Zimbabwe - Tobacco Reporter

Zimbabwe: More Money From Less Tobacco

Zimbabwe has sold 201.05 million kg of tobacco worth US$614.27 million since the marketing season opened in March, reports The Star, citing statistics from the Tobacco Industry and Marketing Board.

While being close to matching last year’s output, the value of the crop sold so far this year has surpassed last year’s figure, reflecting firmer prices due to good quality leaf. During the same period in 2021, Zimbabwe’s tobacco growers sold 207.18 million kg for US$578.78 million.

Despite being grown under difficult conditions characterized by erratic rainfall, the seasonal price averaged above US$3 per kg compared to US$2.79 per kg last year.

Ninety-five percent of Zimbabwe’s tobacco crop is grown under the contract system. Only 5 percent of farmers self-finance their crop production, which they then sell through auction floors.

Zimbabwe’s tobacco auction season officially closed July 20, but contract sales are still ongoing.

August 22, 2022

Zimbabwe: Growers Start Land Preparations

Tobacco growers in Zimbabwe have started preparing land to plant their irrigated tobacco crop in early September, reports The Herald.

Sept. 1 is the earliest legislative date for transplanting tobacco from the seedbed to the field. The bulk of the rain-fed crop will be planted from October to early December, depending on the region. To prevent the carryover of diseases, tobacco farmers are required to destroy tobacco stalks and regrowths, which can host pest and pathogens, by May 1 each year.

Industry representatives expressed concern about the cost of agricultural inputs this year.

“The major challenge on the ground is that input prices are very high, hence the majority of farmers are finding it difficult to continue with tobacco farming,” said Edward Dune, vice president of the Zimbabwe National Farmers’ Union, urging authorities to improve the conditions of payment.

This season, tobacco farmers were paid three quarters of their proceeds in foreign currency and the balance in local currency, converted at the prevailing auction exchange rate on the day of sale.

According to the Tobacco Industry and Marketing Board, prices at the auction floors, at US$3.04, were firm because of low volumes. In 2022, tobacco growers pocketed more than US$620 million from their leaf sales.

August 15, 2022

Tobacco Auction Season Ends in Zimbabwe

Zimbabwe’s tobacco farmers are making their last deliveries as the tobacco auction season comes to a close.

The auction season, which started in March, closed on Wednesday, with more than 180 million kg of the golden leaf having been sold at an average price of $3.04 per kg.

However, due to the significant volumes that are still being received, the Tobacco Industry and Marketing Board (TIMB), said contract sales will continue until further notice. A mop-up sale will be conducted on August 17.

“This season was okay, although not as good as last year,” said Tafadzwa Mugwagwa, a small-scale farmer from Rusape, a farming region southeast of Harare.

“We experienced erratic rainfall, there was a dry spell and the rains were late. The crop was affected when we applied fertilizers but it picked again when the rains came, that’s why the crop wasn’t auctioned on time,” he told Xinhua, according to CTGN Africa.

While most farmers had already delivered their crops to the auction floors before the end of the selling season, many farmers from Manicaland Province said they are yet to bring all their crops to the market.

“We haven’t brought all the crops to the market, we still have tobacco crops back home because we didn’t finish harvesting on time. We were still curing tobacco in June,” said Dorothy Chigwededza, a tobacco farmer.

July 21, 2022

Zimbabwe to Wrap up Auction Sales

Zimbabwe expects to wrap up its tobacco auction season July 20 with slightly better prices than last year, reports Xinhua News Agency, citing the Tobacco Industry and Marketing Board (TIMB).

A flue-cured auction mop-up sale will be conducted on Aug. 17, 2022, and depending on the volume of deliveries, the clean-up sale may be continued for more than one day until all delivered tobacco is sold.

The TIMB added that because of significant volumes that are still being received, contract sales will continue until further notice.

Zimbabwe’s 2022 tobacco auction selling season started March 30, 2022.

Tobacco prices have been slightly firmer this year, due to better leaf quality despite the difficult weather conditions experienced during the season.

The opening price this year was $4.60 per kg, compared with $4.30 last year.

Over the course of the selling season, prices remained firm, averaging above $3 per kg compared to an average of $2.80 per kg last year.

As of July 12, farmers had sold 179.4 million kg of golden leaf at an average price of $3.04 per kg.

The bulk of Zimbabwe’s tobacco leaf is sold through contract floors, as only 5 percent of farmers are able to self-finance tobacco leaf production.

