ZIMBABWE has a rich history of tobacco production, dating back to 1894, four years after the arrival of white settlers.
Its tobacco is known for its unique flavour, aroma and taste, which are influenced by several factors, including climate, soil and growing conditions.
Zimbabwean tobacco is characterised by its smooth and mellow taste, with a balanced combination of sweetness and earthy tones. It also has a distinct and pleasing aroma, often described as slightly sweet and nutty. The country’s climatic conditions, low humidity and fertile soils contribute to the highest quality tobacco, making it the best tobacco in the world and highly sought-after globally.
The tobacco industry in Zimbabwe has experienced significant growth in recent years, reaching an all-time high of almost 300 million kilogrammes in 2023.
However, as the industry continues to break production records, it is crucial to assess its sustainability, identify potential future obstacles and propose mitigation strategies to ensure the continued production of this valuable crop.
Brief historical perspective
Against all odds and in the face of various challenges, Zimbabwean tobacco is an inspiring success story. The land reform programme implemented in 2000 resettled landless black Zimbabweans on farms previously owned by a few white commercial farmers, who exclusively produced tobacco.
The resettled farmers lacked the necessary expertise and capital to sustain tobacco production, which had reached an all-time high of over 236 million kg in 2000 under the management of around 4 500 white commercial farmers.
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Many dismissed Zimbabwean tobacco, shifting their focus to Zambia, where most of the former white farmers had settled after losing their land.
By 2008, production had plummeted to an all-time low of around 48 million kg produced by the remaining farmers.
However, the Zimbabwean tobacco story was far from over. Several initiatives were introduced, leading to the current position of a record 295 million kg, making Zimbabwe the largest producer on the African continent and the fourth-largest in the world.
This massive growth and success can be attributed to various factors, including focused leadership at the government and TIMB (Tobacco Industry and Marketing Board) level, favourable rainfall for the 2022/23 season, a well-defined tobacco contracting model, timely distribution of inputs by tobacco merchants, and the adoption of world-class tobacco production skills by small-scale growers who now contribute over 55% of the crop.
With production just under five million kg shy of the targeted 300 million kg this year, the question arises: can Zimbabwe maintain this record going forward?
Sustainable production in Zim
Customers worldwide are increasingly concerned about the production methods behind the products they purchase, particularly with regard to environmental standards.
To demonstrate responsibility and appease these conscious customers and investors, many companies have implemented self-monitoring reporting mechanisms known as ESG (Environment, Social and Governance frameworks).
These mechanisms assess a company's environmental care, emission reduction, social impact, and governance practices, in addition to financial performance.
Similarly, the tobacco industry has introduced the Sustainable Tobacco Programme (STP) to ensure sustainable production practices that prioritise the environment and the well-being of those involved in tobacco production.
This demonstrates that tobacco companies are not solely driven by profit but also aim to enhance the livelihoods of their stakeholders.
Sustainable tobacco production involves efficiently producing high-quality tobacco, while minimising the impact on the natural environment and improving the socioeconomic conditions of those involved in its production.
STP focuses on the well-being of tobacco producers and the environmental impact of tobacco production, aiming to ensure that producers thrive financially while preserving the environment to support tobacco production in the long term.
TIMB has identified several undesirable effects of unsustainable tobacco production, including climate change aggravation, child labour issues, and deforestation.
To address these issues, the TIMB has brought together industry players to find solutions. As a result, many industry players, under the TIMB’s guidance, have started implementing STP.
To ensure the continued success of the tobacco industry, guided by STP, it is crucial to pay attention to the following aspects, as identified by independent observers, including the writer:
Grower viability and indebtedness
The onset of the 2022/3 season coincided with the beginning of the Russia-Ukraine war, which disrupted global supply chains, especially for fertilisers and other agricultural inputs.
Zimbabwe was not spared from these disruptions, resulting in significantly increased input costs.
Grower associations estimate that production costs for the season rose by over 80%. In contrast, tobacco prices in the country actually decreased by US$0,03 cents, from US$3,06 in 2022 to the current price of US$3,03 per kg.
This has led to significant losses for most growers, with many unable to repay their loans.
Furthermore, it is estimated that 85% of all small-scale growers are highly indebted to tobacco contracting companies.
