Online Reporter
IN the year 2000, Zimbabwe embarked on the land reform programme. While the programme addressed long-standing land imbalances, banks chose not to help but to stop financing agriculture. Without secure and bankable land documents, financial institutions were simply not willing to lend money to newly resettled farmers.
This created a major problem for the economy. Agriculture, and tobacco in particular, is Zimbabwe’s biggest source of foreign currency. Without access to bank loans, the entire tobacco sector faced the real risk of collapse.
To keep things going, the government introduced contract farming in 2004. At the time, this was seen as a practical short-term solution. It allowed production to continue while the country worked towards fixing land tenure issues.
However, contract farming was never meant to last forever. It was a stop gap — not a permanent system.
Today, we are seeing the consequences of keeping that temporary solution for far too long.
Government is now asking why tobacco prices have suddenly dropped so sharply. The truth is not complicated. The real issue — the elephant in the room — is contract farming itself.
Over the years, all the major players in the tobacco industry, including merchants, processors, and auction floors, were given licences to run contract farming schemes. As a result, these same companies now produce up to 95 percent of the tobacco they need.
This has completely changed how the market works.
When auction floors try to set a base price, there is very little interest in bidding competitively for the small portion — just 5 percent — produced by independent, self-financed farmers. The outcome is obvious: prices fall to very low levels.
What makes matters worse is that the base price set at auction is also used to pay contract farmers. So even though TIMB believes its system prevents price collusion, the situation on the ground tells a different story. When the main buyers are also the main producers, real competition disappears. The system ends up regulating itself — and it simply does not work.
There is no sabotage behind this. There is no global oversupply pushing prices down. The problem is entirely internal.
Zimbabwe has unintentionally built a system where the same players control both supply and demand. In such a setup, genuine demand is never created, and fair pricing becomes impossible.
If Zimbabwe is serious about saving its tobacco industry, then clear and decisive action is needed without delay. The country must move beyond temporary fixes and start addressing the structural weaknesses that have quietly built up over the years. There are three practical steps that can be taken to restore balance, rebuild confidence in the sector, and ensure that farmers are fairly rewarded for their produce.
First, contract farming by merchants, processors, and auction floors must come to an end. These players were never meant to be producers; their role is to buy tobacco, process it, and link it to markets. When they take on the role of producers as well, they gain too much control over the system. This weakens competition and drives prices down, as they no longer need to compete for supply in an open market. By removing them from production, Zimbabwe can begin to rebuild a fair and transparent marketplace where independent farmers have a real chance to benefit from competitive pricing.
Secondly, there is an urgent need to issue conditional title deeds. One of the biggest barriers to agricultural growth since land reform has been the lack of bankable security. Farmers cannot access meaningful financing without proper documentation that lenders can trust. By issuing conditional title deeds, the government would unlock much-needed funding from banks, particularly institutions such as AFC. This would not only support tobacco production but also boost other crops, helping to restore proper agricultural lending and strengthen the wider economy.
Finally, Zimbabwe should consider adopting the Irvines model. This approach focuses on fairness and stability by ensuring that the farmer’s price or benefit is agreed upon before production even begins. Such a system gives farmers certainty, allowing them to plan their work with confidence, knowing what they will earn at the end of the season. It also reduces disputes and protects growers from sudden price shocks, creating a more predictable and sustainable farming environment.
Taken together, these measures offer a clear path forward. They are not complicated, but they require commitment and the political will to act in the long-term interests of the industry.
Zimbabwe’s tobacco sector is not failing because of external pressures. It is struggling because the current system limits competition, weakens pricing, and discourages independent production.
The solution is clear: restore real demand, bring back proper bank financing, and rebuild trust in the market.
Only then can the tobacco industry recover and grow once again.— O GUTU
derick.khumalo