Tag: Zimbabwe

  • Farmers Earn $1.3 Million From Shisha Leaf

    Farmers Earn $1.3 Million From Shisha Leaf

    Photo: Cavendish Lloyd

    Farmers in Zimbabwe have earned $1.3 million so far after selling 92 percent of the projected shisha crop size this marketing season, reports The Herald. The season is coming to a close with only one outstanding sale before the 2024 marketing season ends.

    Yield projections dropped from 800,000 kg to 500,000 kg due to the El Nino weather pattern, which caused drought and negatively affected the 2023/2024 agricultural season.

    Recent Tobacco Industry and Marketing Board statistics showed that growers sold 387,559 kg of shisha leaf valued at $1.27 million. The average price dropped from $3.44 per kilogram to $3.28 per kilogram. The highest price of the season was $5.70 per kilogram, and the lowest price of the season was $0.75 per kilogram. There has been an 8 percent rejection rate.

    “We are left with only one sale to clear all the produced shisha crop,” said Tinashe Mukadzambo, CEO of Cavendish Lloyd, the country’s sole shisha buyer.

    The 2024/2025 season is expected to be more lucrative due to forecast La Nina weather patterns. Cavendish Lloyd has begun contracting farmers. 

    “Growers should have enough arable land for crop rotations, preferably sand to sandy loam soils with priority given to those with a good source of water and can irrigate,” said Mukadzambo. “A risk assessment will be done to check on whether the grower has any outstanding loans from their previous tobacco seasons.”

    Shisha production increased 270 percent from 110 hectares during the 2022/2023 season to 407 hectares in the 2023/2024 season. Production is expected to increase to 500 hectares in the 2024/2025 season. 

  • Cut Rag Processors to Open Factory in Harare

    Cut Rag Processors to Open Factory in Harare

    Photo: Screaghin

    Cut Rag Processors is poised to open a USD120 million tobacco factory in Harare, reports The Herald.

    According to Managing Director Caillin Mellet, the company is currently training personnel.

    “Our aim for this factory is not only for ourselves in terms of value addition to the economy but also for the people who work for us in terms of upscaling and teaching the people we have how to operate the world-class high-technological machinery,” he was quoted as saying.

    The construction of the factory dovetails with Zimbabwe’s goal to extract more value from its tobacco industry.

    Under the Tobacco Value Chain Transformation Plan, the government aims to create a $5 billion industry by 2025.

    In addition to moving beyond exports of processed tobacco into value-added activities such as cigarette manufacturing, the plan seeks to boost production of alternative crops and increase their contribution to farmers’ income by 25 percent.

    “This state-of-the-art factory I have just toured represents an important milestone in our efforts […] to grow and modernize Zimbabwe’s tobacco industry,” said Vice President Constantino Chiwenga during a pre-commissioning tour of the facility on July 10.

    “Tobacco has long been a crucial export crop and economic driver for our nation. Through strategic investments in infrastructure technology and skills development, government is accelerating the transformation of Zimbabwe’s tobacco industry.”

  • Gaining Momentum

    Gaining Momentum

    Photos courtesy of Cavandish Llloyd

    Cavendish Lloyd is eager to expand shisha tobacco production in Zimbabwe and elsewhere.

    By George Gay

    When I corresponded in 2022 with the president of Cavendish Lloyd, Koen Monkau, he was bullish about the market for shisha-style, low-nicotine flue-cured tobacco (LNFCT), the production of which his company was trialing in Zimbabwe. And, earlier this year, he was still bullish. The major manufacturers of shisha might have experienced a drop in sales recently, mainly due to vaping, he said, but a lot of new players had entered the market in the past few years, and shisha consumption was still growing worldwide. Five years ago, for instance, there were no shisha bars in Harare, but now there are plenty of establishments that offer shisha. “This is a worldwide trend,” he added.

    While this sounds like good news for Cavendish Lloyd, it seems to also be good news for Zimbabwe. As part of an email exchange in May, Monkau told me it was important for Zimbabwe’s tobacco industry that it diversified the portfolio of tobacco it offered buyers and, ultimately, manufacturers. “An industry is not sustainable in the long run if half its crop is sold to one customer, as is the case now,” he said. “LNFCT—and also other tobacco varieties—can assist in diversifying the industry so that it is able to stand the test of time.”

    Although Cavendish Lloyd is the only company currently producing LNFCT in Zimbabwe, it is certainly the case that the country’s tobacco industry, at least in the guise of the Kutsaga Tobacco Research Board (TRB), seems aware of the desirability of diversification. Monkau said his company had enjoyed a good cooperative relationship with the TRB, which had this season, 2023–2024, grown 7 ha for it on a commercial basis. At the same time, the TRB was continuing to experiment with alternative growing methods and different shisha tobacco seeds.   

    This season, Cavendish Lloyd is hoping that its Zimbabwe crop will reach 600,000 kg, and Monkau is looking for investors to help him expand LNFCT production into other countries, including Malawi, South Africa, Tanzania and Zambia. His company, he said, was now looking to hold talks with the tobacco research institutes of these countries, following initial approaches that had been made by the chief executive officer of the TRB, Frank Magama. In fact, Tanzania had already expressed serious interest in growing this crop, and representatives of the country’s Tobacco Research Institute had attended this year’s sales, which were ongoing at the time this story was written.

