A Lesson in How Not to Run a Country

Source from:  tobaccojournal.com 02 Sep 2008 09/17/2008

Zimbabwe's once proud tobacco-growing industry has experienced one of the lowest crop in history, estimated at 55 million kg. Low wages, skyrocketing inflation, lack of electricity and the constant threat of seizure of their farms by the government continue to plague Zimbabwe's once proud tobacco-growing industry. Since this time in 2007 the political situation in Zimbabwe has not improved in any way. In fact, it has deteriorated following the March general election to determine a new government as well as a new president and the recent presidential run-off, in which the opposition candidate refused to take part, citing violence throughout the country and especially in the rural areas. These two political events have rocked the country politically for most of the first half of 2008, with government leaders concentrating on retaining power more than the task at hand which is curing the country's economic woes. Most farming operations, and notably the tobacco sector, were affected by these events as the labour force and, to a lesser extent, the farmers were the target of politicians seeking votes. The rural vote, which includes all the tobacco labour force, is seen as important to the current government as their support base. This has not made the tobacco farmers' task easier, as the peak season for tobacco harvesting occurred during this very tumultuous period. Thrown into the mix of course is the constant threat to the remaining farmers that their farms will be taken over by government officials. In the early part of the 2007, farmers were not affected by politics as much as they were by the weather and input-related problems; however, some farmers were still forced off their land and this trend increased in the early part of 2008 as the election loomed. Though not many farmers were forced off their land, the uncertainty of the political situation has once again caused farmers not to re-capitalise and rather continue with what means they have to grow a crop. Meanwhile, the country's economy has continued to decline at a rapid rate and inflation has risen to two million per cent if not more. In an attempt to stabilise this, the government has taken steps which are more political than economical and the situation has only deteriorated further. Wages, and particularly those of the farm labourer, have failed to keep pace with the rate of inflation and the government has forced farmers to maintain an artificially low wage rate for farm workers as they said the "new" farmers would not cope with increased wage bills and be forced out of business. This has caused the single biggest problem for tobacco farmers and that is the movement of farm labour away from the farms and into the cities or into neighbouring countries where they can earn the equivalent of a month's wages in a single day. Farmers have attempted to subsidise their workers' wages with food packs; however, as food is so scarce, this has not always been possible. It would be fair to say that labour has become the remaining tobacco farmers' single greatest limiting factor to production now. Policies create input problems In a further attempt to control prices for political gain, the government has once again introduced price controls on the more important inputs which tobacco farmers require. The most important one is electricity. The vast majority of tobacco farms require electricity for curing the crop in their automated curing systems. Because the government has not allowed the electricity supplier to increase prices in line with inflation, supply is no longer guaranteed. A shortage of electricity due to the power stations not being properly maintained and the fact that the country's leaders are unable to import enough electricity due to foreign currency shortages has meant that farmers go for days without electricity and are forced to cure the crop with generators. The fuel costs incurred have made the crop far less viable than in the past. Small-scale farmers have been less affected by this problem as they tend to use low-tech, small barns for curing, which do not require electricity. In an effort to earn foreign currency, the government has also been exporting Zimbabwe's high-grade coal from Hwange colliery to other countries. In addition to the logistical problems, the government-controlled operation can no longer supply tobacco farmers with the coal required for curing their tobacco. Hence they are forced to truck coal from two other mines which are further away from the tobacco-growing areas and are of lower quality than Hwange coal. In an attempt to maintain its political support in rural areas, the government has also restricted the price increases for fertiliser so manufacturers have simply stopped production, citing viability, which in turn has created enormous fertiliser shortages. The farmers contracted to grow for tobacco companies have relied on them to import their fertiliser and provide it on a credit basis. This has reduced the problem, yet many small-scale growers not contracted were unable to source fertiliser, especially the nitrogenous ones required for top dressing the plants. Weather hurts Although this is one area which politics cannot affect, this year's weather was very poor for tobacco production. Consistent heavy rains in the early part of the growing season meant that crops were not established well, and the lack of fertiliser meant farmers were unable to compensate for the leaching of nutrients that took place at this vital stage of the plants growth. The remainder of the season was fair, but an early cut-off of rains in some areas meant that late-planted crops did not fill out either. Diseases such as bushy top, which decimates production, were also bad due to the weather, late planting and the failure of government technicians to control seasonal stalk destruction. Combined with the input shortages, this has resulted in very low yields for the farmers. Zimbabwe has experienced one of the poorest average yields in history due to these factors. While the quality has been good in most cases, many farmers, especially the small-scale growers, had lower qualities as well. Hence, a crop size of around 55 million kg is predicted for this season, compared to the 72 million kg produced in 2007. New farmer currency Tobacco prices have been firm since the start of selling in April, but again, politics has played a role in the way farmers have been paid. The prices at the auction floors and buyers' warehouses are quoted in US dollars but the farmers are paid in local currency at the official exchange rate. Though the governor of the Reserve Bank allowed the exchange rate to "float" freely for the first time, and the Zimbabwe dollars paid to the farmers were supposed to be paid at a rate equal to the "parallel" rate, this did not quite happen. A national shortage of bank notes meant that the government was unable to supply banks with enough money to pay the farmers for the crop. Thus, they created a "tobacco" rate, which remained lower than the parallel rate. This created tension between the farmers and the government, who then introduced a new currency called "Agro-cheques" with which the farmers were paid. After initially refusing to accept them, suppliers were forced by government to allow farmers to use them for the purchase of inputs. This introduction of higher denomination notes (a five-billion and 20-billion note) provided some short-term relief to the money supply, but it also fuelled inflation and the Zimbabwe dollars farmers are receiving for their crop is now insufficient to realise a profit. Since the heavily disputed run-off elections, which disrupted farming activities, the political upheaval in the country has been marked. With the recent talks between the two main parties apparently nearing completion, it appears that a power-sharing deal is being brokered. If this leads to political stability, the European Union and the US have indicated that they will supply an aid package to bail out the seriously ailing Zimbabwean economy. Without this, the country has no hope of recovery and the situation will worsen. Farmers will not be able to continue growing any crops for export and the crisis will deepen. However, if a new, stable government can be formed, the prospects for the country look good. While many tobacco farmers have lost hope of returning to their homes and have settled elsewhere, several have indicated they will return once the land questions have been solved. Enditem