Tobacco is Zimbabwe’s second foreign currency earner after gold, with China and South Africa being the major buyers of the country’s golden leaf.

July 17, 2022

TIMB Vows Crackdown on Side Marketing

Zimbabwe’s Tobacco Industry and Marketing Board (TIMB) vowed to crack down on side marketing, noting that five exporters lost $57 million due to the practice in 2021, according to News Day.

Side marketing is a form of contract breach in which contracted tobacco growers sell their produce to third parties in violation of an agreement to sell all their leaf to the party who provided the agricultural inputs.

“This year, 2022, the Tobacco Industry and Marketing Board is on an accelerated drive to end tobacco side-marketing. This criminal practice is responsible for the loss of millions of dollars annually and has the potential to kill the tobacco industry,” the TIMB wrote in an article published on its website.

“TIMB cannot accurately ascertain how much is lost annually since side-marketing is an illegal activity whose statistics cannot be accurately ascertained. However, in 2021 alone five exporters lost US$57 million as a result of several factors and chief among them being side marketing,” it said.

Prior to Zimbabwe’s radical land reform program in the early 2000s, most of the country’s tobacco was produced by commercials farmers who funded their own operations and sold their leaf at auction. Today’s Zimbabwean tobacco production is dominated by smallholder production and contract buying, as most of the new farmers are unable to pre-finance their crops.

In 2021, the TIMB created a special unit, the inspectorate department, to prevent, detect and investigate side marketing and other illegal activities in the tobacco industry.

July 12, 2022

Boka Tobacco Sales Suspended

Zimbabwe’s Tobacco Industry Marketing Board (TIMB) has suspended the Boka Tobacco Sales Floor (BSF) from purchasing tobacco from farmers with immediate effect, reports Africa Press.

The regulator acted on July 14 following several reports by growers that they have spent more than a month without receiving payment for their produce.

TIMB Public Affairs Officer Chelesani Moyo said the suspension will be reviewed after the BSF clears all its outstanding dues and provides proof of adequate financial resources.

“We have received several complaints from growers who have not been paid by Boka Tobacco Sales Floor after sales,” she said.

“As a regulator, we have engaged with Boka management to resolve the issue in an amicable manner.

With immediate effect, TIMB has suspended all tobacco purchases by Boka until they have cleared all outstanding payments and provided proof of adequate financial resources.”

July 11, 2022

Zim Tobacco Earnings Surpass Last Year’s

Zimbabwean tobacco growers had sold 167 million of tobacco and earned $505 million by the end of June, reports The Herald, citing statistics from the Tobacco Industry and Marketing Board.

By comparison, in the entire 2021 marketing season, farmers pocketed $504 million from the sale of 183 million kg.

While this year’s volumes are lower than in 2021, the higher quality has been commanding better prices, according to experts.

The average price for this year is $3.02 per kg while that of last season was $2.76 per kg. The lion’s share of Zimbabwean tobacco is sold under a contract system. Only 5 percent of farmers are sufficiently solvent to borrow from banks or fund their own operations.

Tobacco is a key crop for Zimbabwe, with exports and supporting activities contributing earnings of more than $1.2 billion annually.

Eager to capture more value from the golden leaf, the government aims to transform the business into a $5 billion industry by 2025. Its Tobacco Value Chain Transformation plan calls for increasing primary production to 300 million kg by 2025 and localizing financing for smallholder farmers, among other initiatives.

July 6, 2022

Zimbabwe Seeks to Switch to Gas for Curing

Zimbabwe wants to replace wood with gas as fuel source for tobacco curing to curb deforestation, reports Xinhua News Agency, citing the Tobacco Industry and Marketing Board (TIMB).

The TIMB said it is seeking gas technology companies to partner with it in establishing a centralized gas curing facility for tobacco. Such a facility should allow for multiple farmers to cure their tobacco at the same time, the regulator noted.

According to the TIMB, of the 262,000 hectares lost to deforestation in Zimbabwe every year, 15 to 20 percent of this is attributable to tobacco growing, particularly curing.

“This is one of the sustainable curing initiatives which we are considering as a board,” TIMB spokesperson Chelesani Moyo was quoted as saying. “Sustainable tobacco production is the efficient production of quality tobacco, under conditions that limit the negative impact on the environment. This also entails the best agricultural practices that improve the socio-economic conditions of tobacco growers and communities in tobacco-producing areas.”