During the opening ceremony of the 2022/3 tobacco production season, the TIMB chairperson mentioned that growers owed contracting companies over US$43 million.
On average, every registered grower owed at least US$300 to these companies, and this amount increases each season. For the 2023 season alone, one company reportedly lost over US$9 million due to non-repayment of loans by growers, severely impacting the company's financial stability.
The issue of grower debts has had several negative effects, including increased side-marketing as growers try to avoid repaying their substantial debts; corporate failures as contracting companies fold due to heavy losses; moral decay as growers attempt to evade loan repayment; loss of assets as growers’ properties are attached and sold off by contracting companies; increased reliance on child and forced labour as growers seek cheaper labour sources; and reduced production going forward as fewer growers receive financing and companies reduce their projected production.
As the level of indebtedness continues to rise, some growers and grower associations are calling for government intervention to find a lasting solution.
There are speculations that tobacco production in Zimbabwe is being carried out through exploitative means, with companies exploiting growers to maximise profits at the expense of small-scale growers, who struggle to repay their loans.
These loans are believed to have exorbitant interest rates, making repayment impossible for growers. These concerns raise serious questions about the sustainability of Zimbabwean tobacco.
Unlike other tobacco-producing countries that have prohibited the use of indigenous trees for tobacco curing, Zimbabwe allows growers to cut down indigenous trees for this purpose under Statutory Instrument 116 of 2012 (Control of Firewood, Timber, and Forestry Produce Regulation).
However, growers must obtain a firewood permit from the Forestry Commission, and they are also required to plant between 550 and 850 trees per every hectare of tobacco planted.
Additionally, growers contribute an annual Afforestation levy of 1,5% of their total sales. This levy is managed by the Forestry Commission, which established the Tobacco Wood Energy Programme to produce seedlings for distribution to growers, enabling them to plant fast-growing trees to replace those cut down for tobacco curing. However, the impact of these efforts is yet to be fully realised.
It is estimated that for every kilogramme of tobacco cured using conventional, inefficient curing barns, between eight and 14kg of firewood are used.
Assuming that 85% of Zimbabwean tobacco is cured using these barns, the country used over 2,5 billion kg of firewood in a single year.
Most of this firewood comes from cutting down indigenous trees across the country’s forests. A drive through the tobacco-producing regions reveals the gradual disappearance of forests and the transformation of mountains into plains due to the demand for firewood in tobacco curing.
While efforts have been made to curb deforestation, more must be done to ensure the future sustainability of tobacco production.
Afforestation efforts should be intensified, legislation enforced, and grower education on the dangers of deforestation increased.
Those benefiting the most from tobacco production should take the lead. Although tobacco merchants have established woodlots for afforestation, the number of trees being planted needs to be significantly increased. Growers should also be actively involved in these programmes.
Now, more than ever, research on efficient curing systems and alternative energy sources for curing, such as those not reliant on firewood or coal, should be prioritised. Affordable solar systems can also be beneficial in this regard.
Climate change poses a real challenge, and our actions and efforts should be directed towards mitigation. Companies, in particular, need to put in extra efforts to ensure that everyone plays a part in protecting the environment.
Child and forced labour
Regulators and industry players in Zimbabwe continue to make significant strides in addressing child labour issues in the tobacco industry.
The Tobacco Industry Working Group on Child Labour has been actively working to eliminate child labour from the industry. Increasing awareness among growers about what constitutes child labour and its
effects is crucial.
Additionally, efforts should be made to improve the viability of growers so that they can afford to hire general labourers.
Late and non-payment of growers
While there has been significant improvement in payment practices for growers, concerns have recently arisen regarding late and non-payment by tobacco merchants and contractors.
It is alleged that this practice is widespread, with growers waiting for months to receive their proceeds, and some growers claiming they have not been paid for the previous season.
This casts a dark shadow over the future of tobacco production in Zimbabwe. There are serious concerns that growers will struggle to procure inputs and fund their working capital requirements, as their finances will be tied up with contracting companies.
This problem is further compounded by the fact that some growers are contracted to companies that provide little to no inputs. This perpetuates cycles of poverty and indebtedness for growers.
