Tobacco industry Going4Growth

Dr John Basera

Nothing less than growth is targeted by the agriculture sector.

The Ministry of Lands, Agriculture, Fisheries, Water and Rural Development is delivering its mandate as guided by the Agriculture and Food Systems Transformation Strategy supported by an array of anchor plans and strategies.

The adoption of the strategic mantra Going for Growth (#G4G2023) by the ministry arises out of the realisation that all the fundamentals in terms of plans, strategies and policies are in place to facilitate the smooth transition to sustainable growth.

As such, the sector is targeting nothing less than a sustained growth and transformation anchored in seamless transitioning of farmers in general from subsistence-oriented farming to commercial farming for surplus and commerce.

The thrust to achieve sustainable growth is predicated on key strategic value chains, including high value export crops, namely, tobacco inter alia.

Tobacco is a key export crop to the Zimbabwean economy.

It is grown in the northern parts of the country, primarily Mashonaland West, Mashonaland Central, Mashonaland East provinces and parts of Manicaland.

Inclusive growth, a key vision 2030 priority

Zimbabwe is the largest grower of tobacco in Africa and is ranked sixth globally following China, India, Brazil, the United States and Indonesia, based on 2022 tobacco production figures.

Golden leaf sales earn the country up to US$1 billion per season and with value addition through processing and export bringing the total annual value of tobacco to over US$1,2 billion.

Tobacco contributes between 5 to 10 percent of national gross domestic product (GDP), between 14 and 20 percent of agricultural GDP and over 50 percent of agriculture export earnings.

More importantly, too, the golden leaf supports up to 160 000 households and there are over 700 000 direct dependants of tobacco, while close to two million people benefit from the crop in the downstream activities.

The total value of tobacco exports has been in excess of US$760 million since 2015.

The exports are targeted at more than 40 different countries in five continents.

China is the largest export destination, accounting for between 40 and 45 percent of total tobacco exports.

The role and potential of the sector to stir economic growth and subsequent transformation of livelihoods for Zimbabweans is massively significant.

Prior to the land reform programme, more than 95 percent of the total national flue-cured tobacco came from the large-scale farming community.

To promote inclusive growth post-land reform, deliberate efforts have so far been made to enhance the participation of small-scale farmers in tobacco production.

Currently, more than 70 percent of tobacco is produced by small-scale farmers and this is in line with Government’s economic transformation agenda that leaves no region, no village, no category of farmers and no household behind.

The overall objective is to contribute immensely to increased incomes for the populace of Zimbabwe given that 70 percent of the population depends on agriculture.

The ultimate end game is to significantly contribute to the nation’s aspirations as enshrined in Vision 2030.

Tobacco sector going for growth

In 2021, the ministry developed a Tobacco Value Chain Transformation Plan (TVCTP) (2021-2025), which seeks to secure the future and consolidate the important role of the tobacco value chain to agriculture and the economy through:

Sustainable intensification of tobacco production to 300 million kilogrammes;

Enhancing transparency and fair tobacco marketing, expanding into new markets in the Middle East;

Reforming, restructuring and rebuilding existing institutions in order to optimise tobacco value chain financing so as to raise and optimise the net export benefits from tobacco from the current 12,5 percent of exports to 70 percent by 2025;

Increasing tobacco value addition and beneficiation from the current 2 percent to 30 percent by 2025;

Facilitating production of alternative crops to tobacco to diversify and increase the contribution to farmer revenues; and

Enhance traceability and sustain the industry level of production, value addition and beneficiation in the face of climate change and anti-tobacco campaign.

The overall goal is to transform the tobacco value chain into a US$5 billion industry by 2025 through localisation of tobacco funding, increased production and productivity and value addition and beneficiation and exports of cigarettes in order to contribute significantly to GDP growth, foreign currency generation, employment creation and raising household incomes in pursuit of Vision 2030.

Because of smart partnerships created, stakeholders in the tobacco industry are on a drive to radically transform and develop the tobacco value chain for the benefit of the nation as guided by the Tobacco Value Chain Transformation Plan.

Implementation of the key touch points of this blueprint increased productivity levels by 22 percent in 2022 from an average of 1 566kg/hectare in 2020 to a new average of 1 920kg/ha.

Consequently, farmers’ gross revenue increased by 41 percent from an average of US$460 million in 2020 to US$650 million in 2022.

Tobacco export earnings also increased by 30 percent in 2022; the country earned US$991 million compared to the US$763 million recorded in 2020.

Currently, the number of registered farmers increased by 23 percent from 123 595 in 2022 to 152 045 in 2023.

The exciting fact is that from the total increase, about 3 309, constituting 12 percent, are new growers.

Attraction of new growers is a good indication of how lucrative the value chain has become through robust governing frameworks, a guaranteed market, consistent Government and stakeholder support.

As an icing on the cake, tobacco prices have been firming.

The current average price of US$3,01 is favourable compared to US$2,93 in 2022.

As of April 6, about 49 468 099kg of the golden leaf valued at US$148 594 058 had been sold.

This current marketing season, tobacco production is expected to reach 230 million kg.

This is a positive development, reflecting an 8,13 percent jump from last year’s figure of 212,7 million kg.

At this rate, the target to reach production of 300 million kg per annum by 2025 is achievable.

As we go for growth (#G4G2023), the vision of a US$5 billion tobacco industry by 2025 is achievable.

