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Tobacco, not cannabis, remains the future for Zimbabwe and Malawi.
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It’s business as usual on the tobacco sales floor in Harare this marketing season.
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The Malawi Tobacco Commission said the future of tobacco remains safe despite the introduction of cannabis and the global anti-tobacco lobby.
The future of tobacco farmers in some of the world’s top producers, principally the US, is touted to lie in cannabis, but in two of Africa’s biggest growers, the golden leaf remains the future. Support for tobacco farmers to make the switch, the legalization of cannabis cultivation in that country, and the promise for higher revenues have seen growers in some US states – among them Kentucky, Massachusetts, and Connecticut – taking steps to try marijuana in recent years.
Indeed, some tobacco farmers in Zimbabwe were keen to move over to cannabis when their government legalized cannabis growing for medicinal and scientific use in April 2018. However, they learned when the regulations were released in September 2020 that growing the crop would be difficult for most of them. The regulations governing the emerging industry are strict, analysts say, and financial demands too high for them to meet.
An interested farmer or other investor has to apply to the government for a growing license, paying an application fee of between US$200-500. If their application is successful, they are bound to pay $40,000 for a five-year license and thereafter $15,000 as an annual fee. According to the regulations, farmers, too, must invest in high-end physical and automated security on their cultivation and processing sites to the satisfaction of a government-appointed regulator.
Most tobacco farmers will be unable to meet the requirements, said Believe Tevera, who grows the crop in the Chakoma area, Mashonaland Central province, north-east of Harare, the capital. “I am already growing tobacco so I thought cannabis could be more attractive,” he told Tobacco Asia. “But, the licensing requirements put me off. Cannabis is for the elite who have the money to pay for too many things and secure their farms, not small-scale farmers like me.”
Tobacco is grown by an average 120,000 mainly small-scale farmers in the southern African country, also the continent’s top producer and the world’s sixth. Last year they sold 225 million kilograms of the crop earning $456 million. By comparison, the government had issued 44 cannabis growing licenses by November 2020 with forecast sales mounting to $1.25 billion this year.
Nine African countries have legalized the growing of cannabis for medicinal and industrial use since 2017. Lesotho was first, followed by Zimbabwe and South Africa. Ghana, Eswatini (previously known as Swaziland), Rwanda, Zambia, and Uganda joined the club later. Malawi was the last in February 2020. Of the nine countries, three – Zimbabwe, Zambia, and Malawi - are among the top five tobacco producers on the continent. “When blacks took over land from white farmers in 2000, there was no planning and you find that many farmers don’t have access to grid electricity; they do not have solar systems because they are expensive. How, in the circumstances, can I be expected to automate security on my farm when I do not even have electricity?” asked Tevera, who is also president of the Tobacco Farmers’ Union of Zimbabwe.
“They make more money from cannabis than we do from tobacco so the keenness was naturally there among [tobacco farmers]. but the government is afraid that if it relaxes the regulations, marijuana smoking might go out of control in the country. So don’t expect farmers to drop tobacco for cannabis. Regulations and costs don’t allow that to happen.”
Historical accounts indicate that cannabis has been grown in eastern Africa since 1000 CE, having been introduced from Asia. Africans mostly smoked it, but in the late 1700s Mozambicans also started making cordage from marijuana stems. The free cultivation and consumption of marijuana ended when colonial governments criminalized it in the early 1920s. Still, the United Nations estimates about 10,000 tons of it was grown yearly on the continent before 2017, part of it consumed locally and some illegally exported.
On the other hand, tobacco was introduced to Africa from the Americas much later in the late 1500s with trading in it starting in the 1600s. Before last year’s legalization, Malawi had a long tradition of illegally growing and exporting a local marijuana strain known worldwide as the Malawi Gold. To grow it or other strains legally, they have to obtain a government license that costs $10,000. Malawians protested against the fee when it was announced in November 2020, saying it would prevent interested local farmers from obtaining cannabis growing license.