STP proponents have described this practice as akin to forced labour, as tobacco contracting companies seize growers’ produce without payment.
The TIMB has recently implemented robust measures to address this issue, and it is hoped that offending companies, if any, will be held accountable and that all growers will receive fair compensation for their labour.
Growing concerns have been raised about unfair contracts, inadequate and inflated inputs provided to growers by certain contracting companies, as well as delays in input distribution.
TIMB has been working on a robust Compliance Enforcement Framework to address these issues. This framework will ensure that contracting companies offer fair terms to growers, including timely and adequate input distribution, working capital disbursement and prompt payment for delivered tobacco.
Non-compliance may result in the revocation of licenses for offending companies. Failure to implement this framework will spell disaster for the industry.
The RBZ forex retention levels
The central bank has gradually increased the foreign currency retention level to the current ratio of 85% United States dollar and 15% Zimbabwe dollar.
While this was a welcome move, the disparity between the official exchange rate and the parallel market rate during the tobacco marketing season has consistently been significant.
Growers receive the Zimdollar component at the official rate, but when they spend it, they must use the parallel market rate, as most goods are priced accordingly.
This has resulted in growers losing value on the Zimdollar component, effectively selling their tobacco at 85% of its real value. This contributes to high levels of default and poverty among growers, making it difficult for them to self-finance.
Going forward, it is crucial to ensure that the exchange rate during the tobacco selling season reflects the real market rate. This will greatly contribute to grower viability and the overall sustainability of the sector.
The United Nations Framework Convention on Tobacco Control (UN-FCTC) has been actively campaigning for the global ban of tobacco production, citing climate change, environmental degradation, food insecurity, forced and child labour, green tobacco sickness and other health hazards as reasons to end tobacco production.
The organisation has designated May 31 of every year as “No Tobacco Day” and has been continuously advocating for the ban, particularly in what they refer to as “food insecure, third world countries”, including Zimbabwe.
If this agenda were to succeed, it would spell the end of tobacco production in Zimbabwe.
Proposed mitigation measures
To ensure that Zimbabwe remains a leading producer of the sought-after golden leaf, it is crucial to implement the following mitigatory measures urgently and wholeheartedly:
Implement measures to reduce grower indebtedness to contracting companies. A possible solution could be a debt assumption programme similar to the one established by the central bank in 2012, which absorbed non-performing loans from banks. This would not only revive merchants and contracting companies, many of which are indigenous, but also free growers from debt and ensure their sustainability.
Establish a Zimbabwe forum for tobacco sustainability, bringing together growers, contracting companies, regulators and all stakeholders to deliberate and find ways to ensure the long-term sustainability of the tobacco industry in Zimbabwe and beyond.
Encourage tree planting initiatives by involving all stakeholders in the tobacco industry. For example, the TFT #ATreeForEveryKgold initiative could be adopted, where every kilogramme of Zimbabwean tobacco sold is accompanied by the planting of a tree to replenish those used in the curing process.
Expedite the implementation of the TIMB Compliance Enforcement Framework to address issues such as late input disbursement, inadequate inputs, and other related concerns. This will ensure that growers are paid on time and receive fair treatment.
As part of the Tobacco Value Chain Transformation Plan, introduce alternative crops urgently to ensure grower viability and improve food and nutritional security. This will also counter the narrative of food insecurity put forth by the UN-FCTC.
Ensure that foreign currency retention levels reflect the actual market exchange rate during the tobacco selling season to avoid shortchanging growers.
Zimbabwe’s tobacco production is headed towards reaching the targeted 300 million kg and maintaining it, provided that all responsible value chain actors commit to the sustainable tobacco production practices proposed by the TIMB and adhere to the set guidelines to support the growers who are critical to productivity.
It is also crucial for all players to address deforestation, which remains the primary concern that can impede the country's efforts towards reaching the set targets.
Zimbabwe’s tobacco industry is sustainable and will surpass current production levels if efforts are sustained to ensure all raised issues are confronted accordingly.
- Mukomberanwa is the founder of The Farmer Talk (TFT) Club, incorporating Tobacco Farmer Talk and TFT Climate Change and Sustainability. He has a keen interest in STP and ESG. He writes in his personal capacity. — +263 715 645 064 or e-mail [email protected]