Zimbabwe’s policy of promoting small-scale production has accelerated deforestation as farmers indiscriminately cut down of trees to cure the golden leaf.

Tobacco is one of Zimbabwe’s major foreign currency earners.

Last year, the country sold 186.6 million kg of tobacco leaf valued at $515.9 million, up 16.8 percent in volume and 31 percent in value over sales in 2020.

June 17, 2022

African Ambition

The Pacific Cigarette Co. continues to gain momentum.

By Daisy Jeremani

The Pacific Cigarette Co. of Zimbabwe has made significant progress toward becoming one of Africa’s No. 2 cigarette makers as it now produces more than 3 billion sticks per year, according to company founder and chairman Adam Molai.

In a recent interview with Tobacco Reporter, Molai said Pacific was on track to becoming the largest indigenous African cigarette manufacturer by 2020 and the second-largest cigarette manufacturer on the continent, but its growth was disrupted by the Covid-19 outbreak.

“Significant gains have been made toward this objective, growing from inception to over 3 billion sticks per annum. However, the Covid-19 pandemic merely delayed—it did not destroy or disrupt—our ultimate goal. Our vision for global success through value addition and tobacco beneficiation remains undeterred, and we continue to strive to create value for the African economy and enhance the lives of Africans,” he said.

Born into an entrepreneurial family, Molai attended some of southern Africa’s most prestigious schools, including Peterhouse Boys, northeast of Harare. He worked at Ernst and Young in Zimbabwe and proceeded to the University of Buckingham in the U.K. where he graduated with a business degree in August 1992. Four years later, he left Lakehead University in Canada with a first-class commerce degree.

Molai returned home and ran some small businesses, but his biggest break came at 31 years old when he, together with Nick Havercroft, founded Savanna Tobacco, later renamed Pacific Cigarette Co. They launched it in 2002 as a threshing enterprise in Africa’s No. 1 tobacco growing country. This entailed buying tobacco stems from farmers, processing them and exporting them. They did not immediately have the resources to import a cigarette manufacturing plant, but investing in threshing and starting to export were the first serious steps that propelled Pacific to be the brand it is now.

Molai and Havercroft recognized the opportunity that lay in processing tobacco into cigarettes, and through innovative financing structures to raise foreign currency in a market plagued by foreign currency shortages, they were able to import the required equipment and became the first indigenously owned cigarette maker in Zimbabwe. In addition to the challenge presented by the foreign currency shortage, they also had to overcome the difficulties presented by the then poor relations between Zimbabwe and Germany, which is home to some of the world’s leading tobacco equipment manufacturers. At that time, Europe and the U.S. were sanctioning Harare over the land acquisition program and human rights issues. Despite this, Molai was still able to pay for the company’s first cigarette maker and packer to start producing Pacific Blue cigarettes for export in 2004

While this represented a big break at a personal level, breaking into a market that had been dominated by established brands for decades presented a considerable challenge, according to Molai. Competitors tried to derail and sabotage the newcomer in a variety of ways, at times using underhanded methods, he says.

Nonetheless, Molai persisted. “Although it was challenging competing with established global multinationals with infinite resources, we used this as a learning experience,” he said.

“Our competition provided us with the best education on business. They triggered the tenacity, resilience and boldness which has facilitated our growth and expansion into the region.”

A few years later, Molai turned the company’s focus to tobacco contract farming. He won government approval to establish contract farming in a country still dominated by auction sales. Critics labeled him an economic saboteur who wanted to use contracting to help white farmers, most of whom just had been evicted from their farms under the land acquisition program, externalize funds. But he was not deterred, having realized that the new, resettled farmers lacked the technical know-how, inputs and financing to seriously grow tobacco.

After two years of lobbying and hard work, the company was finally licensed to contract but with extremely stringent conditions that gave it no recourse against any defaulting farmers. This first contract scheme was called Zimbabwe Tobacco Growing Co., later rebranded to Northern Tobacco.

“I believe our foremost contribution to the tobacco industry is not cigarette manufacturing,” says Molai. “The most important contribution we made was fighting for permission to introduce contract farming of tobacco in Zimbabwe.”

Other companies launched their contract schemes later, and today, more than 100,000 farmers produce some 95 percent of the local crop under contracts.

Four years ago, Pacific partnered with China Tobacco Shaanxi Industrial Corp. (CTSIC), in an effort to serve the Chinese market. In January 2022, Pacific invested $9.5 million to relaunch two of its brands, Pegasus and Branson, to ensure that they would be able to not only cater to the premium segment but also offer world-class quality cigarettes at an affordable price. The Branson brand family was expanded with Branson flame, toasted and mint varieties while Pegasus now comes in a toasted flavor and a Chinese blend named Hong Ma.

