Black Tobacco Farmers Flourish in Zimbabwe

Source from:  Ventures Africa 08/04/2014

Forget, for a moment, all the problems Zimbabwe's economy faces; forget an unemployment rate of almost 80 percent which economists say heralds the demise of its economy; and never mind the ever-widening gap between the rich and poor. Out of this economic mess, in a country where various currencies are accepted as legal tender, a new breed of entrepreneurs is steadily emerging.

With domestic banks lacking the capacity to lend money for productive industries, many Zimbabweans have taken up tobacco farming to stave off the spectre of unemployment. It has become an impressive opportunity to earn the cash necessary for other investments.

Moses Chibaya is a university graduate with a degree in English and Communications. His dream of becoming a journalist has taken a hit as Zimbabwe's media industry contracts. Newspapers have had to cut down on staff as advertising revenue declines, and Chibaya's freelance work hardly pays enough to sustain him and his parents. Last year he altered his course, starting a tobacco farming venture in his rural area of Karoi, about 200 kilometres north of Harare. For most small-holder tobacco farmers like Chibaya, one hectare of a good crop is worth about $10,000 dollars.

Chibaya is expecting to make no less than $30,000 this season, an amount he says will cover the pressing obligations that his journalism earnings barely stretched to meet. "Tobacco has transformed my life in a big way," he says. "I am now able to look after my family." What started as a detour for Chibaya looks set to grow into a diversified business. This year he plans to grow potatoes and do piggery and poultry after auctioning his tobacco in February. Having endured years of economic decline, most Zimbabweans have become crisis-hardened. But thanks to the golden leaf, fortunes for the general populace have started to change. In the early 2000s, Zimbabwe was the second-largest exporter of flue-cured tobacco – a high-quality, lucrative crop.

The sector's fortunes reversed suddenly with the land reform of 1999, when the Zimbabwean government seized land from productive, white-owned commercial farms and parceled it out to ill-capacitated black farmers. The upheaval devastated the country's agricultural sector for 15 years. But recent, steady gains by black Zimbabwean tobacco farmers have raised production of the crop closer to pre-reform levels and may help salvage the country's struggling export sector.

In 2013, tobacco earned Zimbabwe almost $770 million – some 10 percent of the country's GDP. The trend will continue: this year, the country is expected to produce 171 million kilograms of tobacco, significantly up from last year's 166.5 million kilograms. Zimbabwe's Tobacco Industry and Marketing Board says most communal and smallholder farmers have now moved into tobacco farming. About 16,755 of the country's 40,000 overall registered tobacco producers are farmers in these categories. Tendai Chikodzi lost his job when a local clothing and textile company ran into financial problems and cut back its workforce. He spent two years trying to eke out a living from piece jobs (part-time jobs), but could hardly make ends meet.

He tells of difficult times struggling to pay school fees and hospital bills for his son, who was often ill. Chikodzi has planted five hectares with tobacco in Zimbabwe's Mashonaland East province and is expect- ing to make as much as $60,000 this year. Economists in Zimbabwe say that ventures like Chikodzi's and Chibaya's have begun to reduce the country's un- employment rate, although official statistics make this claim difficult to verify. "Zimbabwe's economy has increasingly become mostly informal and we are seeing more and more people venture into agriculture, mostly tobacco, in a bid to raise money for themselves.

The government has failed to provide formal jobs, the private sector is struggling for viability, and most companies are scaling back," said economist Johannes Kwangwari. According to Rudo Boka, the chief executive officer of Boka Tobacco Auction Floors, one of the biggest tobacco auctioning companies in Zimbabwe, the crop has registered "tremendous recovery" in the past four years.

"Tobacco pays cash on the spot. We have seen the opportunity to utilise land; to get a value from it and still be able to participate in other sectors. It's a 10-month crop. After selling the tobacco, farmers do other things such as chicken- and pig-rearing," Boka said. Her company handles 15 percent of Zimbabwe's tobacco crop. In 2013, it handled $92-million worth of tobacco. Expectations are high that a good season could result in a significant increase on this figure. "People should embrace tobacco farming as a business. Your inputs will determine the output," she said.

Despite struggling for liquidity, some Zimbabwean banks have started getting in on the action. George Guvamatanga, the president of Bankers Association of Zimbabwe, said the number of individuals borrowing to finance tobacco growing has increased.

Most of the tobacco auctioning companies and cigarette manufacturers in Zimbabwe have contract-farming arrangements with farmers. These are proving to be lucrative, and even those growers not on contract arrangements are looking to expand into the area as a source of additional revenue.

"There are a number of people now in tobacco who have an interest elsewhere," said Chibaya, adding that it is a seasonal crop, a cash crop, and you are paid soon after auctioning your harvest. While the growth of the tobacco sector is a relief for many Zimbabweans, some experts believe the boom could be better and that issues of resources, inputs, knowledge and machinery are holding farmers back from their full potential.

After years of dire unemployment and bad economic news, the rise of tobacco farming, unglamorous though it may be, could spark ambitions that go well beyond the humble crop. At a time when few other institutions can, tobacco sales provide entrepreneurs like Chibaya with crucial start- up capital for business ventures – agricultural or otherwise – that could see them become millionaires. If there is one good thing about starting from a low base it is the vast potential that exists for growth. Enditem