Tobacco farmers languish in poverty

via Tobacco farmers languish in poverty – The Zimbabwe Independent April 8, 2016

DESPITE tobacco being Zimbabwe’s second largest foreign currency earner, most local growers of the golden leaf are languishing in abject poverty with nothing tangible to show for their hard work.

Fidelity Mhlanga

Statistics from Treasury shows tobacco exports were only second to gold, valued at US$481 million constituting 23% of all exports from January to October 2015.Gold exports were valued at US$ 503 million.

However, Garikai Taengwa, a Macheke farmer, does not have anything to show for the four years he has toiled growing tobacco.

“In my first year of growing tobacco I managed to buy two cows and a scotch-cart. Since then, I have failed to buy any meaningful assets because I am using the little money I get from selling tobacco to purchase inputs for the following season,” Taengwa said.

He said plans to drill a borehole, set up an irrigation facility and buy a tractor have been derailed by the low prices being paid for tobacco at the country’s auction floors.

Taengwa said he has been increasing his tobacco planting area from half a hectare to four hectares over the years in anticipation of better returns, but it has turned to be a nightmare.

“Last year I grew four hectares and harvested 30 bales, but due to low prices, I only managed to grow three hectares this year. Prices were not encouraging for me. They were so bad to an extent I sold my cattle to buy inputs,” he said.

Taengwa is not alone in this. Many farmers say they are experiencing similar problems.

Vengai Chinzara, a Centenary tobacco grower, said his hopes of buying a residential stand in Harare have proven to be a pipedream due to poor tobacco prices in the past few years.

“So far, we have just built a two-roomed house at our rural home. The little money I am getting is not enough to build a modern home in town for my family and buy inputs for the next season,” Chinzara said.

Tobacco output has been rising since dollarisation after farmers ditched other crops such as maize in favour of the cash crop.

In 2010, production was 58,5 million kg, surging to 123,5 million kg in 2011, 132,5 million kg in 2012, 144 million kg in 2013, 216 million kg in 2014 and dropping to 199 million last year.

The fall in tobacco output last year has been attributed to poor rains and poor prices obtaining on the floors.
The first day of 2014/2015 marketing season was affected by protesting farmers who were enraged by low prices offered by buyers at the auction floors.

Dissatisfied farmers say cartels of unscrupulous buyers operating at auction floors are manipulating prices.
In 2009, flue-cured tobacco prices averaged US$2,98/kg before dropping slightly to US$2,88/kg in 2012 and further retreating to US$2,73/kg in 2011.

The average price of flue-cured tobacco closed the 2012 marketing season at US$3,65/kg and grew further to US$3, 67 per kg in 2013.

In 2014, the average tobacco price dropped to US$3,17/kg before tumbling further to US$2,93/kg last season which has prompted some farmers to ditch the crop.

Official figures from Tobacco Industry Marketing Board (TIMB), show the number of tobacco growers plunged by 22% from 92 430 last season to 71 728 after farmers failed to raise money for inputs ostensibly due to poor prices.

Consequently, production this year is projected to dwindle further to 170 million kg from 199 million recorded last year.

Last year, tobacco valued at US$580 million went under the hammer.

Zimbabwe Tobacco Association (ZTA) CE Rodney Ambrose told businessdigest last week, that with Brazil, India and Tanzania having downsized their tobacco production this year, it is highly estimated that the global demand for the golden leaf will balloon, pushing up local prices.

The highest price offered at Tobacco Sales Floor on the first day of the marketing season last Wednesday was US$4,50 per kg.

“We are anticipating a better year in terms of prices. Farmers have been getting poor prices for the past two seasons that is why 21 000 farmers left the industry. We are expecting a better average price this season,” Ambrose said.

However, at the end of the first selling week, the crop’s average price was pegged at US$1,59 per kg down from US$2,56 over the same period last year.

Tobacco Industry Board (TIMB) chairperson Monica Chinamasa said dwindling golden leaf cultivation was a cause of concern. The board is committed to dealing with the matter improving productivity and ensuring a more predictable pricing and purchasing pattern that ensures viability to growers, she said.

“The major concern for growers as the marketing season commences is the declining viability of tobacco cultivation,” Chinamasa said last week in her speech to mark the commencing of 2016 marketing season.

“There is need to put minds together and find ways of improving viability by minimising the costs and maximising the productivity.”

With the Reserve Bank of Zimbabwe (RBZ) and the Tobacco Industry Marketing Board (TIMB) compelling all proceeds from the sale of tobacco to be paid through banks, it is envisaged that most farmers selling their crop via auction will have a track record to qualify them for loan financing.

Before the country’s controversial land reform, farmers relied on banks to provide working capital and funding for purchase of tractors and other necessary machinery. Banks say the new land tenure system is not conducive to collateral based lending.

If successful, this endeavour will help tobacco growers buy inputs and undertake huge projects.

While other farmers have failed to realise the glitter of the golden leaf, others like Jeffrey Muringai of Shamva have reaped huge rewards from tobacco farming.

“For the 15 years I have been in tobacco farming I purchased a residential stand in Bindura and built a big house. I also bought myself a truck which I use to ferry my produce to the market. I am sending my children to boarding schools,” Muringai said.