Molai recognizes that the Chinese blends are still in their infancy but says the company is working to ensure that it is able to grow that market given that China has the world’s largest population, which is getting increasingly affluent and traveling or settling in other countries.

“As a disruptor and a trendsetter, Pacific will continue innovating to keep ahead of the competition,” he says. “The relaunch of some of our brands was not only driven by our Chinese partnership but also part of our DNA to ensure we satisfy our customers.”

Pacific’s deal with CTSIC, he said, was the first of its kind, where Chinese brands got licensed to an African entity. The partnership, which is in line with Zimbabwe’s “Look East” investment policy, remains a key part of the strategy to build Pacific’s market share, considering that China has the world’s highest number of smokers and there are an estimated 10,000 Chinese living in Zimbabwe.

It takes time to establish and grow a brand, says Molai, so Pacific is working tirelessly to gain the trust and loyalty of consumers.

“Our aspiration was to get African cigarettes into the Chinese market,” he says. “Africa is the only continent without a quota to supply cigarettes into China, and with Zimbabwe being the largest tobacco player on the continent, it was therefore my responsibility, on behalf of our continent, to make this happen.”

Pacific is also making inroads into neighboring South Africa, and they recently launched their Acacia brand and intend to continue expanding. As Covid-19 hit in March 2020, Pacific had to innovate and began a campaign centered on its mission that “People are the recipe for maximizing stakeholder value,” so they have been cementing and capitalizing on the relationships that they have on the market to ensure that they get the desired product placement and sales traction.

Speaking on the prospects for the African economy, Molai said the economy can only grow when businesses identify opportunities for beneficiation and increase their levels of domestic value addition, creating employment and industrializing while enhancing and developing its people. Value addition is especially imperative for Zimbabwe, which exports 98 percent of its tobacco raw and processes just two percent of local production into cigarettes.

“My personal objective was to democratize the tobacco industry from a highly racialized industry to one whose participation mirrors the continental demographics. This has been largely achieved with indigenous Zimbabweans now major players from growing to cigarette manufacturing.

“It is our responsibility, and as Pacific, we remain committed to the well-being and long-term sustainability of Zimbabwe’s golden crop by manufacturing and distributing products of international quality,” he said.

The businessman said his personal ambition has now expanded beyond tobacco and is now also focusing on the industrialization of Africa and beneficiation of other value chains so that the continent becomes an alternative supply chain to the world. Covid-19, he added, has exposed the risk concentration of current supply chains, thus Africa has a phenomenal opportunity to industrialize and create opportunities for it’s very young and unemployed youth.

In November 2020, his self-titled foundation launched JUA Kickstarter, a $1 million initiative to support startups on the continent. With support from partners, the fund was doubled in January 2021. Announcing the development, Molai recalled the grueling journey he traveled to launch a successful brand and felt the need for him to assist startups.

“With 65 percent of our population below 35 years of age, this population represents a significant threat or opportunity for our continent,” he told Tobacco Reporter.

June 1, 2022

Zimbabwe: Decline in New Tobacco Growers

The number of new tobacco growers in Zimbabwe for the 2021–2022 season has declined by 50 percent compared to the previous year, according to a report in The Herald.

According to the Tobacco Industry and Marketing Board (TIMB), 756 of the new registered farmers are from the communal sector, 244 are A1 farmers, 38 are from the small-scale commercial sector and 56 are from the A2 sector.

Meanwell Gudu, TIMB chief executive, attributed the decline in new registrations to viability issues. “The decline witnessed in terms of registration of new tobacco growers can be attributed to viability issues. The cost of production is going up and the growing demand of the U.S. dollar component in the operations,” he said. “Even farm laborers now demand payment in foreign currency. So without development funding, it becomes a challenge for new tobacco farmers to register.”

Meanwhile, average prices for tobacco exports have marginally increased this year.

“There [are] increased exports, which is a clear reflection of the opening up of the economy post-Covid-19 lockdowns, and there are improvements in logistics,” Gudu said.

So far, Zimbabwe has exported tobacco worth $307.8 million this season compared to $222.2 million in the same period last year.

May 12, 2022

Tag: Zimbabwe

The Pacific Cigarette Co. continues to gain momentum.