Zimbabwe's tobacco farmers are refusing to send their crops to the auction floor in a protest over terms that threatens to derail Harare's economic recovery plan.
President Robert Mugabe recently announced what his government is calling the National Economic Development Priority Program, or NEDPP, the linchpin of which is generating an increase in foreign exchange inflows from export sales.
But when Reserve Bank of Zimbabwe Governor Gideon Gono opened the tobacco auction floor on Tuesday, farmers declined to step forward despite a 35% bonus for early deliver of cured leaf. The Zimbabwe Tobacco Association has dismissed Gono’s incentive, urging members to withhold crops until the Zimbabwe dollar is devalued.
Under the existing arrangement, growers receive half the proceeds from the tobacco auction in hard currency, and half in Zimbabwe dollars, for a blended exchange rate of Z$150,000 to the U.S. dollar compared with a parallel market rate of Z$200,000. The growers say they cannot afford to continue operations at that exchange rate.
Reporter Blessing Zulu of VOA's Studio 7 for Zimbabwe asked Tobacco Association President James de la Fargue what arrangement the farmers would consider fair.
Chief Economist Prosper Chitambara of the Labor and Economist Development Research Institute of Zimbabwe, says the government must further devalue the dollar if the tobacco industry, a main earner of foreign exchange, is to remain viable.