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A man shows off his crop in Zimbabwe. Photo credit: TIMB
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Zimbabwean tobacco farmers undergoing training. Photo credit: TIMB
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Zimbabwean farmers sorting their crop. Photo credit: TIMB
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A view of a tobacco trading floor in Harare, Zimbabwe. Photo credit: TIMB
Zimbabwe’s contract floors were still accepting farmers’ final deliveries into late September to conclude a tobacco year in which erratic rains curtailed output but yielded a high quality leaf and prices.
The 2022 selling season ended officially on July 20. Auction floors closed on that day but contractors are allowed to continue taking deliveries often up to the end of September.
At the official end of the marketing period, farmers in Africa’s top growing nation had sold 187 million kg, 4.92% less than the 196.7million kg they had sold in 2021. Although there was a decline in output, this year’s leaf fetched much higher prices thanks to its better quality compared to 2021 when the country received normal to above normal rainfall. Farmers had, by July 20, shared US$569million, a 4.17% jump from the 2021 revenue of $546million. The seasonal price average for this year improved from US$2.78/kg last season to US$3/kg.
“We produced a high-quality crop in tough growing conditions,” farmer Believe Tevera told Tobacco Asia. “The price was better this year than last year but the drought resulted in us realizing a smaller harvest.”
By September 29, 2022, the 120th day of the marketing season, according to figures from the industry regulator, Tobacco Industry and Marketing Board (TIMB), national output had risen to 207,997,515 kg compared to the 210,725,122kg sold by the same day in the previous year. Contractors, who sponsor the production of more than 95% of the local crop, had bought 195,408,428kg while the auction floors bought 12,589,088 kg. In terms of revenues, farmers received US$636,163,454, 8.03% up on 2021’s US$588,860,366. Contractors, according to the TIMB release, paid US$595,875,081 of the total sum at an average price of US$3.05/kg with auction floors shelling out US$40,288,373 at about US$3.20/kg. In 2022, both contract and open floors paid a mean price of $3.06/kg compared to $2.79/kg in the prior year.
“Our failure to adapt to climate change was laid bare this year,” said Edward Dune, who farms in Rusape, north-east of Harare, the capital. “The rains started falling late and when they did, they were erratic to such an extent that about 50% of the seedlings that farmers had planted were a write-off. Then there was a period of incessant rainfall which, however, gave way to a prolonged mid-season dry spell up to the end of the season. So it was a very difficult start to the season, on and off and heavy rains in the middle followed by an early end to the season.”
The southern African country is the continent’s number one tobacco producer and sixth globally. It exports up to 98% of its annual output mainly to China, South Africa, and the Middle East, earning an average US$1billion.
In a review of the October 2021-March 2022 growing season, the government said effective rains started falling in late December 2021 and where they fell earlier, between the last week of October to mid-November, it was a false start. Its distribution across the period was poor in terms of time and space. After the drier beginning to the season, there were heavy falls in January 2022 but the skies cleared out again in the first week of February to the end of March.
“The false start of the season resulted in failed crop establishment forcing most farmers to replant several times,” says the report released at the end of April.
“The late onset caused late plantings which were later affected by the prolonged dry spell at the reproductive stage causing write-offs, especially in the central and southern parts of the country. During April unusually heavy late rains have been received which should benefit the late planted crop. The positive impact of these rains has not been evaluated but should generally result in improved production for most crops. Incessant rains caused excessive leaching of nitrogen and other crop nutrients.”
This year, the government allowed buyers to pay farmers 75% of their deliveries in US dollars and the remainder payable in Zimbabwe dollars. That was in response to growers’ appeals that they needed hard currency to be able to pay for inputs in a country where the greenback is the most preferred medium of exchange.
However, farmers are still unhappy with the payment modalities said, Zimbabwe Tobacco Association president, George Seremwe. “Contractors deduct the input costs in US dollars,” he said.
“This takes up a large portion of the foreign currency component and effectively the only money that a farmer is left with is the 30% local currency portion. What we are proposing is for the government to put the payment to 100% foreign currency. That is one point. The second one which we think will be very helpful is for local funding to drive tobacco, not contractors. That is included in the Tobacco Value Chain Transformation Strategy that was adopted last year so we urge the government to get the systems in place.”
It is difficult, he added, for a farmer to fully fund themselves and be free to sell their crop on the auction floors because prices at on that market are determined by those prevailing on the contract floors. “There is a possibility that a farmer may be worse off if they decide to self-fund as ultimately the price they get at the auction is determined by the contractors,” he said.
The season was also marred by some irregular activities of the so-called “surrogate” buyers, who are effective runners for some of the big merchants in the country. Some of them have been accused of failing to pay the farmers they contract. In an attempt to weed the imposters out, the government, through TIMB, on September 22, announced the introduction of a compliance administration framework which will from the October 2022 growing season mandate whoever intends to contract growers to provide a fuller package of in-puts such as fertilizer, coal to cure the crop, and a portion of the labor costs.
Seremwe thinks that the new regulations will force the five dominant contractors – Northern Tobacco (BAT), Premier Leaf Tobacco, TianZe, Zimbabwe Leaf Tobacco, and Mashonaland Tobacco Company – to be more directly involved in the contracting process.
But the regulator has also come down hard on farmers who violate contracts by collecting in-puts from one contractor and ending up selling to another contractor or on the auction floors. It deregistered more than 37,000 farmers who registered and subsequently grew the crop over the past few seasons but did not deliver any crop to the auction or contract selling points. This, it said, raised the suspicion that the growers engaged in “side marketing,” a form of contract fraud.
Despite a mixed 2021-2022 tobacco season, the industry is positive as the 2022-2023 one begins. Those who grow the leaf under irrigation started transplanting on September 1. By September 2, they had bought 925kg of tobacco seed, enough for 184,999 hectares versus 798kg, enough for 159,664 hectares in 2021. A total of 106,067 growers had registered to grow the country’s top agriculture export by September 22, an improvement on 80,069 by the same time last year. A forecast by the Department of Meteorological Services in August that the country could receive normal to above normal rainfall season could have been an incentive even amid payment modalities that farmers complain make tobacco growing uncompetitive.
“Dryland growers are preparing and those with irrigation systems are already working,” Tevera told Tobacco Asia. “Conditions with respect to the difficulties over the foreign currency payment system and the fact that some farmers have still not been paid after surrogates disappeared after receiving the crop are constricting, but tobacco is our livelihood.”