Business / Economy
Tobacco surge 'justifies Mugabe's land grabs'
07 Jul 2014 at 16:56hrs | Views
Zimbabwe's biggest tobacco sales in 13 years vindicate the land transfer campaign pursued by President Robert Mugabe's government, according to Agriculture Minister Joseph Made.
The more than 205.5 million kilograms (453 million pounds) of tobacco delivered for sale this marketing year topped the 200 million kilogram mark for the first time since 2001, according to data from the country's Tobacco Industry and Marketing Board. That year the market still was dominated by large-scale, mainly white-run farms. Often violent government-backed invasions that began in 2000 eventually pushed about 3,000 farmers and 300,000 workers off land that now makes up small and medium-scale black-run farms.
Production of flue-cured tobacco, also known as Virginia tobacco, plunged after 2002 as farmers struggled with the cost of inputs like fertilizer and chemicals, as well as with technical know-how. Output slumped to 48 million kilograms in 2008. The industry has been recovering since the southern African nation abandoned its currency in February 2009, allowing farmers to purchase seed and fertilizer with mainly U.S. dollars.
"The tobacco crop vindicates the country and the policy, because our detractors thought we'd fail to farm the land and embarrass ourselves," Made, a member of Mugabe's ruling Zanu-PF party, said in a July 3 phone interview from the capital, Harare. "Instead, we've shown the world that we're endowed with human capital and resourcefulness."
Land seizures
In the seven years following the start of the land seizures in 2000, Zimbabwe's world rank as an exporter of top-grade, or flue-cured, tobacco slipped to sixth from second. The country experienced years of famine. The economy shrank 40 percent between 2000 and 2008, according to the International Monetary Fund.
By 2008, Zimbabweans faced inflation of 500 billion percent, according to an IMF estimate, as well as empty shop shelves, fuel and electricity shortages. The country abandoned the Zimbabwe dollar in February 2009 to use mainly the U.S. dollar and South African rand. The move halted hyperinflation and saw the first economic growth in a decade.
While tobacco production is recovering to pre-2000 levels, farm invasions laid waste to the country's profitable flower and vegetable export industry, as well as denting corn, dairy and beef production. And though the tobacco industry's recovery is now earning the country much-needed currency, the disruption of the last decade caused significant damage, said Harare-based independent economist John Robertson.
"We'd have sustained earnings throughout the period and kept them close to the billion dollar mark" without the disruption, Robertson said in an interview.
Export earner
Farmers earned more than $651.9 million from the crop this year, according to TIMB data published July 2. The leaf is the country's second-largest export earner after minerals. Zimbabwe was the world's ninth biggest producer in 2012, with output of 115 million kilograms, according to data from the United Nations' Rome-based Food & Agriculture Organization. China, with 3.2 billion kilograms, was the top producer. Zimbabwean leaf is used by merchants to provide flavor to cigarettes filled with cheaper, "filler" tobacco.
While prices fell to an average $3.17 a kilogram from $3.70 last year, a 33 percent increase in deliveries pushed earnings higher, said Andrew Matibiri, chief executive officer of the TIMB, the state regulator. The volume of tobacco sold will increase "slightly" after mop-up sales are held July 15, he added.
In 2001, about 1,400 large-scale farmers sold the bulk of a 236 million kilogram crop of tobacco planted the previous year. This year, more than 106,000 mainly small-scale farmers sold the crop planted between September and November, according to TIMB data.
Expensive inputs
"It's not the great crop they're making it out to be because inputs are prohibitively expensive," Tendai Nyikadzino, 48, who farms two hectares (4.9 acres) of the leaf near the northern town of Mvurwi, said in a phone interview.
"Profits are low and labor intensive. I won't plant next year, I'm switching to vegetables and chickens because I can't afford coal or even wood to cure the crop in the barns."
Fenton Magaya, who farms two hectares nearby, said the value of his crop was "relative."
"I struggled to achieve 800 kilograms a hectare and it sold for about $3 a kilogram," he said in an interview on his farm July 2. "So while I was happy to earn the money, $4,800 isn't a lot for my family. It's nice, but it isn't going to see me through because it cost me about $3,500 to grow the crop."
Still, with more than 100,000 growers now compared with about 1,400 in 2001, money generated by the industry is trickling down further, said James Chari, a shop owner near Mvurwi.
