HomeBusiness DigestDeath knell for tobacco

Death knell for tobacco

Ngoni Chanakira

ZIMBABWE’S foreign currency woes are set to worsen with revelations this week that tobacco – the golden crop – won’t chalk up the billions normally expected for the country’s coffers.

In fact, bankers pointed out, this could be the last major harvest from commercial farmers because the crop being delivered to the auction floors was grown during the previous farming season – before the land was parcelled out to new farmers by government.

Most commercial farmers who grew the tobacco have now been served with Section 8 Notices, ejecting them from the land.

“Most of the crop that is currently being delivered to the auction floors was grown by commercial farmers before they were served with Section 8 Notices,” said a banker. “We definitely will witness less tobacco being delivered to the auction floors next year when another season begins.

Tobacco is very expensive to grow and commercial banks are very cautious about loans to that sector right now.”

The banking sector has reduced lending to agriculture, citing its high risk because of the uncertainty surrounding ownership of the commercial farms.

On the other hand, some new farmers allocated tobacco-growing farms have decided to diversify into maize production, with the blessing of President Robert Mugabe.

Mugabe has addressed several rallies urging farmers not to abandon maize production in order to feed the nation.

In its report for June 2003 released this week, the Reserve Bank of Zimbabwe (RBZ) said as of May 30, cumulative tobacco sales amounted to 7,7 million kilogrammes, at an average price of US$1,87 per kilogramme.

The RBZ said this compared to 15,6 million kg sold at the same average price of US$1,82 per kilogramme, during the corresponding period last year.

Tobacco is Zimbabwe’s largest foreign currency earner but less earnings are expected this year due to fewer deliveries to the Tobacco Sales Floors, the Zimbabwe Tobacco Auction Company and the Burley Marketing Zimbabwe Floors.

Last week tobacco heavyweight firm, Tobacco Sales Ltd (TSL) said urgent attempts needed to be made to revitalise tobacco production over the next few months.

The company said latest estimates of this year’s tobacco crop indicated a volume of approximately 80 million kilogrammes, less than half of last year’s production.

“The prospects for next year’s crop are similarly poor,” TSL said. “However, TSL is pursuing strategies to stimulate tobacco production. A successful outcome will obviously have a major beneficial impact on the fortunes of many group companies.”

Bankers said they were astounded by “impressive tobacco figures” being thrown around by government when the situation on the ground pointed to dwindling production levels.

They said the tobacco issue could be likened to that of maize where the Minister of Lands, Agriculture and Rural Resettlement Joseph Made assured the nation that he had taken a flight and saw large tracts of land with lots of maize.

This, however, proved to be untrue and the nation is currently importing maize from neighbouring countries such as South Africa and Zambia.

Insiders said on the back of constraints such as inputs shortages, inhibitive input costs and inadequate financial resources for infrastructure development and working capital, agricultural production was expected to remain well below normal levels in 2003.

Last year agricultural production declined by an estimated 25%.

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