The statistics in the table above depict the growth trajectory as from 2020:

Moving up the value chain

Pursuant to supporting value addition and processing, depicted as the third National Development Strategy 1 (NDS1) pillar of national priority, the Tobacco Value Chain Transformation Plan provides for a considerable jump in terms of tobacco value addition and beneficiation from the current 2 percent to 30 percent by 2025.

The ultimate plan is to have a sustainable transformation of the sub-sector that is private sector-led and public sector-facilitated. Currently, seven cigarette manufacturers operate in Zimbabwe, with a combined production capacity of around five billion cigarette sticks per annum.

One key cigarette manufacturing company, Cutrag Processors Pvt Ltd, is producing around 1,6 billion sticks per year.

The company is in the process of constructing a new manufacturing facility in Lochinvar, Harare, and the estimated completion date for construction and occupation for purposes of cigarette production is in the second half of 2024.

Additional equipment is being procured and it is expected to double cut rag processing capabilities and increase installed cigarette manufacturing capabilities by 50 percent in the first half of 2024.

Another cigarette manufacturer, Haltrade Pvt Ltd, intends to expand its brand portfolio by introducing a tobacco product where individuals can roll on their own, satisfying a niche market in the cigarette industry. The first trial blends will be available in July 2023.

An estimated five million kg of cut rag will be processed to produce two billion sticks per year.

Innovative production systems to anchor sustainable growth

The ministry, through the Tobacco Industry and Marketing Board (TIMB), is promoting shisha tobacco as an alternative cash crop.

The first batch of the crop was grown in the 2022/2023 season and 7 233kg were sold on a single day at an average price of $4,40.

Cavendish Lloyd Tobacco has been licensed to support the production and processing of shisha.

In line with the Tobacco Value Chain Transformation Plan, shisha tobacco will be processed locally and marketed to lucrative markets across Africa and Europe.

Compared to flue-cured tobacco, shisha tobacco is easier to grow.

The crop requires less fertiliser than flue-cured tobacco, and it has fewer field operations, making it cheaper to produce.

The crop presents huge opportunities for Zimbabwean farmers.

TIMB has established the Stow Muhacha project in Mashonaland West to intensify tobacco production through employing a toll-curing method.

This is a concept where curing facilities are central and offered as a service within a locality to assist farming communities who are not able to own such facilities.

The Stow Muhacha project is benefitting 23 farmers. The project also has an irrigation system (fixed and towable centre pivot), demonstrating the ministry’s goal of climate-proofing production.

Centralised production systems reduce costs of production, improve tobacco quality and uniformity, and minimise tobacco post-harvest losses.

The pilot project covers 40ha of tobacco, 10ha of maize and three hectares of sugar beans. Sugar beans and maize are part of the diversified tobacco production portfolio and the target is to produce winter wheat during the 2023/2024 season.

Once this project is successful, it will be replicated in all the tobacco-producing regions.

These are some of the solid steps in motion for the tobacco industry to reach a US$5 billion economy by 2025.

Research for development

The other pillar of the Tobacco Value Chain Transformation Plan (TVCTP) is the sustainable intensification of tobacco productivity and production and promotion of alternative crops.

The ministry, through the Tobacco Research Board (TRB), released 20ha worth of tobacco seed in February 2023 for the experimental tobacco hybrids (ETH) T78, T79, T80 and T81 under the Industry Limited Release Protocol.

These have been under development for nine years and have been tried for three years in Harare, Masvingo, Lower Gweru, Matabeland North (Insiza) and Tengwe.

The ETHs were developed for profitable production in marginal areas characterised by low rainfall, high temperatures and dry conditions.

Ensuring sustainability

The ministry, through its key arms and strategic partners, is actively engaged in afforestation and reafforestation programmes. Sustainable Afforestation Association (SAA) members are self-levying and establishing woodlots.

Farmers who are still using wood-powered barns are encouraged to use wood from established woodlots and adopt usage of efficient curing facilities.

Under the TIMB and Sustainable Afforestation Association’s tree-growing support programme, 400 hectares of fast-growing tree species have been established in Mashonaland East, Mashonaland West and Manicaland.

There is also a deliberate move to develop and promote use of fuel-efficient curing facilities (construction of rocket barns), coupled with conscientising farmers on using coal as opposed to wood to cure tobacco.

Elimination of child labour in the tobacco industry

Going4Growth entails tobacco industry players revisiting their operations, programmes and initiatives to focus on profit, people and the planet.

The industry is conscious of the global movement to eradicate child labour in the tobacco industry and Zimbabwe is making frantic efforts to identify the same, then address it as it arises. This is in line with the United Nations General Assembly’s thrust to eliminate child labour.

Furthermore, a statutory instrument (SI) criminalising child labour has been drafted and will be gazetted soon.

This SI details the hazardous tasks for children, as well as child labour remediation. An agricultural labour practices (ALP) code has been developed and adopted by the tobacco industry.

This working document is the minimum standard for sustainable and ethical use of labour in the tobacco industry.

Awareness programmes on sustainability issues still take centre stage and are being executed through schools, field days and other training platforms.

With all these key imperatives, the tobacco sub-sector and agriculture industry at large, are poised for incredible growth!

We are Going4Growth!

 

Dr John Basera is the Permanent Secretary in the Ministry of Lands, Agriculture, Fisheries, Water and Rural Development