Online Reporter
THE bulk of Zimbabwe’s tobacco crop is exported as raw leaf following minimal processing, largely getting the moisture content right and stripping some of the stalk, with only about 1 percent retained for local consumption and a tiny bit extra exported as cigarettes.
Part of the problem of adding value to exports has been the way the global tobacco industry is organised, with cigarette factories in most countries, and those without a local national tobacco industry wanting imports of raw leaf so that all the value addition is done in these localised factories. Often there are official or unofficial monopolies that add to the difficulties.
Global companies, and these dominate many markets, have worked on a model of opening subsidiaries in many countries, where they could not supply directly from their American and European factories, and tended to preserve the status quo.
Zimbabwe itself, until the late 1990s, had its own cigarette manufacturing concentrated in the hands of two multinationals, which eventually combined operations and that opened a gap that an innovative entrepreneur could exploit, especially as some scrapped equipment was still usable and available cheaply.
We fortunately had the innovative entrepreneurs and a variety of new brands were brought into the local market. Perhaps more importantly, there was some aggressive export marketing, with some of the newcomers more than willing to work under contract for foreign partners and create even more specific brands to order.
These new brands filled gaps in the old multinational-dominated markets and often price advantages helped push the new products, even where local tobacco taxes were exceptionally high.
The expansion in the amount of tobacco that had to be processed to cigarette manufacturing stages created a new processing industry to back the manufacturing.
Before the leaf from the farmer or even the Zimbabwe tobacco merchant doing the traditional initial processing can be poured in the hoppers feeding the production machines, it needs considerably more value-added processing and blending.
The actual product that is used by a cigarette maker is technically known as cut rag, that finely shredded tobacco of a very precise moisture content and usually subjected to extra processing, such as toasting, literally heating to a precise temperature to change the flavour of flue-cured Virginia, and often these days to more blending.
While an ultimate goal of Zimbabwe’s industrialisation may be the export of finished and packed cigarettes, and the African Continental Free Trade Area may help here to overcome some of the non-tariff trade restrictions at least on the continent, there is room for replacing a solid block of leaf exports with something that a factory in another country can just pour from the export container into the hoppers.
So enter Cut Rag Processors, which had its new US$100 million processing plant commissioned by President Mnangagwa on Wednesday.
The President noted that Zimbabwe had the private sector that was willing to work to the same ends as the Government, building up the value of what our farmers grow and miners dig up so that we export something that will add significantly extra to what we sell.
We do not have to make batteries from lithium or cigarettes from tobacco before selling what we produce from our natural resources, but moving the local processing to the stage where what we sell is what a factory owner in another country wants and needs can multiply the value of an export several fold.
We need to remember that a lot of that extra value comes from what we pay Zimbabweans in new skilled jobs, so there is a multiple advantage of more exports and more decent jobs.
It is also, obviously, an essential stage in any programme where we also make and sell more of that final product, but we are always likely in areas where we are listed in the top 10 producers of raw materials to have to have a mixed value addition strategy, selling a lot of raw material in the final form wanted by a manufacturer as well as having our own manufacturers.
The next stage in tobacco, now we are able to do much more final processing, is to expand the range of leaf we grow.
Zimbabwe built its tobacco reputation and industry on flue-cured Virginia, a product that has the widest possible reach of any tobacco.
But by the time it is in a cigarette it has often been blended with a modest amount of other tobaccos, and especially the darker flue-cured types and more particularly with Oriental tobaccos, a sun-dried tobacco of stronger flavours.
Already a Matabeleland South enthusiast has been helping local communities in this different climatic region from the main tobacco belt to produce these specialist tobaccos and the progress needs to be encouraged.
The different growing conditions will also give more farming families a shot at boosting their incomes significantly, again to the advantage of Zimbabwe as well as farmers.
It will also make it easier to build up the sort of range of blends that we need in final cigarette manufacture if we are to become a giant in that industry to match the sort of standing we have in flue cured tobaccos.
The huge expansion in tobacco output by our farmers has also meant Zimbabwe is now actively looking for new markets, before it saturates those we already have.
Once again quality will count but that quality must also mean quality ranges and very high-quality processing, so that we maintain our advantages.
So we are back to what the President commissioned this week, and that new giant processing plant should be able to allow us to supply what a lot of businesses that need that sort of product and have not been able to get just what they want at the quality and price they need.
