A Promising New Start

Source from:  tobaccojournal.com  10/28/2004

With a bumper harvest this year, Zambia is the rising star among Africa's leaf tobacco supplying countries that want to step in for Zimbabwe's declining production. TJI took a look. Some pictures remain at the back of your head all your life. Many Zimbabwean farmers have seen such pictures. "Mugabe's so-called war veterans came up to our farm and circled around our house, looking into the windows," remembers farmer's wife Ro Thorne. "They were carrying crude weapons, such as pick-axes. We had to protect our workers from them." The invaders eventually began to squat on the farmland, building huts and trying to keep Ro's husband Chris from re-entering his property whenever he left the farm. The siege lasted several months, until the Thornes finally abandoned their home in 2001 and left the country. They went to neighbouring Zambia to begin a new life. Together with a partner, Trevor Proctor, who owns a cut rag trading company in Harare, Zimbabwe, Chris and Trevor acquired a farm north of Zambia's capital Lusaka. With the assistance of the local banks they were able to raise funds to purchase Kayanje farm, which entitled them to take title of the farm for a period of 75 years, which is the lease period remaining from the government of Zambia. Kayanje farm was a deserted organic vegetable farm, overgrown with thorn trees and weeds. Tobacco had been grown there once, too, but that was thirteen or fourteen years ago. It takes a while to go round the 2,700 hectares in a four-wheel drive, but it is an excursion that reveals the valuable heart of the farm: the dam, a huge reservoir indispensable for ensuring security of a consistently high quality crop of irrigated tobacco. Apart from the dam, Chris and Trevor virtually had to start from scratch. They bought a brick-making machine, enabling them to make bricks from the clay on their land, from which they have built offices, store rooms, workshops and tobacco storage and grading sheds. Chris has had to build up the soils that had been idle for many years and revitalise them to achieve better crop yields and qualities. They decided on a site for the seedbeds and began planting, they installed brand-new bulk curing barns imported from South Africa, as well as a fully automated pivot irrigation system from the US. Today, eighteen months after they bought the land, they are growing 160 hectares of Virginia tobacco and will be increasing this to 200 hectares next season. This year, they aim to achieve a yield of 3,000 kilograms of tobacco per hectare, amounting to a total crop of 480,000 kilograms. 250 hectares of the farmland are currently planted with maize and another 40 hectares with wheat. 460 local workers have found jobs on the farm. Chris Thorne is one of an estimated 125 Zimbabwean farmers and farm managers who have settled in Zambia after fleeing the land seizures in their home country, which began with Mugabe's land reform programme in 2000. On the northern side of the Zambezi River, which is a natural border between the two countries, they have found climatic conditions that are fairly similar to those in Zimbabwe, while the temperatures are higher, especially in Zambia's north, where planting has to start earlier. Tobacco is grown in the country's southern region in Choma, Chiloma and Mazabuka, in the central region including Lusaka, Kabwe and Chisamba, and in the northern region's Makushi block. It is mainly in these regions where commercial farmers from Zimbabwe have settled. Apart from the natural advantages of the country, the non-existence of racial tensions is a huge relief. "Life in Zambia is relaxing," says Chris. "We have none of the pressure we felt in Zimbabwe." The new arrivals are pleased with the growing conditions for high-quality tobacco in Zambia. The country has consistent rainfall and a lot of underground water. "The general style of the crop here in Zambia is predominantly ripe, flavourable styles," says Trevor Proctor. "The tobacco is chemically well-balanced as far as nicotine and sugar levels are concerned. This has been confirmed by manufacturers who have purchased from Zambia over the last few years. It adds to a good smoking quality." Fertilisers are readily available in Zambia, they are imported from South Africa. Seeds come mainly from Zimbabwe and South Africa. Due to the strength of South Africa's re-valued rand, however, farmers in Zambia this year had to cope with a 28 per cent inflation on their input. 