HomeBusiness DigestUrgent structural reforms needed to boost golden leaf production

Urgent structural reforms needed to boost golden leaf production

Zimbabwe’s requires structural changes in agriculture and more capital to fund tobacco farming, now driven by small scale farmers since the introduction of the multi- currency regime in 2009 as production levels continue to fall below an all-time peak.

Fidelity Mhlanga

Golden leaf farming is still recovering from the effects of the chaotic land reform programme undertaken at the turn of the millenium, raising hopes that the small scale farmers could get earnings from tobacco farming after they ditched other crops preferring the cash crop after dollarisation.

But failure and reluctance by banks to extend loans to resettled indigenous farmers due to lack of collateral has seen most farmers self-funding the crop while established ones have been contracted.

According to Tobacco Industry Marketing board (TIMB), production reached a record high of 236, 13 million kg in 2000.

It then plunged to record lows of 44, 9 million kg in 2008 at the height of a decade long economic meltdown characterised by acute foreign currency shortages and runaway inflation.

Under the programme, white commercial farmers who were the mainstay of tobacco farming lost their land which was then re-distributed to new black farmers who initially lacked the expertise or experience to sustain production levels.

This started a downward slide in tobacco production which culminated in the record low of 2008.

In 2001 a total of 202, 5 million kg was sold. The decline continued in 2003 to 2005 when 81, 8 million kg, 69, 1 million kg and 73, 3 million kg were respectively sold. In 2006, 55, 5 million kg were sold while only 73, 5 million kg were delivered in 2007.

After the land reform programme, large-scale farms were sub-divided and land allocated to indigenous farmers. This significantly increased the number of small scale growers.

Characterised by rapid recovery of production and increase in grower base buoyed by small scale farmers who ditched crops like cotton and maize, tobacco output started to pick up after the country adopted the use of foreign currency

According to Zimbabwe Tobacco Association the number of small scale farmers as at 2016 season is 65,365 with most of them coming in after dollarisation.

The number of small scale tobacco farmers was 4,000 in 2004.

Tobacco production now generates considerable rural employment as the majority of rural people turned to tobacco farming.

In 2009, 58,5 million kg worth US$174,5 million was sold up from 44, 9 million kg valued at US$145, 6 million which went under the hammer in 2008.

The following year, 123,5 million kg of tobacco worth US$355,7 million went under the hammer.

The figures surged to 132,5 million kg as tobacco valued at US$361,5 million was sold in 2011.

In 2012, 144,5 million kg valued US$540 million increasing to 166,7 million kg worth US$610 million in 2013.

As the appetite for growing the crop increased, in 2014, 216.2 million kg of the crop was sold realising US$685.2 million.

In 2015, tobacco out was 199million kg with experts projecting it dwindle further to 170 million kg this year.
Even though there are many small scale tobacco farmers, their activities are self-funded as they battle to access cash from the banks.

While the pricing regime is a key factor in attracting small scale farmers, the average tobacco price has been fluctuating since dollarisation.

Most local growers of the golden leaf are failing to recoup their investments with some of them having nothing tangible to show for their hard work. Some disgruntled farmers blame cartels of unscrupulous buyers operating at auction floors for manipulating prices.

In 2009, flue-cured tobacco prices averaged US$2,98/kg before dropping slightly to US$2,88/kg in 2012 and further retreating to US$2,73/kg in 2011.

The average price of flue-cured tobacco closed the 2012 marketing season at US$3, 65/kg and grew further to US$3, 67 per kg in 2013.

In 2014, the average tobacco price dropped to US$3, 17/kg before tumbling further to US$2, 93/kg last season.

Zimbabwe Commercial Farmers Union president Wonder Chabikwa said tobacco production levels has been firming over the previous years as small scale farmers preferred the cash crop than maize due to better payment.

“The payment system of tobacco has been encouraging farmers over the years unlike maize where you deliver to Grain Marketing Board and no get paid,” Chabikwa said.

“However Last year prices were not good due to international factors of demand and supply. If it continues like this it will reach a point where farmer will not grow tobacco .It is our hope that prices maybe better. If prices and seasons are good we may reach the 236 million kg levels of year 2000.”

Official figures from Tobacco Industry Marketing Board (TIMB), show the number of tobacco growers plunged by 22% from 92 430 last season to 71 728 after farmers failed to raise money for inputs ostensibly due to poor prices.
Economist Prosper Chitambara said the growth of tobacco production since dollarisation is a reflection of high unemployment bedevilling the economy pushing the majority into tobacco farming.

“The issue of limited opportunities within the broader formal economy is the major factor. There are no opportunities elsewhere,” he said.

Zimbabwe is the largest producer of tobacco leaf in Africa and the world’s fourth-largest producer of flue-cured tobacco, after China, Brazil and the United States of America.

According to Food and Agriculture Organisation 98 % of all tobacco production is exported since the country does not have a large tobacco manufacturing industry and produces only enough cigarettes to supply domestic demand.
Three main types of tobacco grown in Zimbabwe are namely flue-cured, burley and oriental tobacco. Of these, flue-cured is by far the most important and is generally produced in the better rainfall areas to the north and east of Harare.

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