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
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