"The crop is allowing more people to send children to school, buy goods and live better lives," he said.
The more than 205.5 million kilograms (453 million pounds) of tobacco delivered for sale this marketing year topped the 200 million kilogram mark for the first time since 2001, according to data from the country's Tobacco Industry and Marketing Board. That year the market still was dominated by large-scale, mainly white-run farms. Often violent government-backed invasions that began in 2000 eventually pushed about 3,000 farmers and 300,000 workers off land that now makes up small and medium-scale black-run farms.
Production of flue-cured tobacco, also known as Virginia tobacco, plunged after 2002 as farmers struggled with the cost of inputs like fertilizer and chemicals, as well as with technical know-how. Output slumped to 48 million kilograms in 2008. The industry has been recovering since the southern African nation abandoned its currency in February 2009, allowing farmers to purchase seed and fertilizer with mainly U.S. dollars.
"The tobacco crop vindicates the country and the policy, because our detractors thought we'd fail to farm the land and embarrass ourselves," Made, a member of Mugabe's ruling Zanu-PF party, said in a July 3 phone interview from the capital, Harare. "Instead, we've shown the world that we're endowed with human capital and resourcefulness."
Land seizures
In the seven years following the start of the land seizures in 2000, Zimbabwe's world rank as an exporter of top-grade, or flue-cured, tobacco slipped to sixth from second. The country experienced years of famine. The economy shrank 40 percent between 2000 and 2008, according to the International Monetary Fund.
By 2008, Zimbabweans faced inflation of 500 billion percent, according to an IMF estimate, as well as empty shop shelves, fuel and electricity shortages. The country abandoned the Zimbabwe dollar in February 2009 to use mainly the U.S. dollar and South African rand. The move halted hyperinflation and saw the first economic growth in a decade.
While tobacco production is recovering to pre-2000 levels, farm invasions laid waste to the country's profitable flower and vegetable export industry, as well as denting corn, dairy and beef production. And though the tobacco industry's recovery is now earning the country much-needed currency, the disruption of the last decade caused significant damage, said Harare-based independent economist John Robertson.
"We'd have sustained earnings throughout the period and kept them close to the billion dollar mark" without the disruption, Robertson said in an interview.
Export earner
Farmers earned more than $651.9 million from the crop this year, according to TIMB data published July 2. The leaf is the country's second-largest export earner after minerals. Zimbabwe was the world's ninth biggest producer in 2012, with output of 115 million kilograms, according to data from the United Nations' Rome-based Food & Agriculture Organization. China, with 3.2 billion kilograms, was the top producer. Zimbabwean leaf is used by merchants to provide flavor to cigarettes filled with cheaper, "filler" tobacco.
While prices fell to an average $3.17 a kilogram from $3.70 last year, a 33 percent increase in deliveries pushed earnings higher, said Andrew Matibiri, chief executive officer of the TIMB, the state regulator. The volume of tobacco sold will increase "slightly" after mop-up sales are held July 15, he added.
In 2001, about 1,400 large-scale farmers sold the bulk of a 236 million kilogram crop of tobacco planted the previous year. This year, more than 106,000 mainly small-scale farmers sold the crop planted between September and November, according to TIMB data.
Expensive inputs
"It's not the great crop they're making it out to be because inputs are prohibitively expensive," Tendai Nyikadzino, 48, who farms two hectares (4.9 acres) of the leaf near the northern town of Mvurwi, said in a phone interview.
"Profits are low and labor intensive. I won't plant next year, I'm switching to vegetables and chickens because I can't afford coal or even wood to cure the crop in the barns."
Fenton Magaya, who farms two hectares nearby, said the value of his crop was "relative."
"I struggled to achieve 800 kilograms a hectare and it sold for about $3 a kilogram," he said in an interview on his farm July 2. "So while I was happy to earn the money, $4,800 isn't a lot for my family. It's nice, but it isn't going to see me through because it cost me about $3,500 to grow the crop."
Still, with more than 100,000 growers now compared with about 1,400 in 2001, money generated by the industry is trickling down further, said James Chari, a shop owner near Mvurwi.
"The crop is allowing more people to send children to school, buy goods and live better lives," he said.
Source - Bloomberg
