Online Reporter
Obert Chifamba-Agri-Insight
IN 2021, the Government adopted the Tobacco Value Chain Transformation Plan that set what appeared to be an ambitious and insurmountable target of 300 million kg by 2025 for the tobacco industry.
This came as part of a cocktail of measures the country was putting in place to boost production of the golden leaf to allow the industry to reclaim its yesteryear glory, which saw it playing a weighty role for the national economy.
By Day 73 of the 2025 tobacco marketing season – exactly four years and six months later, statistics availed by the Tobacco Industry and Marketing Board (TIMB) showed that farmers had sold 306 251 229 kilogrammes marking a 46 percent increase from 210 457 693 traded last year.
In value terms, the growers earned US$1 028 095, a 42 percent increase from last year’s US$726 290 126.
The plan seeks to secure the future of tobacco production and consolidate the important role of the crop’s value chain to agriculture and the economy through sustainable, intensified farming practices.
Essentially, the feat of surpassing the 300-million kg target set in the transformation plan is not just a record, but has set the stage for a revolution that will further consolidate the tobacco industry’s crucial role in building the national economy.
The country’s growers have proven that with the right knowledge, support and drive, they can meet global demand for tobacco and shape market dynamics as well.
This now requires focus to be shifted to matters of quality, pricing power and sustainability given that we have successfully metamorphosed into a serious market influencer, as a country.
The reality on the ground is that the road to attain 300 million kilogrammes of the golden leaf, which was once a dream is now history in the making, hence the need to finish strong. All eyes are now on Zimbabwe.
As the country celebrates this milestone, it is also important to remember that there is one issue that has remained sticking out like a sore thumb – the stark reality that 95 percent of our tobacco crop is produced under contract arrangements using offshore funds.
This means that the bulk of the money generated from the sale of the crop goes to the merchants, thereby eroding the contemplated financial benefit to the grower.
It will therefore not require rocket science for anyone to appreciate the fact that the future of the country’s industry lies in adopting self-funding models as opposed to contractual arrangements whose strings can be complex relating to inflated pricing structures of inputs and other insidious costs. The crux of the matter is that after producing under contract arrangements, farmers settle their loans by repaying contractors who then export the money financial institutions outside the country.
It is painful to have farmers producing tobacco that leaves very little in the country’s coffers while enriching countries that do not produce it yet they make more revenue than the producers. Localising tobacco funding will mean that contractors will no longer rely on external sources to which they will be obliged to ship money across the borders after every season.
Analysts say the country remains with something in the region of 12 percent in tobacco earnings every year that is split between the Government and farmers, which makes not much sense in terms of business. This is one of the biggest issues that the country must now move to address given that we have proven our mettle on the production side.
This potential must now be supported by appropriate earnings to motivate more farmers to produce the crop on an even bigger hectarage.
The other important observation is that the country must also value add the bulk of the crop, with farmers also participating in process so that they make the most t from their crop as opposed to the current model, which favours contractors.
Local financial institutions must also appreciate the farmers’ showing this season and realise that they have the potential to produce enough to repay loans if they decide to finance them.
Banks must make pave the way for farmers to secure loans and avoid relying on contractors that later buy the crop at prices they also choose before leaving with almost everything from the crop to the revenue generated. In recent seasons there have been pricing impasses, with farmers accusing buyers of colluding to short-change them.
This situation is traceable to the absence of reliable funding for farmers, which inevitably forces them to turn to contract arrangements instead of using locally available funding sources that are sadly not available at the moment. Localising funding is crucial to retain financial resources within the country, thereby supporting local economies and reducing vulnerability to global market fluctuations.
It is now important for the country to strengthen financial institutions by capacitating them to provide credit and investment specifically for tobacco production. This will include creating tailored financial products that cater for the unique needs of tobacco farmers.
On the one hand, the formation of cooperatives among tobacco farmers can facilitate collective bargaining for better contract terms and access to funding. The farmers can also pool resources and engage with local financial institutions for loans and technical support while reducing reliance on contractors.
The other advantage of localising tobacco funding is that such an eventuality will allow investment into research and development, focusing on sustainable farming practices, pest management, and improving crop yields.
It is also important for the tobacco sector to have diverse funding sources to ensure there is fluent financial support every season. And while contract farming is prevalent, exploring alternative funding models, such as impact investing or public-private partnerships, can provide additional resources. This diversification can reduce risks associated with reliance on a single funding source.
The Government can also help the situation by adopting more policies that incentivise local funding and investment in the tobacco sector. This may include tax breaks for local investors and subsidies for farmers who source funding locally.
One thing the country must appreciate, as it revels in the current success is that it has set a high bar for itself and has to make sure it maintains the level or even improve it.
Farmers must meet international sustainability standards to attract funding from environmentally conscious investors while the implementation of certification programmes can enhance the marketability of Zimbabwean tobacco and allow farmers to fetch better prices.
After all is said and done, it remains critical to appreciate that by reducing dependency on offshore capital, strengthening local financial institutions, and promoting cooperative farming, Zimbabwe can enhance its tobacco industry’s resilience and sustainability.
This approach not only supports local economies, but also positions the country favourably in the global tobacco market, ensuring that the benefits of production are retained.
