The Zimbabwe tobacco problem

At least The Guadian has the good grace to note the real problem:

The growers’ problems are not helped by the government’s insistence that only 60% of the sales are paid in US dollars. The remainder must be paid in local currency, at the prevailing exchange rate. The tobacco-selling season is one of the few times the government receives any foreign currency. But farmers complain they lose out because their input and labour costs are paid for in US dollars.

The farmers get screwed by the manipulation of that exchange rate……

9 thoughts on “The Zimbabwe tobacco problem”

  1. I wonder what “prevailing” means, too. If it was a market rate, the growers shouldn’t mind too much. But I guess that actually it means the artificially high legal or published central bank rate, and the growers lose – a lot?

  2. The Gold Coast once had a thriving industry of peasant farming of cocoa. But it became independent in 1957. Whereupon “Ghana’s historical cocoa sector, which was notorious for its dysfunction – particularly, massive inefficiency and rampant politicisation – in the 1960s and 1970s”. The writer I quote makes no mention at this point of how the political structure of the 60s differed from that of the 40s and 50s. Odd that.

    Anyhoo she says things are much better now, “now” being 2009.

    “She” being Tracy Williams, a Policy Analyst at the Bill and Melinda Gates Foundation USA, who has an MA from the Institute of Development Studies, in Governance and Development.

  3. @Napsjam

    You are correct. As usual, the governing parties and cronies can buy dollars at the bank rate but the farmers have to rely on the market rate, usually a lot lower.

  4. I’m surprised the Guardian isn’t pressing for a ban on growing a Lethal Addictive Drug there to begin with.
    After all, the rag has no problem whatshowever to nod through, if not applause, any and all measures to ban tobacco ( and all other things Fun In Life ) altogether, regardless of the economic disaster it would mean to the farmers they seem to be so worried about..

  5. @Johnnybonk: the local workers very much want to be paid in Real Money™, instead of company scrip. And they’re damn right too…

  6. I thought they’d abandoned the Zimbabwe dollar after hyperinflation lead to trillion-dollar bills, which were roughly of equal value to rolls of Andrex. I have somewhere a couple I bought off eBay years ago.

  7. Andy, Richie sometimes struggles to stay erect during a shoot these days so the sight of debauched currency might be just the thing to keep his pecker up. Polly
    Reading the Tax Act no longer seems to work quite as well as it once did. No doubt worries about loopholes are having their woeful effect. The donkey, however, does his best to revive Richie’s spirits

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