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Edgar Vhera Agriculture Specialist Writer
THE drive to localise tobacco funding and embrace value addition of the golden leaf will play a key role in the country’s push to achieve a US$5 billion tobacco industry by 2025 as envisioned in the 2021 Tobacco Value Chain Transformation Plan (TVCTP).
This is the general feeling among many stakeholders in the tobacco industry, as they all look forward to the eventual utilisation of the US$60 million tobacco revolving fund that was announced by the Government in 2021 as part of efforts to localise funding for the crop.
Tobacco Farmers Union Trust vice president Mr Edward Dune said tobacco farmers were still waiting for the release of the fund, which would help capacitate local firms that produce tobacco inputs.
“The tobacco revolving fund will have ripple effects throughout the whole economy by stimulating downstream industries to increase their operations thereby creating further employment. Increased localisation of funding will enable the country to enjoy a large piece chunk of the foreign currency earnings from tobacco exports unlike what is currently happening under the off-shore pre-financing arrangement,” said Mr Dune.
Zimbabwe Farmers Union Secretary General Mr Paul Zakariya concurred saying the TVCTP was a process not an event.
“The Government crafted a comprehensive document in 2021 that will ensure the country achieves its Vision 2030 objectives early. It starts with Government implementing the regulations, as proclaimed in the TVCTP with relevant departments also following suit,” said Mr Zakariya.
Zimbabwe Tobacco Association chief executive officer Mr Rodney Ambrose said: “Lack of independent funding and Government input support for tobacco has led to private contractors financing the crop but at a cost. Private contractors do not fully fund growers, yet at the end of the season expect farmers to deliver their entire crop to them with their pricing based on the level of support that they provide.
“This is the reason growers are always complaining that prices they get when they sell their tobacco do not cover costs of production and leave them unable to re-tool for a new season, thereby perpetuating a contractor dependency syndrome,” said Mr Ambrose.
With 98 percent of the country’s tobacco exported in unprocessed state, the move to increase exports of processed tobacco requires the Government to offer incentives such as tax breaks on new investments on machinery and technology.
The 2022/23 tobacco marketing season which starts tomorrow will unlikely have any meaningful impact on the TVCTP as the regulations, which need to be effected are moving at a snail pace.
The TVCTP has also blamed limited local financing due to over-reliance on off-shore pre-financing, lack of standard input package for contractors, high dependency on imported inputs and low exports of value added tobacco products for the industry’s current poor showing.
To localise tobacco financing for production and marketing for the 2023/24 season, the Reserve Bank of Zimbabwe (RBZ) needs to review the Tobacco Finance Order of 2004 by relaxing the requirement that tobacco merchants finance tobacco production inputs through offshore borrowings.
RBZ and Finance Ministry should also increase capacity of local financial institutions to finance tobacco production.
The Ministry of Finance and Economic Development needs to promote alternative sources of financing for tobacco production as well as support the recapitalisation of local input manufacturers.
The 2022 tobacco product exports showed that the average price paid for manufactured products as well as cigarettes was lower than raw tobacco.
| 2022 Tobacco product class | Net Weight (Kg) | US Dollar Value | Average price |
| Tobacco, not stemmed/stripped | 107,837 | 47,538 | 0.44 |
| Tobacco, partly or wholly stemmed/stripped | 155,009,792 | 911,386,034 | 5.88 |
| Tobacco refuse | 33,251,190 | 14,649,145 | 0.44 |
| Cigars, cheroots and cigarillos containing tobacco | 60 | 4,902 | 81.29 |
| Cigarettes containing tobacco | 15,718,586 | 71,280,074 | 4.53 |
| Smoking tobacco | – | – | |
| Manufactured tobacco, extracts and essence, nes | 179,360 | 689,060 | 3.84 |
| Total | 204,266,826 | 998,056,753 | 4.89 |
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