Zim farmers produce record tobacco crop, but farmers left counting their losses

Despite the drought that ravaged Zimbabwe during the 2018/19 agricultural season, the southern African country still managed to produce a record-breaking tobacco output, reaching 257 547 838 kilograms as at August 30, 2019.

This year's output is higher than the previous record of 252.5 million kilograms recorded in the 2017/18 farming season.

It is also higher than the tobacco output range of between 220 million and 240 million kilograms that regulator the Tobacco Industry Marketing Board (TIMB) had projected at the start of the selling season. 

Highest prices, lowest output

However, the record-breaking output appeared to have brought little cheer to farmers, who were left poorer than before after the selling season recorded the lowest prices in close to a decade, placing the future of the next farming season in jeopardy.

This year's prices, at US$2.03 per kg, where 30.52% lower than the average price of US$2.92 per kg paid in 2018.

Overall, the value of tobacco sold this year was down 29% at US$522.6m, down from $736.2m in the prior year.

Couldn't cover costs 

"This year I increased my tobacco planting area and spent more money than before in growing this year's crop, but after selling I have nothing to show for it. I even failed to meet all my debts," said Michael Kizito, a tobacco farmer in Karoi, 200km north west of Harare.

Kizito said the average price he got this year was not enough to cover the costs of growing the crop. 

"After paying the contractor and my farm labourers I was left with very little to get me by. Getting back into the field this coming season is going to be a challenge. I see farmers scaling down production or pull out from tobacco farming altogether," he said.

Kizito added that late rains, in the drought year, affected the quality of his crop. And he is not alone, as many other farmers similarly had their crop affected by late rains, which were below normal for the season.

Zimbabwe Tobacco Association (ZTA) chief executive Rodney Ambrose said the drought during the past agricultural season was largely to blame.

"Drought affected the quality of a portion of the crop, which in turn resulted in weaker demand and pricing," he said.

Currency impact

TIMB public relations manager, Isheunesu Munyoro, cited a number of additional factors including late rains, which affected quality.

"The tobacco that is in the grades one to three this season is lower than what we had last season and that has had a bearing on prices," he said. 

In its report for June, ZTA said many farmers had been unable to clear their US dollar debts and would exit the once-attractive industry.

"Tobacco will, more worryingly, also become a less important key foreign currency earner, social and employment contributor to the economy," according to the report.

Farmers also lamented payment modalities introduced by the Reserve Bank of Zimbabwe (RBZ) as detrimental to their overall earnings.

The RBZ this year introduced measures that saw farmers being paid part of their earnings in a depreciating local currency.

"Most farmers had hope of getting hard currency, but government really let us down by paying farmers in local dollars when tobacco is an export crop," said Kizito.

This season the RBZ said farmers could retain 50% of their earnings in hard currency but would only have 90 days which they could keep hard currency in their accounts before compulsory conversion to local currency at the prevailing exchange rate.
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