2004 is the first bulk cropping season of the Zimbabwean farmers in Zambia. The average yield per hectare here at the present time is marginally lower than yields that have been achieved in Zimbabwe. This, however, is steadily going to improve as soils that have lain dormant for years are built up and the correct land management procedures are implemented. The average yields were around 2,200 kilograms per hectare, compared to 2,600 or 2,700 kilograms during Zimbabwe's better times. The entire flue-cured crop in Zambia is expected to be around 14 or 15 million kilograms this year. With about 22 million kilograms, the Burley crop is bigger in volume but smaller in value. The farmers from Zimbabwe account for about 75 per cent of this year's crop. Mutual benefits "For all the new farmers, it has been an intense rush so far, trying to get everything set up and established. Timing has been of the utmost importance, but overall qualities and yields will increasingly improve over the next years with the building-up of soils and enhanced farming practices," says Trevor. Nevertheless, growth figures are already impressive. For comparison: in 2000, Zambia had a total Virginia output of 4.5 million kilograms with earnings of about US$ 5 million. This year, the country's estimated 14 million kilograms will have a value of around US$ 26 million. Burley tobacco has also grown from 3 million kilograms in 2000 with earnings of US$ 1.8 million to 12.5 million kilograms in 2003. For tobacco, it is the first time in forty years that the previous record flue-cured crop of 11 million kilograms grown in 1964, the season prior to Zambia's independence from Great Britain, has been exceeded. Zambia's agricultural sector, which experienced a decade of ruin in the 1990s, is currently seeing a renaissance. The boom in labour-intensive tobacco production is also bringing about an increase in much needed agricultural jobs, an important factor in a country that has an unemployment rate of about 60 per cent and where rural-urban migration is very strong. Benefits of the migration of farmers from Zimbabwe are, however, mutual. "We are all very thankful for the opportunity," says Trevor. "The Zambian government has been consistently helpful and we are basically here as their guests of which we are extremely aware." Much of Zambia's land is owned by tribes; ultimately, all land belongs to the government and can be leased for up to 99 years. As part of a strategy to broaden the country's economic base, the Zambian government launched a policy of providing land on a leasing basis to local and foreign farmers, which coincided with Mugabe's land reform programme that put many commercial farmers in Zimbabwe out of business. The displaced farmers in turn bring in their knowledge and expertise as well as investments to Zambia. According to the Zambia Investment Centre, the settlers had invested some US$ 107 million in their new home country by 2003. They have boosted the country's farming economy, also because they are obliged to plant food crops such as maize and wheat to the same degree as the cash crop tobacco. Last year Zambia for the first time in many years harvested enough maize to export a part of its crop as well as seeds – to Zimbabwe, by the way. As part of the government's support, commercial farmers do not have to pay taxes during the first five years in Zambia; afterwards, they pay 15 per cent of their profits. Furthermore, they are allowed to import certain vital machinery requirements to the country without having to pay VAT. Foreign exchange restrictions have also been relaxed. Tobacco sponsoring schemes Most of the Zimbabwean farmers and their farm managers have been unable to take their farm equipment and hard currency out of their country, so for them beginning new projects in Zambia has only been possible because they have been given access to significant loans to expand their operations. Presently there are several tobacco support schemes in Zambia, which stipulate that the commercial farmers must pass on their knowledge to local small-scale farmers in order to help them develop. The latter account for the majority of farmers in Zambia, contributing significantly to the country's tobacco crop. Around 2,500 small-scale growers plant Virginia in Zambia, while an estimated 15,000 have specialised in Burley production. In late 2001, Universal Leaf's subsidiary Zambia Leaf Tobacco Company (ZLTC) entered into a ten-year project with Barclays Bank Zambia (BBZ) and Agriculture Advisors International (AAI), a consultancy service formed by a group of commercial farmers from Zimbabwe. The programme is aimed at commercial farmers, targeting tobacco production for a farmer's first crop year