South Africa: Lessons of Tete's Tobacco Tale

Source from:  Business Day (Johannesburg) 9 January 2008 01/10/2008

VIEWED from the air, two things stand out in Tete. One is the 720m suspension bridge, built in the 1960s, spanning the expanse of the Zambezi . The other is a large, modern, white building, a $55m tobacco factory built three years ago, the likes of which the province had not seen since the Portuguese colonialists left in 1975. Until recently, the Mozambican province was better known for heat, dust, the Cahora Bassa hydro scheme on the Zambezi, and the $1,5bn coal investment made by Brazilian mining giant CVRD. It is not the place one expects to find a cutting-edge poverty alleviation programme. Nor does one expect it to be conceived and run by the private sector. But it is -- and this is why, unlike most aid programmes, it both works and is sustainable. Over the past decade, US-affiliate Mozambique Tobacco Leaf Company (MLTC) has spread its supply network to 45000 outgrowers, each making on average $400 profit for their tobacco crop annually. Growing mainly burley tobacco, the crop has transformed the lives of probably half a million people. These farmers simply subsisted from the land before. The province produced just 15000 metric tons of tobacco three years ago; this season it will be 21000, and the aim is to produce 45000 by 2015 -- what Zimbabwe now grows. Total country production by MLTC this year is expected to be 40000 tons from a grower base of 90000. This is to be achieved partly through increased yields, and partly through extending the area under cultivation. Smallholders produce roughly one ton of tobacco a hectare, commercial farmers 2,5 times as much through the intensive use of fertilisers, irrigation and better farming techniques. Some might think that Mozambique has boomed where Zimbabwe has failed. Not so. Most Zimbabwean farms produced Virginia not burley leaf. And of 12 Zimbabwean farmers who left Robert Mugabe's land grab behind to start commercial tobacco operations in nearby Manica province in Mozambique in 2004, nearly all have folded. Tete's agriculture revolution has been achieved by private-sector agriculture extension, with MLTC funding all inputs, offering training and technical advice, and buying from the farm gate. This is a complex programme, requiring 2700 agronomists and "leaf technicians" in the field. It has not stopped at tobacco. Now the corporation is seeding other farming ventures. Six million trees have already been planted, with a goal of 16-million by 2012. The company also encourages GAP (good agricultural practices) with rotation of other crops such as soya beans and ground nuts, and distributes seed maize as an input to its growers for food security. The company is engaged in malaria spraying programmes, and building infrastructure such as schools, bridges, road repairs, boreholes and clinics, resulting in the mushrooming of other investment such as transport and other agribusiness within the farming communities. About 6000 schoolchildren benefited from company schemes in 2006. Such practices are driven partly by corporate social responsibility, with the tobacco industry especially sensitive to perceptions of its role. It is also partly driven by common sense and self-interest. A happy farming community leads to a more secure relationship between farmer and buyer, and less chance of "leakage" -- third-party sales outside the relationship. Without this form of extension, the farmers would likely not get their inputs. Nor, more importantly, could they borrow, since they do not own the land. Indeed, they have to pay a form of tithe to the local chiefs, though all land in Mozambique is technically owned by the state. Tete's tobacco tale illustrates two things. First is the extraordinarily positive impact that export-led agriculture can have on poverty alleviation. It reaches the poorest parts of society and can quickly transform livelihoods and lives for the better. Second, commercial projects do what aid can never achieve. By placing extension services on a commercial footing, it grants a different logic to sustainability, one based not on pity but on performance. Enditem