China can't get enough of Zim's tobacco

Tobacco farmer George Square forces a dry smile across his wrinkled face. Like thousands of others at Boka Tobacco Floors in Harare, he is waiting in a long queue at the bank to get the cash he earned from selling tobacco on Monday morning.

Tobacco farmers have not escaped the cash shortages in Zimbabwe. In the past, farmers were given cash on the day they made their sale. Now they must have bank accounts and comply with the many requirements of the Reserve Bank of Zimbabwe in order to be paid. And even then they are limited to how much money they can withdraw at one time.

Square, 49, has few reasons to smile these days, except when he reflects on how far he has come since he took up tobacco farming.

"I was one of the first beneficiaries of the land reform programme in 2000 and I was a pioneer. I am growing the same tobacco crop that I was growing for the white people," he said. "Things really have improved for us in this country since we gained independence and, as a result of the land reform, workers are also now farming."

For 17 years, Square has been growing tobacco on the 3ha of land given to him by the government of President Robert Mugabe in Mutoko, about 145km northeast of Harare. On it, he has been able to support his family of 10, pay school fees for his children, pay wages to his staff and make improvements to his rural home.

Before he got the land, Square had been a farm manager at Morningstar, which was owned by a white farmer. The owners were among the nearly 6000 white commercial farmers driven from their properties by war veterans loyal to Mugabe at the height of the land invasions in 2000.

A fallout between Mugabe and the British government over a willing-seller-willing-buyer scheme was one of the catalysts for the invasions. Britain stopped helping to pay compensation for white-owned farms acquired by the Zimbabwean government. Of the hundreds of millions of pounds pledged under the Lancaster House agreement of 1979 (Britain has, however, denied promising a specific figure), only around £36.5-million to £47-million had been released by the late 1990s for land resettlement.

Mugabe also exploited the populism of the land invasions to win votes. Although his political career was extended as a result, the agriculture-based economy tanked.

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Data suggests that in the aftermath of the land invasions - which decimated agricultural production, led to the imposition of sanctions by the West and resulted in widespread foreign capital flight - Zimbabwe's economy shrank by more than half. It used to be a net exporter of grain; now it has to rely on imports from South Africa and Zambia.

Tobacco, which earned about 40% of Zimbabwe's foreign currency, was also badly hit: production fell from 237million kilograms in 2000 to 68million in 2004. It has since recovered to 202million kilograms, thanks to the efforts of more than 90000 black farmers. This is the number of growers registered with the Tobacco Industry Marketing Board, the industry regulator.

Zimbabwe's tobacco is grown and sold under two systems: about 80% of the farmers are part of the contract system and 20% are independents.

Under contract, the farmers get capital and input support from a company and have a production quota to meet. This system has helped China - which expertly inserted itself into the vacuum left by the West after the land row - to corner 90% of Zimbabwe's tobacco crop.

Independent farmers like Square bring their 100kg bales of tobacco to the auction floors for sale.

This year the average export price, according to the marketing board, is $4.80/kg. Last year it was $5.98/kg.

Chido Nyakudya, the acting CEO of Boka Tobacco Floors, is confident in the upswing of the industry, despite recent challenges. "About 90000 growers are producing what roughly 5000 white commercial farmers used to produce. What it means is that the wealth is spreading out among more people," she said.

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The 2017 tobacco sales began last month and will run until August.

The demand for Zimbabwe's tobacco crop is high.

About 44% of the world's cigarettes are smoked in China.

However, with the World Health Organisation warning of the consequences of the unsustainable costs of tobacco usage in China, and activism against cigarette smoking increasing, there are fears that the demand for tobacco could crash.

Nyakudya admitted: "Tobacco companies are moving towards e-cigarettes, but there is still a demand for the golden leaf."

Industry watchers are concerned that Zimbabwe relies too much on the tobacco crop, which is susceptible to price falls, crop quality and poor farming seasons.

This week an expert, who declined to be named, said: "Zimbabwe needs to engage seriously in conversation over what it would do if there was to be a global shift away from tobacco, or even a major fall in prices."

But, said Tobacco Industry Marketing Board CEO Andrew Matibiri, very little of Zimbabwe's land was given over to tobacco farming, and only about 25% to 27% of foreign currency earnings came from the crop.

Still, the tobacco industry, which earned $900-million in foreign currency last year, has become the darling of Zimbabwe's cash-strapped government.

Earlier this year, Finance Minister Patrick Chinamasa revised the economic growth rate to 3.7% from 1.7%, on the back of a better-than-expected agricultural season.

But Square is oblivious to the role his tobacco plays: his only concern is to get money from the bank.

Tobacco farmers are allowed to withdraw $1000 (about R13250) from banks on their first sale of the season, and are then limited to $500 a time. The farmers are still better off than most Zimbabweans, who are only able to withdraw $50 a day.

Square said: "If I don't get any cash today, I will have to sleep here. I can't go back home without any cash. Everyone there is looking up to me for something."

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