Staff Reporter

Government has raised the cotton and tobacco foreign currency retention ratio from 75 to 85 percent starting this marketing season.

The increase has come on the backdrop of another increase in price for low grade lint from US$0. 30 to US$0, 40 per kilogramme.

Last week, the Reserve Bank of Zimbabwe (RBZ) released a circular to financial institutions informing them that starting this marketing season, tobacco and cotton farmers would be paid 85 percent of their sale proceeds in foreign currency.

 “With effect from the 2023 tobacco and cotton marketing season, tobacco and cotton growers shall be paid 85 percent of their sale proceeds in foreign currency. The remaining balance of 15 percent shall be paid to the grower at the prevailing interbank market rate. Foreign currency sale proceeds for tobacco and cotton growers shall continue to be treated as free funds,” said RBZ.

Cotton farmers who spoke to this publication thanked the Government for considering their plight and said that the increase in foreign currency retention ration and the increase in prices would help farmers plan for the next season.

 “This is a welcome development. As cotton farmers, we are overexcited. Firstly, the lowest grade cotton price was reviewed 25 percent upwards from US$0, 32 per kilogramme. Secondly, our foreign currency retention was increased from 75 to 85 percent. Lastly, cotton inputs came on time and we are likely to have a five-fold increase in production this year on the backdrop of these good rains,” said Enock Sithole of Muzarabani.

Another farmer, Grace Matsika thanked the Government for the free cotton inputs and further said that the increase in foreign currency retention ratio was a sign that the Government was keen to empower farmers.

“Firstly, we got free cotton inputs and now the Government has directed that we get 85 percent of our sale proceeds in foreign currency. This shows that the Government is keen to empower farmers and to make cotton the white gold again,” said Matsika.

Meanwhile, there were mixed sentiments from tobacco farmers with some rooting for retention of up to 100 percent to counter the effects of the rising production costs denominated in the United States dollars.