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Chinese Tobacco Firm Helps Zimbabwe To Generate Much-Needed Foreign Income

Jekesai NJIKIZANA / AFP

In a single file, farm workers carry up to 25 kilogrammes of Virginia leaf tobacco on their shoulders.  Titus Gurupira (45), a farmer on a farm in Mvurwi, 100 km north of Harare, pleads with his workers to hurry with the picking ahead of the hectic marketing season. He is one of 300 farmers contracted by Tian Ze, a subsidiary of China Tobacco International, in Zimbabwe.

Tobacco farmers around here say Chinese interest in ‘the golden leaf’ is improving their income, but the journey has not been easy for either.

Tian Ze started tobacco contract farming in Zimbabwe in 2005.  According to the Tobacco Industry Marketing Board, there are currently over 110,000 tobacco farmers in the country. Zimbabwe is the largest tobacco producer in Africa.

Tian Ze’s managing director is upbeat about the season. “We are happy with the quality of the crop produced by our farmers.”

The crop is one of Zimbabwe’s top foreign-currency earners, accounting for 12% of the nation’s economic output. This season, tobacco growers have earned a collective US$319 million from the sale of 133 million kilogrammes of flue-cured tobacco since the marketing season started at the end of April, says Pat Devenish, chairperson of the Tobacco Industry Marketing Board.

Before Tian Ze came to Zimbabwe, the Zimbabwean tobacco market was dominated by a few local players and the highest price was US$2,99 per kg. At the time of writing, tobacco leaf was sold for an average price of US$4.50/kg.

Correct Grading Has Lifted Average Prices

Tian Ze’s managing director, Ye Hai, says that his company leads in paying competitive prices per each grade, thereby improving competition in the market. He points out that it has been made possible through ongoing grading training sessions that they carry out in all regions. He says: “Many farmers were not grading their tobacco correctly and were mixing it. This will inevitably lower the price.”

Tian Ze’s team of agricultural experts provides regular agronomic, service and market updates via sms platforms and radio programmes.

“Tian Ze offers tobacco farmers interest free loans, subsidized inputs and free technical support and training, among other services.” says Hai.

An independent economist, Persistence Gwanyaya adds that the company has installed centre pivot irrigation systems and tobacco drying infrastructure, and extension work like advice and seed stock.

Gwanyanya says: “Tobacco contract companies like Tian Ze have resulted in improved foreign exchange inflows into the country.

Currency Devaluation & Policy Inconsistency Drastically Impact on Planning

Developing a business in Zimbabwe is, however, complicated. Ye Hai explains: “The policy in Zimbabwe is that all companies that are exporting have to apply to send back dividends to China after paying tax to the Zimbabwean government. The application process is quite lengthy; the process can take some months.”

He believes the re-introduction of the Zimbabwean dollar in 2019 really affected their operations.  “For us as an exporting company we bring foreign currency into the country. When money comes in, it is changed into the Zimbabwean dollar. That money  loses its value by the day if you don’t use it and this impacts on planning.”

He notes that government planning in Zimbabwe has at times tended to be erratic, driving up the cost of business.

“As a business, it is difficult to survive here in Zimbabwe.”

Tian Ze: “We Encourage Farmers To Grow Food”

Tobacco production by small-scale farmers over the past 20 years has been one of the major changes to the country’s agriculture. The impact this expansion in tobacco production has had on food security, is an unsettled debate.

 “It is fair to say that there has been a significant shift in production from maize [corn] to tobacco and other cash crops (under contract farming) due to price competitiveness and viability concerns,” says economist Persistence Gwanyaya.

In a country where about half the population faces severe hunger, according to the United Nations World Food Programme, tobacco growing is nevertheless prioritized.

Ye Hai recognizes the delicate ground that an agricultural commodity like tobacco treads. He says: “The shortage of staples is man-made, but as the tobacco industry we are encouraging our farmers to grow other staples such as maize so that we don’t have single-crop reliance.”

“I love Tian Ze”

Back on his farm in Mvurwi, Titus Gurupira shares that his yields are down this year because of too much rain and a shortage of coal to cure tobacco leaves. Curing tobacco is not a simple process and can take up to eight weeks.

Gurupira has been growing tobacco under contract for five years, and his appreciation of the Chinese firm is evident.

“I love Tian Ze. They have funded all the developments here including the tobacco barns and curing facilities.I have done a lot of capital projects, spending about US$50 000 on buying new tractors and putting up a grading shade.”

Gurupira ceased growing corn, preferring the ‘golden leaf’ – once the preserve of white commercial farmers – because of high prices and a growing demand for Zimbabwe’s tobacco crop on the international stage.

Strategies To Work With Weather Variables

About 110 km north of Harare, also in Mvurwi, a tobacco farmer who has been growing for Tian Ze for three seasons was left counting his losses after another hailstorm ripped through the area.

Gideon Sekere and his family are similarly beneficiaries of Tian Ze’s tobacco training provided. This season he committed 2ha to tobacco after he received the full input pack and was visited every fortnight by the company’s field extension officers.

He built a barn according to guidelines provided and stayed at his farm throughout the cropping season. The farmer expected to make a net profit of US$1 500-2000 but for the weather.

 He would probably reduce next year’s tobacco hectarage, he says.

The former cotton farmer says this season’s floods and hailstorms have forced him and the company to look at strategies to prevent a repeat as well as introducing irrigation instead of relying on summer rain, and other tobacco varieties with a shorter growing period to suit the effects of climate change.

Both these Tian Ze growers agree that their relationship with the company has provided them with livelihoods in agriculture where few other opportunities currently exist in Zimbabwe.

Stanley Karombo is a Harare-based economics and finance journalist.

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