Regaining a Place Under the Sun

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By Thomas Schmid

Zimbabwe has always been among Africa’s largest tobacco producers thanks to its favorable weather and soil conditions. But the emergence of tobacco contract farming over the past decade led to significant expansions of planting areas and, together with improved yields,  has resulted in progressively higher outputs of the golden leaf.

In 2018 a new record of 258 million kilograms (m.kg) was sold which was slightly lower than the all-time high of 260 m.kg produced in 1998. This development has fostered a resurgence of indigenous tobacco merchants motivated to actively participate in this export business space.

Rekindling the native industry

Founded in 2017 and incorporated in 2018, one of the earliest companies that helped rekindle the native industry was Sub-Sahara Tobacco (Private) Limited. Its vision, according to its managing director Getmore Mangundu, is “to become an internationally recognized premium tobacco supplier” with a customer focus on “small and medium-sized cigarette manufacturers that are not usually serviced by the traditional firms.”

Zimbabwe, she said, currently has approximately 134,378 smallholder farmers and around 20,000 commercial farmers growing tobacco, with average farm sizes hovering around 2 hectares for the former and 30 hectares and often much more for the latter. Producing almost exclusively flue-cured Virginia, Zimbabwe’s main growing regions are Mashonaland Central, Mashonaland East, Mashonaland West, and Manicaland. “Zimbabwean FCV is distinguished by its unique flavor and quality, making it ideal for use by cigarette manufacturers,” Mangundu explained.

100% export-oriented, enjoying growth

Sub-Sahara Tobacco acquires most of its FCV tobacco (approximately 85%) from its contracted farmers, the remainder being purchased from the auction floors. “As a supplier of FCV filler and flavor grades in all quality ranges, we put an emphasis on four principal products; threshed lamina, cut rag, stems, and fines, but of course also are able to reliably fill any customized orders,” assured Mangundu. As Zimbabwe is land-locked, the main shipping ports used by Sub-Sahara Tobacco are Beira in Mozambique, and Durban in South Africa, as Mangundu said that 100% of her company’s tobacco is exported. The firm’s success was attested by a rather healthy growth figure in 2019, while Mangundu anticipates an even more impressive increase this year. The company’s most important export markets are neighboring African countries, MENA, western and eastern Europe, as well as Asia.

Challenges abound

Among other organizations (see table), Zimbabwe’s tobacco industry is governed by the country’s Tobacco Industry and Marketing Board (TIMB), which has a number of key responsibilities. These comprise the control and regulation of tobacco marketing activities; the promotion of tobacco sales (particularly where exports are concerned); the collection and compilation of statistical data relating to the provision, marketing, manufacture and consumption of tobacco; the dissemination of market studies and other information relating to the tobacco sector. But that doesn’t mean that the industry is immune against economic challenges.

“Notably,” said Mangundu, “there persists a chronic shortage of foreign currency in the country, and that poses one of the largest issues for tobacco production. Rising costs for imported farming materials compromise and endanger the viability of contract farming.” Another big problem are climate fluctuations, “as weather conditions are constantly changing, with dry spells and heat waves being experienced year in year out.” To mitigate these negative weather effects, Mangundu called for the urgent establishment of a revolving fund for the development of irrigation systems in the country.

Yet there is more. With Zimbabwe’s tobacco farming sector expanding at a rapid pace, new farmers in particular often lack the knowledge how to adequately raise a crop that satisfies the quality requirements. To alleviate this, the government-run Blackfordby Agricultural College in Harare has been offering intensive training courses for some time now. Landlessness among smallholders also is a persistent problem, but could be solved by implementing a proper land allocation policy through lease grants. Additionally, affordable loans extended by tobacco merchants to their contract farmers would be a way to not only assist them in attaining greater mechanization, thus lowering overhead expenses, but also in upgrading their curing facilities to ensure consistent product quality. Last but not least, the generally unreliable electricity supply especially in the Zimbabwean countryside could be tackled by installing solar panels, as well as diesel-powered generators. There is much to be done still.

Intense competition

As Zimbabwe enthusiastically strides towards a free-market economy future, intensifying competition is just a natural matter of course. This also holds true for the country’s lucrative tobacco industry, where literally dozens of merchant companies and even more traders (i.e. resellers) have emerged in the past few years. For overseas buyers, it can occasionally be something of a hassle to choose the right Zimbabwean supplier, particularly under the aspect that not everyone among them is experienced enough to fulfill orders that meet all specifications. Yet there are quite a few merchants that can pride themselves on very consistent track records. As the perhaps most prominent of the lot, Sub-Sahara Tobacco certainly comes out on top, having in the meantime become something of a fixture at pretty much every international tobacco industry exhibition.

Voedsel Tobacco International

Headquartered in Harare, the company made its first inroads into the tobacco business as far back as 2008 and is licensed by the Tobacco Industry and Marketing Board (TIMB) as a “Class A” buyer, denoting that the firm has permission to acquire and trade in export-quality tobacco crops. After starting out in its early stage as an agent for foreign merchants to buy on their behalf tobacco on Harare’s auction floors, the company has since moved into its own contract farming. Despite its comparatively long history, Voedsel has nevertheless only made an appearance at international trade shows in the past couple of years, but since then very consistently so.

Shasha Tobacco

Shasha Tobacco (Private) Limited is a producer, purchaser, processor, and supplier of Zimbabwean FCV all rolled into one. One of the first locally-owned tobacco merchants, the outfit has access to considerable resources, maintaining a sizeable number of contract farmers. This enables the firm to supply whole leaf as well as an eclectic variety of lamina blends in accordance with customer orders. Shasha Tobacco’s decision in 2019 to attain a higher international profile by exhibiting at various tobacco shows rewarded it with a positive financial outlook. As of the third quarter of last year, the company’s revenue has increased dramatically, reaching a respectable $2 million by end-2019. Shasha Tobacco is the raw tobacco trading arm of ACAL Tobacco, a tobacco product manufacturer established in 2007 that supplies cigarettes primarily on the African continent.