Ashly Dhani
Hebert Zharare and Martin Kadzere
The land reform programme, which was implemented two decades ago, remains one of the hugely successful mass economic empowerment initiatives to be implemented in Africa, if not the world.
Land — the primary means of production — was transferred from minority whites (4 000 of them controlling over 70 percent of the country’s rich and arable land) to its rightful owners.
Indigenous Zimbabweans are now masters of their own destiny.
Official records indicate about 500 000 families directly benefited from land reform.
Despite divesture by white industrialists who used to support the local agriculture value chain, locals have now mastered the art and are now leading in production of inputs and technology needed to support the sector.
It is, therefore, not surprising that tobacco farming stands out as one of the biggest successful empowerment stories in the history of Zimbabwe.
More countries are increasingly taking a leaf from Zimbabwe through crafting laws to repossess their land.
Prior to the land reform programme, tobacco farming used to be a preserve of large-scale commercial farmers.
Blacks made the bulk of labourers in the sector.
Smallholder black farmers were discouraged from producing the golden leaf as it was considered to be technically challenging for them.
And when they delivered their little crop to the floors, it was sold in what was then termed the “Chitungwiza” sale at low prices.
Clearly, white farmers did not want to share this lucrative cake with the indigenous majority.
Before the land reform, about 2 000 large-scale commercial tobacco farmers produced 200 million kilogrammes, an average of 200 tonnes per farmer.
But after the transition, the number of farmers has exponentially increased to plus or minus 150 000.
This represents a transfer of wealth from elitist large-scale farmers to a broader grower base.
Rural communities have been economically transformed, driven by handsome profits enjoyed by farmers.
There are cases where some farmers are pocketing close to US$500 000 per annum from this lucrative cash crop.
Success has, however, been limited as leaf merchants and cigarette manufacturers have been getting the bigger slice of the cake.
For example, the top price for tobacco at the auction floors is about US$5 per kg. The same kg is retailing in developed countries for US$500 after blending with low-cost tobacco from other markets.
The bulk of tobacco produced in Zimbabwe is exported in green (semi-processed) form mainly by big merchants.
With one or two exceptions, indigenous merchants have failed to penetrate this market due to formidable entry barriers.
They always find it difficult to access low-cost funding, long working capital cycles, and access to markets in the exclusive old boys club of global tobacco, as well as lack of factory processing capacity.
As a result, indigenous merchants have been condemned to surrogate buying on behalf of the big merchants, as well as management of contract-growing schemes on behalf of large tobacco merchants, who enjoy most of the tobacco proceeds offshore. Returns from all these activities are a pittance relative to the returns that indigenous players could make in export markets as leaf merchants or cigarette manufacturers.
Effectively the indigenous tobacco merchant does not have a seat at the main table and is surviving on the crumbs dropped by large merchants.
This needs to be urgently addresses if we are to wholesomely empower our people.
Some market watchers believe while tobacco farming provides lucrative returns, black farmers are only participating on the lower rungs of the value chain.
It is undoubted that the economic development of nations is initially driven by primary production and thereafter by the acquisition of technological competencies for the creation of more complex products further down the value chain.
This is capped by the transition to knowledge economies, which outsource production to poorer countries.
There is need for policymakers to formulate an effective indigenisation roadmap for the tobacco sector to address constraints related to funding, markets and processing facilities.
Online Reporter