Commercial Farmers' Union of Zimbabwe

Commercial Farmers' Union of Zimbabwe

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by darlington musarurwa Sunday, Apr 5, 2015 | 4837 views

>>Chinamasa, Mumbengegwi get US$1m from contractor 
>>Tobacco price collapse sparks witchhunt

0204-2-1-TOBACCODarlington Musarurwa and Africa Moyo

THE plunge in prices on the tobacco auction floors, which has riled small-scale tobacco farmers, has prompted stakeholders to cast a dragnet for unscrupulous players that might be responsible for driving earnings from the golden leaf down.

The role of industry regulator, the Tobacco Industry Marketing Board, has increasingly come under scrutiny as it is felt that it is not doing enough to bring sanity to the market.

Two senior board members of the TIMB — Mrs Monica Chinamasa (chairperson) and Mrs Emily Mumbengegwi (board member) — are at the centre of the storm for entering into an “incestuous relationship” with Chinese tobacco contractor, Tianze Tobacco Company, which provides them with farming inputs.

The named board members have reportedly received a cumulative US$1 million in loans for their tobacco operations.

[READ ALSO Merchants mobilise US$800m for tobacco]

There are suggestions that this could be a serious breach of corporate governance that not only makes their role as regulators debatable, but also breeds mistrust in the industry.

Sources told The Sunday Mail Business recently that while the TIMB members are entitled as Zimbabweans to get support for the personal ventures from whomsoever them wish, they were uneasy that the two began to get loans after being appointed to the board.

Government appointed the TIMB board in June 2011, with Mrs Chinamasa chairing, deputised by Mr Nimrod Chiminya, and with other members being Mrs Mumbengegwi, Mr Crispen Sukume, Dr Jane Gonese, Mrs Mercy Chizodza-Chineunye, Professor David Simbi, Dr Ephraime Hwingiri and Dr Engelbert Kapuya.

“Some of the TIMB board members need to declare their interest so that it becomes clear for every one to judge if they can competently discharge their mandate. While obviously they are entitled to loans, there is a clear conflict of interest where the regulator has an unclear relationship with the regulated.

“How can you be an arbiter in cases involving the contractor? Suffice to say, they are conflicted. How can you be a referee and a player at the same time?” sources asked.

Investigations by this paper, which were corroborated by official documents from Tianze, show that while the appointments were confirmed in June 2011, Mrs Chinamasa got input loans worth US$103 498,12 that season, followed by inputs support worth US$149 378,04 in the 2012/2013 season, US$134 051,06 in the 2013/2014 season and US$62 038,22 in the current season.

She got a total of US$448 955,44 in loans from the contractor.

To her credit, Mrs Chinamasa, who confirmed receiving the loans, has liquidated all her obligations.

Though sources said Mrs Mumbengegwi similarly started receiving loans from the same contractor at the same time, the file that is with Tianze is under the name of her husband, Foreign Affairs Minister Simbarashe Mumbengegwi.

Mrs Mumbengegwi could not be reached for comment last week.

It is understood she received loans worth over US$540 000: US$205 000 in 2012/2013, US$160 000 in 2013/2014, and US$175 000 in 2014/2015.

There are fears that TIMB could be hamstrung from impartially performing its role should Tianze be found on the wrong side of the law because of these relationships.

TIMB regulates all players in the tobacco industry, including contractors such as Tianze.

Tianze is offering top dollar for tobacco delivered under its contract facility, having offered the highest prices on the market to date at USS$6,25 per kg.

The majority of small-scale farmers, however, are having to contend with prices of between US$2 and US$4,25.

Tobacco farmers protested against low prices offered by merchants on the first day of the tobacco marketing season on March 4.

With the recent introduction of a 1,5 percent per kg levy to fundraise for reforestation, some farmers believe they may not be able to return to the fields this year.

Some merchants say the low prices obtaining on the market are a result of excess tobacco both locally and internationally, especially from Indian and Brazilian farmers; while others say Zimbabwean farmers are increasingly delivering a poor quality crop.

Further, most local tobacco is for blending and thus attracts lower prices.

Tianze said last week its relationship with Mrs Chinamasa and Mrs Mumbengegwi was above board.

An official, Mr Li Wenjie, said: “We give inputs depending on the performance of the farm; if the farm is performing well, we give them more inputs because we know the farmers are going to pay us back. If production is low, we do not give a lot of inputs. Basically, that is how we do it.

“Mrs Chinamasa is producing a lot of tobacco at her farm and she brings it here and we deduct our money for inputs. So we treat her like any farmer who comes here and sign an agreement; after that we send our guys to their farms to check their infrastructure and everything before we give inputs . . .

“There is no money in the banks to support farmers so they come to us because we don’t put a mark-up on the inputs we give to them. And that is a good deal. . . We have been paying US$6,25 per kilogramme which I think is the highest so far.

“But it’s all business; there is nothing special that we expect TIMB to give us in return. Tianze is 100 percent owned by the Chinese government and we are exempted from the indigenisation law.

“When we have issues, just like any other company, we communicate with (TIMB),” said Mr Li.

Contacted for comment, Mrs Chinamasa said her relationship with Tianze is that of “contractor and grower, full-stop”.

“I get my inputs from them; I sell to them. I do my job in a professional manner as a regulator, and I am not the only one on that board: there are 11 of us, real professionals.

“So, if you tell me the instance where we were compromised, then I will be interested in that. We go by the book; we are governed by the Tobacco Marketing and Levy Act and all the regulations that are there.

“We go by the book; that I can assure you — unless you are prepared to tell me an instance where we were compromised,” said Mrs Chinamasa.

Tianze has so far bought about three million tonnes of tobacco.

Experts contend that there is need to collapse the dual auction system to ensure that prices charged by merchants are transparent across the board.

It is argued that the dual auction system has led to arbitrage, especially after the re-introduction of Class B buyers who had been banned in 2012 for driving the price of the golden leaf down.

Class B buyers, whose role includes buying, re-handling and repackaging tobacco, were re-introduced on the market under unclear circumstances, a development that is again blamed on TIMB.

Half of Zimbabwe’s tobacco goes to China where over two trillion cigarettes are smoked per year.


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