PROPOSED REGULATIONS FOR THE INTEGRATED PRODUCTION SYSTEM IN TOBACCO PRODUCTION AND MARKETING

DEFINITION OF IPS Contractual agreements between tobacco growers and tobacco buying companies.  Growers may enter into funded or non-funded contracts with buyers;  Memorandum of Understanding between tobacco buying companies and grower associations;  Each grower shall enter into a contract whether on his own behalf or through growers associations with no more than one (1) buyer in each season; and  Provided that the grower has registered more than one (1) estate for growing tobacco, he may enter into a contract in respect of each registered estate.

MINIMUM CONTRACT TERMS agreed volume, expressed in kilograms ; commitment by the grower to sell and the buyer to buy the entire crop of the grower, within an agreed production variance of 10%; commitment by the grower to grant the buyer the first option to purchase the grower’s crop which is in excess of the agreed variance; agreed price for each grade of tobacco, which shall be no less than the minimum price set and published by the Commission in the Gazette; commitment from the grower to comply with GAP and minimum standards in tobacco growing as specified by ARET and/or the buyer;

MINIMUM CONTRACT TERMS (cont.) duration of the contract, which shall be one (1) year subject to renewal; The tobacco presented for sale should represent the crop throw; the grower has insurance to underwrite the COP for that growing season, including but not limited to the financing provided by the buyer, in case the grower is unable to deliver a crop; commitment by the buyer to promote recommended technologies as prescribed by ARET; and commitment by the buyer to pay transportation costs of the contracted tobacco from the farmer to the selling floor.

OTHER CONTRACT TERMS Funded and non-funded contracts shall contain the registration number(s) of the grower(s) who are a party to the contract. Contracts not containing the minimum terms specified above shall be invalid. Contracts between buyers and illiterate growers shall be invalid unless: (a) a written translation is made into a language the illiterate grower understands; or

OTHER CONTRACT TERMS (cont.) (b) the English version of the contract is explained to the illiterate grower in a language he understands by a person who is independent of the buyer; and (c) the contract acknowledges that the steps in (a) and/or (b) above have been followed. Growers and grower associations must every year negotiate with buyers on contract terms before buyers submit their contract agreement forms to the commission for inspection and clearance. Each buyer must submit to the commission the negotiated and agreed contract terms for inspection and clearance before grower identification for the season starts.

GROWER IDENTIFICATION Buyers shall identify growers for contracts either on their own or through grower associations; Contract forms to be filled in quadruplets: one for the buyer, one for the grower association and two to be given to the growers (the grower will submit one copy to TCC when registering

REGISTRATION OF CONTRACT INFORMATION The Commission shall keep and maintain a register of information detailing:  names of the parties thereto;  grower(s)’ registration number(s); and  agreed volume. The register shall identify for each growing season the contracts that have been entered into for that season; The Commission shall update or cause to be updated the register of growers when the grower is registering with the commission; The register shall be confidential and shall not be made available for inspection by the public.

COMPLAINTS REGARDING CONTRACTS The Commission may investigate complaints by any party to the contract regarding the fairness in terms of the implementation of the contract; The commission shall communicate any complaint it considers to be well-founded to the party concerned and address it accordingly

FINANCING OF GROWERS Buyers may where necessary provide finance to its contracted growers. Finances may be direct from the buyers or through commercial banks. Where the buyers have arranged such financing, they are under obligation to a full disclosure of the loan amount including quantities of each input type, interest rates and any other related costs. Where the buyers have arranged such financing, growers shall execute farmer stop orders in favour of the buyers and shall register the same with operators of selling floors through the commission.

FINANCING OF GROWERS (cont.) Growers shall not register the same registration numbers with different buyers for as long as there is an active farmer stop order registered on that particular number. The Commission shall use their database to ensure there is no double registration.

OFFENCES Administrative penalties. THE END THANK YOU FOR YOUR ATTENTION