Online Reporter
PHILLIP Morris International (PMI), the world’s biggest tobacco company by market capitalisation, estimates the value of the global leaf tobacco industry at $16,7 billion.
At factory stage where the leaf is turned into cigarettes, cigars, cigarillos, pipe tobacco and so on, the value of the industry rockets to $251 billion. It becomes a $756 billion colossus at the retail end with cigarettes accounting for 88 percent of global sales, PMI states.
This means that the value of tobacco grows 45-fold from golden leaf stage to the moment of consumption.
Our country, Africa’s top grower, produced a record 355 million kilogrammes of tobacco worth $1,2 billion this year. Ninety-eight percent of all output is exported in raw form yearly, and just two percent is locally beneficiated into the final product.
South Africa (28,5 percent), Kenya (19,5 percent), Nigeria (16,8 percent), Senegal (8,1 percent) and Tunisia (6,4 percent) are Africa’s top five cigarette producers, yet none of them features on the list of the five biggest tobacco growing nations on the continent.
Going by PMI’s estimates, our $1,2 billion tobacco industry would have contributed up to $54 billion to the economy this year.
The figures demonstrate the enormity of the value that our economy loses by sitting at the base of the value chain. They, too, highlight the immense profit that nations, which positioned themselves at the apex of the pipe earn.
Indeed, we, as an economy and a people, have committed this injustice to ourselves for far too long, 131 years, so to speak, since the first commercial tobacco crop was harvested in Zimbabwe.
However, Wednesday marked a major step in the country’s quest to address this old, obvious anomaly.
Yes, we mentioned earlier that we process two percent of the leaf we grow into finished products, mainly cigarettes, but the impact that the new $100 million Cut Rag Processors (CRP) plant that President Mnangagwa commissioned on that day will be significant.
The continent’s biggest tobacco processing plant has the capacity to make 12 000 sticks per minute, 720 000 per hour and 5,7 million in an eight-hour shift.
The President was happy, as we too are, that CRP has made an investment of this magnitude.
“This enterprise gives a glimpse into the immense potential of our manufacturing industry,” he said.
“It is further commendable that since its establishment in the year 2000, as Zimbabwe’s first independent cut rag and cigarette manufacturing facility, Cut Rag Processors Private Limited has grown to become one of the leaders in innovation and production excellence. This multi-million-dollar investment by Cut Rag Processors reflects the growing confidence, which the private sector continues to place in Zimbabwe’s economic transformation agenda.”
We are happier because CRP is a 100 percent locally-owned company, which means greater national value retention.
CRP’s investment is a challenge to the oldest cigarette maker in the country, BAT, as well as Pacific Cigarette Company, to expand their investments in tobacco beneficiation. We don’t see any impediment along the way because the Government encourages more investment in value addition.
We already produce a large tobacco crop yearly, so, sourcing can’t be an issue.
Yes, Zimbabwe is a tiny cigarette market — about 859 620 adult smokers, according to Tobacco Atlas — but export markets cannot resist the high quality and unique flavour of locally-grown tobacco.
