realise that most of the fraudulent contractors’ activities could be starting at the point they sign the contracts with the farmers, which makes it critical for TIMB to rope in other industry stakeholders such as Agritex and farmers’ organisations to oversee the signing process.

This should happen easily, as all the players (Agritex and farmers’ organisations) are available everywhere across the country. I understand TIMB has also decentralised services and is now available in most tobacco growing districts, which makes it possible for them to be represented during the contracts signing activities.

After overseeing the contract signing process, TIMB and other stakeholders should not wait to check for compliance when the marketing season begins but should be on the ground enforcing the regulations and addressing complaints on such issues as late disbursement of inputs and even funding.

TIMB should always give contractors deadlines to declare a complete schedule of inputs and costs to them every season and follow that up with a validation exercise to ascertain if the contractors’ submissions will be accurate and in tandem with what will be happening on the ground.

They should also make it the rule of thumb that in cases where costs of inputs are inflated, the contractor not only recovers the actual value of the inputs they would have provided as ascertained by the TIMB but gets de-registered just like in cases where contractors’ databases have people not contracted to them.

Further punitive action should also be taken against such contractors, as the actions easily qualify for fraud.

Some contract packages come with agronomic support but in many cases farmers complain that they never see the agronomists, which affects their eventual yields and ultimately the earnings.

Minimum packages include seed, fertilisers, chemicals, tillage, and harvesting, curing and marketing resources but in most cases they come in bits, which is one of the major reasons for constrained productivity.

With adequate inputs, a farmer can produce 2 500kg of tobacco per ha but they are currently failing to do so and scoring way below the mark.