ZIMBABWE
In a 2019-2020 season that was largely blighted by drought, tobacco farmers managed another record-breaking feat by delivering 259.5 mln kgs of the cash crop, up from a historic 252 million kg recorded last year.
But, there was little cheer as revenues declined significantly. Despite pocketing US$207 million less — as overall earnings slumped to US$530 million from US$737 million a year ago owing to lower prices — farmers are equally worried by what they perceive to be man-made challenges caused by a well-knit syndicate of merchants, buyers, and packaging material manufacturers that allegedly milk them through extortionately inflating the price of inputs and packaging material. The expenses are reportedly aggregated and deducted from their season’s proceeds, which chews into their margins so much that some of them are mulling substituting tobacco for other cash crops.
The bulk of farmers are able to grow tobacco, which is one of the country’s major foreign currency earners, through support from contractors, with 80% of the crop produced under the contract system. However, since most of the contractors finance production in foreign currency, repayments are equally docked in the same currency, and many farmers are not happy and feel the valuation for the support extended to them is being inflated.
Currently, there are 22 contractors and 34 merchants registered with the regulator. The Zimbabwe Tobacco Association, a 91-year-old representative body of small- and large-scale farmers that produce an estimated 30% of the country’s flue-cured tobacco, said it was looking into the concerns.
There are growing fears that continued frustrations will force some farmers to abandon the crop. Latest statistics show that the number of new farmers who have registered to grow tobacco has declined by 80% to 7,274 compared to 34,845 farmers last year. More than 25,000 of the 162,028 farmers who grew tobacco last year plan to ditch it this year.
Farmers have also been put off by unattractive prices. Average prices for contract tobacco topped US$2.07 this year from $2.95 a year ago, while auction tobacco stood at $1.76 from $2.73 in the same period.