Tobacco: Poor farmers contracted to debt, misery

It doesn’t take much effort to notice the high levels of poverty among the people at Kabwafu Tobacco Growing scheme as their houses and other facilities speak volumes about the conditions they are living in as a community.

Almost all the houses for the 1 500 farming families are grass-thatched and built with mud—with some almost falling apart, while toilets and bathrooms are made of grass and sticks, without a roof.

Yet the majority of them have been growing flue cured tobacco under contract with Limbe Leaf Tobacco Company for the past four years. Listen to their stories and you will understand why tobacco farming has made some of them poorer than they were before.

A majority of the growers have nothing else to show for their sweat from April last year.

Those that we spoke to could not hide their frustrations and attributed their misery to what they say are “unfair practices and outrageous conditions” attached to the contract.

Fifty-five year old Linse Shaba is one of them, who last month was forced to travel to her home in Embangweni—about a 100 kilometres away from the scheme—to sell the only cow she had, to pay two tenants that helped her produce tobacco, after she failed to pay them from proceeds of her tobacco sales.

Shaba took a K1.4 million loan from Limbe Leaf and produced 21 bales of tobacco which, upon selling and repaying her loan, only left her with a K11 500 profit, although she realised a K600 000 ‘surplus’.

This is because half of the members in her 10-member sub-club failed to repay their loans after realising negative returns from tobacco sales, a development that resulted into her and the members’ earnings being cut by Limbe Leaf to settle their peers’ loans.

“Our contracts stipulate that where some members under your club have failed to clear their loans, the other members take responsibility of repaying those loans. Things are so bad this year as half of us completely failed to repay the loans, so that has affected the whole group,” she said.

She and all her club members are now on a list of hundreds of growers who are set to be evicted from the scheme for proving to be “not fit for contract growing”.

The scheme’s administrator, Starvens Zgambo, confirmed that growers who fail to settle their debts after selling tobacco are ordered to leave the scheme.

He said last year they removed 50 growers from the scheme, allegedly because prices were better and the growers realised more money whereas this year they expect the number to be larger.

“The default rate is much higher this year and we expect a large number to be expelled from the scheme,” he said.

Contract farming, also known as integrated production system (IPS), involves smallholder farmers entering into agreements with tobacco buying companies to provide them with inputs on credit for the production of the green gold.

In return, the growers are expected to sell their tobacco exclusively to the company they entered into an agreement with, and also settle the loan in full.

Our investigations have established that during the 2017/18 growing season, which is winding up, most growers engaged on contract farming came out empty-handed, and some of them are in huge debts. A good number of them have failed to service  their loans.

Managing director of Limbe Leaf tobacco company Don McAlpine refused to comment on the concerns, and cut the line afterwards.

In a telephone interview on Thursday, Tobacco Control Commission (TCC) chief executive officer (CEO) Kayisi Sadala indicated that as a regulator, TCC has observed that some buying companies are not making full disclosures in the contracts that growers sign.

He stressed that from now onwards TCC will ensure that no grower signs a contract blindly.

Said Kayisi: “The contract must have all full disclosures, and this is the position of TCC and government moving forward. But so far, we haven’t heard any queries from growers from Kabwafu.”

The TCC boss also advised growers to desist from overproduction, which he said leads to prices collapsing and buying companies cashing in.

Meanwhile, Parliament has been tasked to consult on the new Tobacco Act (Amendment) Bill so as to iron out all thorny areas.

The Tobacco Act of 1972, among others, places several restrictions on the growing of tobacco, which accounts for about 15 percent of the country’s gross domestic product (GDP). n