April 16, 2015 / 7:56 AM / 4 years ago

Zimbabwe takes tobacco road to agriculture recovery

HARARE, April 16 (Reuters) - Fifteen years after Zimbabwe’s agriculture sector collapsed in the face of President Robert Mugabe’s seizure of white-owned farms, its tobacco industry is again booming, with black farmers funded by private firms producing a near record crop.

Production of tobacco, increasingly sold at a premium to China, was up 235 percent last year compared with 2009, propping up an agriculture sector that accounts for 18 percent of GDP.

It’s the surest sign yet of a revival of Zimbabwe’s farming, which saw output of most crops fall dramatically since Mugabe’s followers seized white-owned farms in 2000 and the government nationalised land.

From 5,000 mostly white farmers in 2000, there are now more than 90,000 growing tobacco, known locally as “green gold”. Farmers prefer it to traditional cereal crops because there is a ready market, payment is prompt, and marketing companies provide funding in advance for seeds and equipment.

“What this shows is that black farmers are just as capable of farming if they are given the financial support,” said Edward Bhasera, a farmer waiting to deliver 60 tonnes of the crop at Zimbabwe Leaf Tobacco, one of the biggest of around 20 marketing firms that buy the crop from farmers.

Mugabe’s land seizure drive, which he defends as necessary to correct skewed colonial land ownership, was followed by a 45 percent fall in commercial agriculture output, forcing the one-time regional food exporter import food.

Tobacco export earnings fell to $175 million by 2009 from $600 million in 2000, according to the state Tobacco Industry and Marketing Board, TIMB.

Farming was hit in part because farmers were unable to get credit without deeds for the land they farm. But in the tobacco sector, private companies like ZLT that contract farmers to produce the crop have since stepped in to fill the funding gap.

“Tobacco contract growing and marketing is the future of the industry because it is the only way farmers can easily access inputs without support from banks,” said Andrew Matibiri, general manager or the Tobacco Industry and Marketing Board.

Farmers backed by such firms now account for 80 percent of the crop from only 23 percent in 2004.

CHINESE DEMAND

Bhasera, from the farming district of Mvuma, 170 km (100 miles) south of the capital Harare, said he started growing maize and tobacco in 2003 after he received a farm from the government.

He initially produced little because he could not get a bank loan, “but in 2009, I managed to be contracted to grow tobacco, and that changed everything,” he said.

Mother of five Fadzai Makani said she signed a contract with ZLT to grow tobacco since 2011 in a group with 10 other farmers from her village in Makonde northwest of Harare. This year’s 1,000 kilo crop from her small plot was double last year’s.

“If it was not for them (ZLT) I would not be growing tobacco. We get the inputs on time and they tell you how to get the best yield,” she said in the vernacular Shona language. The extra earnings had allowed her to increase her cattle herd and renovate her modest homestead.

The recovery has been fuelled by surging demand from China, with 300 million smokers the world’s biggest market and grower of tobacco. Of the 218 million kilos produced in Zimbabwe last year 2014, 40 percent went to China, up from 18 percent in 2010, according to TIMB figures.

Abrie Rautenbach, head of Agriculture Africa at South Africa’s Standard Bank said the bank had seen renewed interest in agriculture in Zimbabwe in the last 18 months.

“You also see some of the big corporates, especially some of the tobacco players coming back, returning quite aggressively.”

Zimbabwe’s flue-cured tobacco is of higher quality and pays better than Malawi’s and Zambia’s burley tobacco. It is used as a flavouring by global cigarette makers, including those from China, who pay a premium for it.

Although 40 percent of the tobacco exports go to China, it accounted for half of Zimbabwe’s $823 million of tobacco export income in 2014 because Chinese buyers paid more than others.

Reserve Bank of Zimbabwe (RBZ) figures show that tobacco buyers have already borrowed $850 million from local banks this year, compared to $660 million last year.

Bankers Association of Zimbabwe advocacy officer Clive Maphambela said banks planned to lend $1 billion to agriculture this year, with nearly 60 percent funding tobacco farming. This compares with $720 million in bank loans to the whole agriculture sector in 2014 and $500 million the previous year.

Zimbabwe itself consumes less than 5 percent of its tobacco output.

“We don’t smoke much of it. The Chinese smoke most of it,” Mugabe said last week in Pretoria.

“We will grow for those who want to smoke it. You should listen to what your doctor says. But if you over smoke, don’t blame us,” a smiling Mugabe added, drawing raucous laughter from Zimbabwean and South African government ministers and reporters. (Reporting by MacDonald Dzirutwe, additional reporting by Joe Brock and Ed Stoddard in Johannesburg; Editing by Peter Graff)

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