Cabinet this week approved the long awaited Tobacco Value Chain Transformation plan meant to transform the troubled sector into a US$5bn industry by 2025 with local financing of the golden leaf complementing external sources, Business Times can report.
The development, which comes after the government missed last month’s deadline to announce the plan, was disclosed by the Minister of Information, Publicity and Broadcasting Services, Monica Mutsvangwa.
The delay to announce the plan had exposed the farmers to the predatory tobacco merchants, who have been accused of impoverishing the farmers by luring them into a debt trap.
It is understood the merchants have already distributed inputs for the forthcoming season.
Mutsvangwa said the plan would help the sector increase tobacco production and productivity through increasing the yield per unit, increasing the area under crop and minimising losses.
It comes at a time when Zimbabwe is failing to get maximum benefit from its tobacco crop in terms of value addition and beneficiation.
However, it appears the tobacco merchants will remain firmly in control of the sector as Cabinet said it will only complement external funders already in place.
“The strategic objectives of the plan (include) localising the funding of tobacco to complement external funders, raise tobacco production and productivity from 262m kilogrammes to 300m kilogrammes by 2025,” Mutsvangwa said.
The government also wants the sector to diversify and increase the production of alternative crops such as medicinal cannabis and increase their contribution to the farmers’ incomes to 25% by 2025.
The administration also wants to increase the level of value addition and beneficiation of tobacco from 2% of total tobacco produced to 30% in order to increase exports of cigarettes; and to create an enabling environment that incentivises investors to set up shop in the country instead of exporting raw or semi-processed tobacco.
The proposed local funding of tobacco comes as farmers have been exposed to the predatory tobacco merchants who are accused of manipulating the prices at the floors and are said to be taking around 85% of the tobacco farmers’ earnings and the country could not be benefiting much from its tobacco.
The crisis in the tobacco sector has been worsened by the absence of funding by local banks leaving farmers to rely on contractors.
Local banks’ reluctance emanates from the government’s failure to issue transferable ownership to black farmers settled on former white-owned land.
The reluctance by banks to lend has seen tobacco merchants coming up with contract growing schemes.
As part of the localisation of the financing of tobacco, the Tobacco Industry and Marketing Board is contracting 50 000 ha, up from the 12 000 ha contracted last year.
Tobacco is the fourth largest foreign currency earner behind platinum, diaspora remittances, and gold.
About 90% of growers are now 100% US$ borrowed from their contractors, implying no new US$ comes into the country until US$ loans are repaid.