The Malawi Tobacco Commission said in a November 2020 statement that the future of tobacco remains safe despite the introduction of cannabis and the global anti-tobacco lobby.
“The country is yet to identify a competitive crop or another best alternative to tobacco. Until we reach that stage where we shall have an alternative crop that will be raking in [as] much foreign exchange as tobacco, we will still be relying on tobacco,” said the statement. In an interview with Reuters around the same time, the commission’s board chair, Boniface Kadzamira, backed tobacco but acknowledged cannabis’ potential in not supplanting tobacco income but supplementing it. “Our view as regulator is that if we get honest investors,” he said, “the hemp industry can supplement export revenues from tobacco, and in some cases, surpass it. But it will not immediately replace tobacco.” Tobacco supports an estimated 1.7 million Malawians, according to the Comesa Business Council in a recent report, Tobacco Sustainability in Africa. It contributes about 15% of the country’s gross domestic product and is the country’s top earning export, raking in $173.5 million in 2020.
The African Cannabis Report by Prohibition Partners agrees that widespread adoption of cannabis will take a long time in Africa because of regulatory, infrastructural, and market impediments. The report indicates that law makers on the continent are generally reluctant to enact laws promoting cannabis growing by peasants. “Any path towards the inauguration of a legalized and regulated cannabis industry will present challenges,” said managing director Daragh Anglim in the report. “The laws governing cannabis use in Africa are both opaque and open to interpretation.”
With respect to infrastructural requirements cannabis would, for security reasons, have to be farmed under tight control in green houses which are expensive to build, not in open fields. “The reality is that unless innovative irrigation technologies are introduced, there is likely to be insufficient water to support mass scale operations in the region, particularly in newer cultivation methods such as hydroponics,” the report adds.
Jacques Olivier, senior analyst, tobacco and drinks, at Euromonitor told Tobacco Asia that with established agricultural infrastructure, most notably in South Africa and Lesotho, the potential for cannabis in Africa looks strong, but the challenge will be getting everyone onboard, from the farm owners, the growers, to the distributors and sellers. “Currently, only a handful of established players are benefiting from the market, mostly those that have established export channels, and even these exports remain low currently,” he said. “Regulations certainly are tough, but with reason. We are speaking here about a previously taboo product.”
Paul-Michael Keichel, a partner at South African law firm Schindlers Attorneys, said the tough licensing requirements will keep cannabis off-limits for less-resourced growers. “I think that the regulations require loosening. Don’t regulate the growth of the plant, but rather regulate the legitimate and illegitimate uses to which it may be put. By keeping them too tight, you are only allowing for the already-rich and multinationals to get richer. What of the small guy, who wishes to uplift himself out of poverty? Let’s keep the wealth in the hands of Africans!”
Delivering Zimbabwe’s 2021 national budget in November 2020, finance minister Mthuli Ncube forecast cannabis revenue of US$1.25 billion this year. He said cannabis production for medicinal and industrial purposes has “immense potential” to generate export receipts and tax revenues for the underperforming economy. A cannabis levy will be introduced this year, he said, in line with export income. He said taxes of about 20% will be levied on oils and dried cannabis flowers.
However, a top local economist, John Robertson, said the minister’s forecast is too ambitious. “It’s a massive overestimate and ignores that cannabis is grown in many markets outside of Zimbabwe,” he told Bloomberg. “It’s sold in grams, not in kilograms or tons, so there will be disappointment. The only enthusiasm will be from producers, but massive supply globally will depress prices.”
Gift Mugano, executive director of Africa Economic Development Strategies, said tobacco still has a future in Zimbabwe and Malawi not only because the crop pays growers well but also because moving over to cannabis will be too costly for most of them and regulations tough. “I don’t see that happening anytime soon,” he said, commenting on the possibility of tobacco farmers ditching the crop for marijuana. “The law is really tough and initial costs high. Without the contract support we are seeing in tobacco growing and relaxation of the law as it stands farmers will stick with tobacco.”