under the scheme at 40 hectares and, during the consolidation phase, at 70 hectares. "The boom in agriculture allows the country to diversify from copper mining as its only source of income," says Paul Richards, corporate director at Barclays Bank Zambia. Universal also has an operation with 119 small-scale Zambian growers in the country's western province. Standard Commercial has launched a sponsoring programme with various international banks as well as local banks, which currently provide loans for 30 commercial farmers. The scheme targets new farmers from Zimbabwe as well as existing Zambian small-scale and commercial farmers. Under Stancom's scheme, 4.5 million kilograms of flue-cured Virginia, 11.2 million kilograms of Burley and 1 million kilogram of dark-fired tobacco have been harvested this year. To enhance the logistics infrastructure for the sale of the tobacco crop, Stancom has set up three sales floors in Mkushi, Kabwe and Choma. "The idea behind it was to bring the sales floor to the farmers to reduce costs, transport being the main one," says Terry Conway, Stancom's leaf manager in Zambia. Similar to Brazil, Zambia's tobacco is sold through a classification sale system with a price matrix, but it is developing more and more towards contracting. While this is seen as an advantage for traceability and price setting, others argue that the establishment of an auction market would help push up prices for local farmers and avoid fluctuating currencies. The Tobacco Association of Zambia (TAZ), realising the need to increase leaf output to a level where the price trends could be determined by the local crop, embarked on a sponsoring programme to recruit new farmers in 2002. The efforts within the country's tobacco sector during the past three years, seizing the chance to step in for the once leading tobacco supplying country Zimbabwe, have borne fruit. "This year we have the best quality tobacco," says TAZ executive director John Downie, who retired from his post in early September. "Competition has sharpened everyone, and this is just the beginning. Zambia is now able to provide cigarette manufacturers with a significant weight of high-quality flavour tobacco. We had a good feedback from the multinational cigarette companies, and many new customers have come in. Even a Chinese delegation was here, and they were impressed." Tombwe Processing, presently Zambia's only leaf-processing facility, in which TAZ holds 40 per cent, while German company Contraf-Nicotex-Tobacco (CNT) owns another 40 per cent and the management the remaining 20 per cent, also provides sponsoring programmes for farmers aimed at commercial and small-scale growers. The processing company is presently going through a factory expansion programme, which involves the instalment of a new processing line, bringing up Tombwe's processing volume from 12 million to 25 to 30 million kilograms. Tombwe also processes leaf for Stancom and Universal, which plan to build their own processing facility in Zambia by 2007 if the increase in leaf production continues at the present pace. To be viable, the Virginia crop has to be at least 25 or 30 million kilograms a year. Due to Tombwe's growers programmes, CNT is also active on the leaf buyers' side. By mid August, ZLTC had acquired 6,780.1 million kilograms, CNT 2,751.7 million kilograms, and Stancom 3,118.7 million kilograms of tobacco. Despite the country's current positive development, there are also some challenges involved. "Zambia is an expensive place to start out for farmers," says Terry Conway. "They have to have a realistic idea of what is expected of them. They only have a short time, usually four years, to pay back their loan, in contrast to Zimbabwe, where they had fifteen years. Furthermore, Zambia does not have the same good infrastructure as Zimbabwe yet, which makes procuring essentials for farming difficult. "Apart from that, Zambia, in contrast to Zimbabwe, has a lack of capable mechanics and sophisticated machinery for equipment repair. Most of all, however, it does not have a tobacco research station yet. "It is vital to open up an R&D centre for seed production as soon as possible," says Mr Conway. "This will be a joint venture of leaf traders to ensure a steady and continued growth of the tobacco industry in Zambia." Back on Kayanje farm, the workers plant the last rows of seedlings for the day as the midday sun reaches its peak. In a few months, these small plants will be part of another record crop for Zambia's rising Virginia tobacco industry. And that, somehow, is a nice picture to store at the back of your head. Enditem