Zimbabwe has recorded its highest-ever tobacco output, earning US$793 million so far, and the small-scale farmers who have made it possible are demanding a bigger say in how their crop is sold.
Tobacco sales hit 263 million kg on Wednesday, beating the previous record of 261 million kg set in 2019, according to data from industry body the Tobacco Industry and Marketing Board. With the season still on, this year’s sales are already 30% higher than last year’s.
Where just 1,500 large-scale white commercial farmers once dominated the field, nearly 150,000 smallholder farmers now account for 85% of the crop. For government, this is evidence of the success of Zimbabwe’s land reform.
“This (record crop) is on the backdrop of the fact that 85% of the tobacco is being produced by smallholder farmers, 60% of whom are beneficiaries of the land reform programme, demonstrating that government policies in the agriculture sector are sound and continue to bear fruit,” Cabinet said on Wednesday.
But, for the farmers themselves, the big numbers do not tell the full story of the industry. While tobacco has indeed changed the lives of many smallholder farmers, they could be earning more, were their industry not dominated by powerful contractors and buyers. Where the white farmers of old could walk into a bank and get bank loan for their crop, resettled black farmers have no title and have had to rely on contractor funding.
Some 95% of all tobacco production is on credit secured from foreign contractors, with auctions accounting for the small remainder. This means that, in real terms, Zimbabwe and its farmers are not getting the bulk of the money from tobacco sales. Most of the earnings go to pay contractors outside the country.
“These contractors are making a killing as they deduct their dues at highly inflated costs in US dollars,” says Edward Dune of the Tobacco Farmers Union Trust.
Tobacco farmers are paid 85% of their sales in US dollars. While this is up from 75% last year, rising inflation has eroded the value of the Zimdollar component, at a time when farmers have already seen costs rising in USD terms.
Production costs rose by over 30% in USD in the season, according to the Zimbabwe Tobacco Association. While costs of inputs rose, average prices have not risen enough over the past three seasons to offset costs, says the association’s CEO, Rodney Ambrose.
With no direct access to financing, farmers have had to secure funding from contractors and middlemen who add to their costs. To free farmers from contractors, Government has promised a US$60 million revolving fund to support farmers.
“Local lending by local financial institutions for farming purposes is limited, particularly for small-scale farmers who do not meet the collateral requirements following the collapse of title-based lending in 2000,” says Agriculture Minister Anxious Masuka.
“The localisation plan will involve government availing US$60 million as seed finance to establish a revolving facility. The plan will operate alongside contract production of the crop. This will anchor the growth to 300 million kg.”
But delays in the launch of this fund mean that farmers have had to face high costs and middlemen on their own.
“If farmers can approach financial institutions and get their loans at affordable or subsidised rates, only then can they be extracted from contractor trap,” says Shadreck Makombe, president of the Zimbabwe Commercial Farmers Union.
Despite funding troubles, tobacco land use grew to 117,000 hectares this season from 110,000 hectares in 2022, according to the TIMB. The number of tobacco farmers rose to 148,527 this year from 123,000 in 2022, reflecting the transformation of the sector from pre-land reform years.