Commercial Farmers' Union of Zimbabwe

Commercial Farmers' Union of Zimbabwe

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Tobacco farmers’ deal turns sour

Tobacco farmers’ deal turns sour


Source: Tobacco farmers’ deal turns sour – The Standard April 16, 2018

Tobacco contracting firm, Agritrade Leaf Tobacco, is in the eye of a storm after it allegedly deducted insurance premiums from farmers without prior contractual agreements.


The premiums were submitted to Champions Insurance.

Farmers who spoke to Standardbusiness said they had not entered into any insurance agreement with Agritrade and Champions Insurance and were surprised when deductions were made.

One farmer, whose total deductions were $1 416 inclusive of levies, was left to take home $406 after $565 went towards insurance cover.

After realising $931 from selling five bales, Lux Chitiki from Hurungwe had $141 deducted for insurance, $701 taken away to pay for transport and input recoveries among other levies and took home $167.

“I agreed to get inputs for only half a hectare, but I didn’t sign anywhere for an insurance company to insure my crop,” he said.

“If they are saying they have signed a policy for me, my tobacco barn caught fire and they didn’t come to serve me,” Chitiki said.

Apart from the insurance fiasco, growers were also incensed by double deductions on inputs.

This paper is in possession of farmers’ payment slips exhibiting astronomical deductions by the company.

According to the input disbursement notes gleaned by this paper, a farmer was given inputs valued at $348 inclusive of interest last year but was shocked when Agritrade deducted $767 when he delivered his crop last month.

Tendai Manhezho, a Macheke farmer who is a victim of the double deductions, has been seeking recourse in vain since the commencement of the marketing season last month.
“I joined this scheme and was given inputs by Agritrade for $348,” he said.

“When I delivered my tobacco at the Agritrade floors in Rusape last month, I was shocked to realise that they had deducted double the amount I had signed for.

“Then I was referred to Harare and up to now (last Thursday) my issue has not been resolved. I have been moving from office to office without joy.”

However, Agritrade MD Cephas Rukweza denied claims that farmers did not enter into any contractual agreement on insurance cover but acknowledged that there were problems dogging the scheme.

“Farmers do not pay attention to details because they just focus on inputs. On our contract form clause number 5:1 stipulates that no Agritrade farmer will be given inputs before getting an insurance cover,” he said.

“The terms and conditions, were clearly marked there. There were brochures written in Shona, which we gave them.

“According to the calculations, one hectare is $232 insurance cover, and half hectare is $141, quarter hectare is $70. But the (interest) rates range from 5-7,5%, but we are using 6,5%.

“We issued forms to the farmers and they wrote different yield per hectare.

“So when Champions Insurance came we gave them the forms without checking as to how many hectares each farmer signed for on the forms.

“We then realised at the first sale that farmers had filled in wrong information.

“Then we went back to our contract agreement with Champions and we told them that farmers had filled wrong information and can’t we revert back to our agreement to say what the average yield per hectare is for a small-scale farmer and according to TIMB [Tobacco Industry Marketing Board] it’s $1 750 per hectare?

“After that it was reduced to become uniform and it overrides the already existing schedule.”

Champions Insurance business development executive, Tapiwa Kahiya, confirmed they had a partnership with Agritrade to provide insurance to all their contracted farmers for the 2017/2018 season.

He said the huge deductions were as a result of farmers who had overestimated the expected yield.

“Some farmers who had overestimated the expected yield approached us to relook at it and we corrected this using the average yields per hectare resulting in a downward revision of the premiums,” he said.

Kahiya said farmers completed insurance proposal forms and this formed the basis of the insurance covers, adding that some farmers had also signed a stop order form used to do once-off deductions from the first sale.

“The question of huge deductions is subjective to the amount of tobacco sold by the farmers compared to the premiums deducted,” he said.

“Currently, insurance premiums are once-off deductions from the first sale unlike in the past where deductions were spread over all the sales.

“As such, the once-off deduction appears too high on the first sale, but there are no further premium deductions on the subsequent sales.”

But an Agritrade field officer who was operating in Mashonaland West province denied having signed contractual agreements with farmers for insurance premiums to be deducted.

“We did not even sign a form from Champions Insurance, but I was shocked when I went to the offices to see a huge pile of forms signed on behalf of farmers. Farmers are coming to me crying for reimbursement and I don’t know what to do,” said the officer who requested anonymity.

Contacted for comment, TIMB public relations manager Isheunesu Moyo said appropriate measures would be taken should there be a breach of contract.

“We will investigate the matter through engaging Agritrade executives as well as the affected farmers,” he said.

“Appropriate sanctions in line with findings of the investigations will be meted out should there be a breach of contract.

“We encourage tobacco farmers with complaints to report such to TIMB, the Zimbabwe Republic Police or the Zimbabwe Anti-Corruption Commission for redress.”

Contract floors control 75% of the trade in tobacco with the remainder going to auction floors.

Apart from benefiting from inputs, which could later be deducted on stop-order basis, farmers have preferred to sell their produce at contract floors predominantly due to better prices offered than those obtaining at the auction floors.

Statistics from the regulator show that year in year out tobacco sold at auction floors has failed to surpass $4,99 per kg whereas contract floors have gone up to as high as $6 per kg.


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