Growing Tobacco Farmers

Source from:  Sunday Times (Johannesburg) Zweli Sukazi  05/18/2004

Industry invests in poor areas where the leaf is grown. The tobacco industry is to invest heavily in the development of small-scale farmers and communities where tobacco is grown - North West, Mpumalanga, Limpopo, Eastern Cape and Western Cape. Over the next two years, the industry, which last year contributed about R6-billion to government coffers in excise duties and value-added tax, is to launch projects to help black small-scale farmers to become independent tobacco farmers within five years. The move comes at a time when the agricultural sector is negotiating its empowerment charter. It is likely to challenge government to relax its strict tobacco product regulations in recognition of the industry's empowerment efforts and the important role that tobacco plays in the rural areas. Francois van der Merwe, chairman of Tobacco RSA, says government is anti-tobacco but it is by far the largest stakeholder in the industry. A total of 52% of the retail price of tobacco products goes to the treasury, while the remaining 48% is shared by all those involved in the tobacco value chain. Tobacco RSA is a body which represents both the manufacturers of tobacco products and tobacco growers. Over the past 10 years, Van der Merwe notes, excise duties on cigarettes have increased by nearly 540%. He adds that while the constant increase in tobacco excise duties has resulted in a drop in the volumes of legal products, it has contributed to an alarming growth in illegal trade in tobacco products. "With growing pressure on disposable income, many consumers are moving away from the legal product to illegal, untaxed products in the marketplace - a lose-lose situation for government and industry," Van der Merwe says. Tobacco is seen as one of the ideal crops for an estimated three million small-scale farmers who are located mainly in the communal areas of the former homelands and produce largely to help meet their families' needs. Tobacco is an extremely hardy, drought-tolerant and high-value crop, enabling families to make a living on small pieces of land. Statistics indicate that small-scale growers account for 75% of world tobacco production. In Africa, 90% of tobacco is produced by emerging farmers operating in 35 countries. Tobacco RSA has already started rolling out empowerment initiatives, in a joint venture with stakeholders such as British American Tobacco SA, the Mpumalanga Department of Agriculture, Environment and Conservation, and SA Golden Leaf. Since last year, the parties have spent more than R5-million developing small-scale black tobacco farmers operating in Hereford, a tobacco smallholding near the semi-rural town of Groblersdal in Mpumalanga. The project has created a market for 19 farmers as they grow and sell their produce to SA Golden Leaf. The Mpumalanga agriculture department has spent R6-million financing the construction of a dam to supply irrigation water to farmers. The industry has built curing and sorting facilities, supplies food to farmers and assists in repairing houses. It has sponsored and employed a final-year plant production student to work with the Hereford farmers as part of his experiential training at the Lowveld Agricultural College. In terms of the Tobacco Pro ducts Amendment Bill, however, the Hereford project, the sponsoring of a student and other initiatives supported financially by the industry, may be illegal. The Bill states that "no person shall advertise a tobacco product... through direct and indirect means including sponsorship of any event, programme, project, bursary and scholarship". Freddy Ngobe, assistant director of communications in Mpumalanga, says the infrastructure provided by government at Hereford has opened new opportunities for farmers to use available land to its maximum potential. He says the project will contribute to food security and combat hunger in the impoverished community of the former homeland now that farmers are able to produce food and cash crops. "The department does not prescribe to farmers what or what not to plant on their land as long as what is being produced is within the laws of the country. "The department provides assistance to farmers to pursue any form of agricultural activities," says Ngobe. Hereford is rich in history. After the Second World War, the then government divided the area - whose original infrastructure, such as tobacco curing barns, grading sheds and houses, was built by Italian prisoners-of-war - into 33 plots and gave it to returning soldiers. "We are really hopeful that we will be able to earn a lot of money from this project," says Jerry Sefoloshe, chairman of the Tafelkop Farmers Association and leader of the Hereford farmers. The SA tobacco industry has 630 farmers and employs about 23 000 people, who provide a livelihood to more than 100 000 of their family members. Martin Matsepe, an SA Golden Leaf employee who provides expertise to farmers at Hereford, says the project has great potential. "The farmers are dedicated. Our challenge is to develop their skills in tobacco farming, business and financial management and expose them to markets," he says. Van der Merwe says the development of such a project involves capital expenditure, financing of production costs and training of people in different skills - the backbone of investing in people for the long term. "Government must embrace tobacco rather than fight it. The world's tobacco industry is 512 years old. The sector is 397 years old in Africa and has been going on for about 350 years in South Africa. Never disregard an industry with such rich history." Enditem