The recent attempt at political stability means that Zimbabwe's leaf tobacco sector is growing again.
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The tobacco crop is projected to rise by about 20 per cent, with more land being used to cultivate tobacco.
After being allocated a piece of land in the year 2000, as part of the country's controversial and often violent land reform, it has taken nearly a decade for small-scale tobacco farmer Tendai Dambanjera to justify commercially the claim of what he says is his ancestral land.
For the first time in 2010, Dambanjera will make a profit and pay his workers what he said would be a "livable wage". Noting his country's abandonment of the hyperinflation-struck Zimbabwe dollar in 2009, he said: "The adoption of the United States dollar has been a life-changing development."
Zimbabwe adopted the use of multiple foreign currencies - the US dollar, the South African rand and the Botswana pula - as a medium of exchange in February 2009, following the formation of an inclusive government between longtime ruler President Robert Mugabe and his rival and leader of the Movement for Democratic Change (MDC), Morgan Tsvangirai, now prime minister.
This reform wiped out runaway inflation overnight, which at one time reached 231 million per cent.
No businesses can operate efficiently under such circumstances and Zimbabwe's important leaf tobacco sector was no exception. It had already been suffering through the country's decade-long economic collapse, blamed by many on the chaotic agrarian reform. Other factors also played havoc with farming activities, too. These included limited access to finance in Zimbabwe's troubled financial sector; a lack of seed, fertiliser and agro-chemicals; under-developed infrastructure; risks associated with adverse weather; lack of security of tenure.
In 2010, however, the currency structure and relative political stability given the new government, the tobacco crop is projected to rise by about 20 per cent, with more land being brought into tobacco production, according to Kevin Cooke, the president of the Zimbabwe Tobacco Association (ZTA).
"We are expecting about 70 million kilograms of tobacco this year, an increase from 57 million kilograms we obtained last year with the average price going at around USD 4 per kg (EUR 2.99). The introduction of foreign currency has seen farmers increasing the number of hectares under the crop," Cooke said. He said 65,000 hectares were being cultivated in 2010, compared to 50,000 hectares the previous season. And as a result, he added, the tobacco season - which usually lasts for about 100 days - is set to end late.
Cooke also attributed the firming of the tobacco price to the floods that hit Brazil recently, resulting in reduced yield in that country.
Traditionally, tobacco sales in Zimbabwe start in April, but this year they were brought forward at the request of small-scale growers, who said they needed the sales revenue to finance their next crop. The early opening is also expected to assist farmers to quickly liquidate their debts.
According to Zimbabwe's Tobacco Industry and Marketing Board, in 2010 17,000 farmers have registered with the board to grow tobacco, compared to 10,000 during the 2008/09 farming season.
The Zimbabwe Tobacco Industry Auction Centre at the Boka tobacco auction floors are the only tobacco sales outlets licenced to operate this season. Burley Marketing Zimbabwe did not register following its acquisition by Savanna Tobacco.
Small-scale growers, such as Dambanjera, produced 35 million kg, while the remainder is from large-scale growers.
Renson Gasela, a farming expert and former general manager with the state-run Grain Marketing Board (GMB), which has a monopoly to purchase grain in the country, attributed the increase in tobacco farmers to a switch by maize farmers as a result of problems in securing payment from the loss-making state enterprise, even though maize is Zimbabwe's staple crop.
"Maize farmers are not paid in cash and they get their payment from the state firm after six months. But with tobacco, you get all your money at the time of delivery," he said. The crop contributed 26 per cent to the GDP last season and this year it is expected to be much higher. Once the auction floors opened, selling was conducted twice a week, on Tuesday and Thursday only, but in response to an upsurge in deliveries the Tobacco Industry and Marketing Board selling is now conducted daily.
Assistance offered to tobacco farmers for contract farming by a number of companies, such as Savanna Tobacco and Saltlakes Holdings, have also been credited with an improvement in the fortunes of the sector.
Into contract-growing
For example, Savanna Tobacco entered into a USD 3 million (EUR 2.24 million) contract arrangement with farmers for the 2009/10 season, while in the previous season it pumped USD 1.5 million (EUR 1.12 million) into the initiative.
"Providing agronomical and technical support does not only ensure that Savanna gets the right quality leaf at the end, it also helps farmers who would be unable to access these services in the challenging economic environment currently prevailing in Zimbabwe," said Savannah in a statement explaining its policy. "Other than agronomical and input support, the farmer is also assisted with subsidised transportation of the crop to the market, crop insurance and auction floor logistics. The greatest benefit, however, is that the contract scheme guarantees the farmer a stable and fair market for his crop at the end of the season, as opposed to the unpredictable auction system," it added.
The company explained that it was choosy about its contracts. "The identification of growers is a meticulous process which starts off with a geographical mapping of the tobacco-growing areas in Zimbabwe and an analysis of the types of grades that come from the different areas," it said. "Northern districts like Karoi north and south, Doma/Chinhoyi are fast-ripening zones that produce heavy-bodied, orange leaf rich in nicotine, and the southern zones in the Marondera Wedza, Odzi belt produce the lemon leaf and Chinese-style tobacco."
For a farmer to qualify for participation in its scheme, a number of critical factors are considered, such as skilled management, availability of infrastructure (essentially irrigation equipment, barns, tractors and tools), proof of tenure and sufficient barn capacity, among others.
With such progress, the immediate past president of the Zimbabwe Farmers Union (ZFU), Edward Raradza, predicted rosy times ahead. He said, "if all things remain equal", they are expecting 150 million kg of tobacco next year. "Inputs are more readily available than in the previous years, but the only problem is that banks are reluctant to offer farmers support," he added.
And there is work to be done here: uncertainty about Zimbabwe's often unstable landholdings have been blamed for the financial institutions' reluctance to extend financial help to farmers, forcing farmer organisations to speed up the issuing of 99-year leases, something that authorities say should be done after a planned land audit.
According to a recent report by the country's parliamentary committee on lands and agriculture, a ten per cent growth in Zimbabwe's agricultural output as a whole is expected in the coming year because of the relative stability in the economy, but the lawmakers warned that threats to continued improvement in output remain.
For example, the legislators expressed concern that a number of measures put in place to reverse nearly a decade of decline, such as the land audit, depend on donor funds to go ahead.
The audit requires USD 33 million (EUR 24.69 million), and is expected to provide information on the nature of landholdings, demand for land, provision of security of tenure to land beneficiaries, land utilisation and compensation issues.
"Since 2002, the agricultural sector experienced cumulative declines of 85.7 per cent. However, the sector is forecast to achieve a growth rate of ten per cent in 2009 and a further ten per cent growth is projected under the 2010," the parliamentary report said.
It warned: "However, most of the funding is donor-driven (vote of credit) and is not readily available. The committee wonders what will happen if donors, for some reason, do not honour their pledges."
Although cigarette manufacturing companies were reluctant to divulge information on production, citing competition reasons, cigarette production in Zimbabwe is on a small scale as the major activities in the tobacco industry are growing and curing, with 98 per cent of all tobacco production exported.
The country does not have a large tobacco manufacturing industry and produces only enough cigarettes to supply domestic demand and provide a relatively small volume for export, noted one industry insider.
Political analyst Eldred Masunungure said, although there were encouraging signs of economic recovery in Zimbabwe, there were questions as to whether this would be sustainable at the end of the life of the current compromise government.
President Mugabe and Prime Minister Tsvangirai have said new polls would be held in 2011, raising fears of renewed tensions, with fears that the old ruling party could slip back into its old habit of repressive policies and murder of political opponents, as in previous polls. If so, tobacco production may well suffer. Enditem
