Online Reporter
Martin Kadzere
The recent 2025 Zimpapers Tobacco Conference drew key players from farming, finance and processing, facilitating candid discussions on the sector’s pain points and charting a collaborative path forward.
The conference, held under the theme “Transforming Zimbabwe’s Tobacco Industry through Beneficiation and Value Addition”, saw topics concerning beneficiation and value addition largely dominate the discussions.
A CBZ Bank representative opened the discussion by emphasising the institution’s commitment to supporting farmers by de-risking their operations.
This involves collaboration with researchers, aggregators and value addition stakeholders to lower farmers’ risk profiles, making them more attractive to financiers.
The speaker acknowledged the hurdle of collateral requirements, highlighting the new collateral registry as a crucial tool for securitising farmer debt. However, a deeper emphasis was placed on equipping farmers with better record-keeping and production management skills, requiring joint efforts from private players, the Government and financiers.
The need for significant capital injection into the beneficiation and value addition side was also stressed, with CBZ aiming to facilitate this funding, including attracting foreign investment.
Tobacco Farmers Union Trust Tobacco Farmers union Trust Tobacco president Mr Edward Dune provided a stark perspective of the situation on the ground.
He raised concerns about alternative crops like cannabis, noting that out of 64 licenced producers, only four had successfully sold their product, indicating severe market challenges.
“If you have 60 out of 64 failing to dispose, what does that mean then?” he questioned, countering the perception of cannabis as a viable alternative for struggling farmers.
Mr Dune lamented the “eroded income” and “capital costs” faced by farmers, citing various costs such as the tobacco, land and forestry levies that diminish their returns.
He called for greater collaboration and farmer involvement in reviewing policies, suggesting that “beautiful policies” often fail in implementation due to inhibitors that need collective addressing.
Mr Munyaradzi Kavhu, another banker, expressed optimism, saying the sector’s “wins are clear in terms of tobacco output for this year”, but acknowledged equally clear “pain points and opportunities”.
He stressed that with the right partnerships and engagements, the industry’s journey towards growth can yield significant results.
Chevron Tobacco executive director Mr Tapiwa Masedza zoomed in on critical processing bottlenecks. He pointed out that while the minister targets 400 million kgs of tobacco, the current three processing factories (GLTs) combined can only handle about 90 tonnes per hour.
This capacity crunch means that a substantial portion of the current 350 million kg crop will spill over into the next year, creating a mismatch with export schedules.
The delay incurs higher interest costs for local financiers, who operate on 12-month facilities, making it harder to revolve capital and reduce interest burdens.
Mr Masedza advocated for investment in a fourth green leaf threshing (GLT) plant with better efficiency and compliance, arguing that current machinery is old, less efficient and below global standards, leading to significant yield losses.
He warned that without this investment, the 400 million kg target would lead to “more chaos” and increased default risk for banks.
Beyond raw tobacco, Mr Masedza emphasised the need for reconstituted tobacco factories to utilise by-products like dust and stems.
This would reduce the cost of local cigarette production, making Zimbabwean products more competitive in regional markets like South Africa, which consumes billions of sticks monthly. He urged the Government to craft policies that reduce production costs to unlock this potential.
A representative from the Zimbabwe Young Farmers Trust, Tanga Joshuwa, advocated for contracting companies to reserve a quarter of their contracts for youth in the tobacco sector, highlighting their significant demographic presence.
He also questioned the impact and channelling of the tobacco levy. However, Mr Masedza addressed concerns about side-marketing, saying that data analytics show youth farmers are “the biggest culprits”.
He argued that while youth participation was vital, the high probability of them diverting contracted tobacco to other buyers severely impacts indigenous companies that borrow at higher interest rates (16-18 percent) compared to international competitors (around 6 percent).
“If you find someone who is 25, 26, you contract that person. The possibility or the probability that that person is going to run away with tobacco is very high,” he said, calling for farmers, especially youth, to honour their contracts.
Mr Dune countered, suggesting that the youth don’t “just run away” but may do so due to “bitterness within the framework of the contractual arrangements”, pointing out the absence of a clear policy on tobacco contracts and historical injustices.
He also spoke on the mismanagement of afforestation levies, advocating for the funds to be reinvested into value chain infrastructure if not effectively used for their intended purpose.
Addressing concerns about financing for youth and small-scale farmers lacking collateral, the CBZ representative explained their model of tripartite arrangements with merchants and aggregators.
The approach de-risks lending by leveraging the aggregator’s resources for follow-ups and ensuring a tied market for the product.
Mr Kavhu further expanded on alternative financing, proposing a shift from traditional bank loans. He described tobacco as a “real golden leaf” that can serve as its security and quickly generate cash flow.
He cited examples such as the issuance of commercial paper (as done by companies like Chevron) and the potential for “tobacco bills” or “tobacco bonds” akin to Agricultural Marketing Authority (AMA) bills.
These instruments, he suggested, could attract alternative investors beyond traditional banks, highlighting the significant value in funding what is essentially a self-liquidating transaction.
Throughout the conference, a recurring theme was the need for Government support beyond mere policy statements.
Participants urged officials to actively engage in international market negotiations, seeking government-to-government arrangements to unlock new export destinations and formalise trade channels to combat smuggling.
They called for a re-evaluation of post-1965 rules that, while once serving to circumvent sanctions, now seem to facilitate illicit trade, impacting legitimate businesses and farmers.
Ethical Holdings chairman Mr David Machingaidze said: “The conference has been potent and timely in light of the celebrations around achieving 351m kg. As regards value addition, key challenges exist around market access as well as export competitiveness.
“This calls for aggressive policy interventions on investment incentives as well as government-to-government engagements for export market access.”
The discussions also underscored a collective call for deeper collaboration, innovative financial solutions, and a decisive policy environment to fully unlock the potential of Zimbabwe’s tobacco sector, ensuring benefits cascade down to all participants, from smallholder farmers to large-scale processors.
