This year tobacco farmers in Zimbabwe will retain 60 per cent of their earnings in foreign currency while the remainder will be liquidated at the prevailing exchange rate, reports The Herald.

“We have standardised everything . . . just like all other exporters; they (tobacco farmers) will retain 60 per cent while 40 per cent of net earnings (after loan deductions) will be sold at the auction market,” central bank governor Dr John Mangudya was quoted as saying.
However, this is lower than the 70 to 80 percent that the farmers had been asking for. Zimbabwe Farmers’ Union president Abdul Nyathi said they have asked the central bank to increase the threshold for withholding from 50 per cent to 80 per cent and are still waiting for feedback, the report said.
“As farmers, if this is the arrangement (60 – 40 per cent), we are not agreeable. We engaged in good faith and we are still hoping for a positive response from the Reserve Bank.” Tobacco farmers have expressed concern about the discrepancy between the exchange rate in the parallel market of about ZWL 125:1 USD and the official auction exchange rate of ZWL 83:1 USD.
However, the foreign exchange exposures would be minimised as loan deductions would be made on the 40 per cent portion of their earnings. This means net earnings, after loan deduction, from the 40 percent will be sold on the auction system.
The date for the start of this year's tobacco season has not yet been announced, but the industry has reportedly proposed 24 March.