    Many Zimbabwean farmers are growing it for the first time this season.

    Challenges

    It would be wrong, however, to give the impression that everything has been going without a hitch. Monkau readily admits that his company was hit by financial and other constraints during the 2022–2023 season and that its crop of 150,000 kg was well below what had been initially targeted. And while the 600,000 kg crop expected this season would represent a major increase, it would have been even bigger, perhaps 1 million kg, but for the El Nino weather effect.

    But then El Nino affected all tobacco (and other) crops in Zimbabwe (and elsewhere, and the resulting drought was eventually declared a national disaster. The unhelpful weather conditions did not come out of the blue, however, and, in mitigation, Cavendish Lloyd was able to focus on growing an irrigated crop from the start. At the same time, Monkau said, the dryland crop had had to be scaled back to ensure that growers did not plant crops that they would not have been able to sell.

    Unfortunately, the current situation implies that things could reverse next season and create problems for those who use irrigation for growing tobacco because there has not been enough rain to fill dams and reservoirs.

    Despite these setbacks, it is not proving difficult to attract farmers to LNFCT. Cavendish Lloyd started out on this project three seasons ago with just one grower, who is still on board, but he has been joined by about 40 others, ranging from commercial to small-scale farmers. Monkau said that LNFCT was relatively easy to grow and provided good returns when cultivated well, so farmers had been lining up to produce this variety.

    LNFCT is closer grown than standard flue-cured tobacco; it requires the application of less fertilizer; it is not topped; it provides for faster harvesting because more leaves are reaped with each pass; and it requires less energy during curing. All this adds up to efficiency savings and better returns, not to mention environmental gains.

    Nevertheless, the switch from growing a regular flue-cured crop to LNFCT requires some adjustments on the part of the grower, who is presented with logistical challenges if he grows LNFCT alongside regular flue-cured. For instance, because LNFCT cures faster than regular flue-cured, growers need good barn management skills when scheduling curing. In fact, Monkau believes it is preferable for growers to concentrate on either LNFCT or regular flue-cured.

    To help growers further, Cavendish Lloyd is currently looking at employing more sophisticated ways of crop management than are now used. “By using satellite imaging to monitor crops, we can deploy our agronomy team more efficiently to areas that need immediate and special attention rather than have them do their weekly rounds of farmers,” he said. “It is a relatively cheap way of potentially increasing crop yields dramatically, and it is quite amazing what kind of information can be gathered on a day-to-day basis.”

    Looking to the future, I asked if African-grown LNFCT might be used for purposes beyond shisha manufacture, to which Monkau replied that his company had already had inquiries from companies operating in the cigarette and RYO markets that were interested in obtaining a bright, low-nicotine-style tobacco that fitted their established blends. In addition, a recent sale of 10,000 kg of LNFCT to a flavor extraction plant in Zimbabwe had shown that there were other outlets for this type as well.

    In finding and establishing these other outlets, it probably helps that as well as being involved in LNFCT production, Cavendish Lloyd has contacts made through some of its other operations, which include the marketing and distribution of cigarettes, and the trade in tobacco, cut rag and tobacco production materials, such as packaging. And since 2023, cigarette manufacturing can be added to that list since the company last year established a manufacturing plant in Lusaka, Zambia.

    This season, Cavendish Lloyd is hoping that its Zimbabwe shisha tobacco crop will reach 600,000 kg.

    Limits to Production

    Looking away from the demand side and toward the supply side of the LNFCT business, I also asked what limited the amount of this type that could be grown. “Limits are mainly defined by how much capital we can raise to fund the growers,” Monkau said. “I believe there is room to expand production to 5 million kg in Africa on a sustainable basis,” he added before providing an interesting comparison, “which would be comparable with the crop size of Germany.”

    This comparison chimes with a point Monkau had made to me in response to an earlier question about whether LNFCT could now be seen as an established commercial crop in Zimbabwe. No, it was not, he replied. Many farmers this season were growing it for the first time, so it would be an experiment to see if it worked for them. Only one farmer was growing it for the third time, and for several, it was their second season. Even with the volume of all Zimbabwe’s flue-cured crops expected to total less than 250 million kg this year because of El Nino, LNFCT would account for only 0.2 percent of the total.

    That, for sure, seems to be only a modest amount of LNFCT, but I was interested to know if it had been a smooth ride getting to that point. There was no such thing as a smooth ride in Zimbabwe, Monkau told me. The financial/economic situation in the country always kept you on your toes. For instance, on Cavendish Lloyd’s first sales day of 2024, April 5, the government had abolished the Zimbabwe dollar and introduced a new currency, the ZiG, which put the whole financial system on hold for a few days, and the company was still dealing with the fallout from that. Such changes did not make doing business easier, but, apart from that, things had gone quite well. There was a lot of interest and support from the government to make the LNFCT business successful, and the company’s efforts were the subject of regular local press reports.

    Of course, the real test of how things are going and will go in the future concerns whether growers are content with the prices they are receiving, and, in the short term, the answer is probably that they are. Nevertheless, Monkau made the point that pricing was something of a thorny issue in respect of LNFCT. His company was required to follow the pricing arrangements specified by the Tobacco Industry and Marketing Board (TIMB), arrangements that could lead to anomalies since LNFCT fell outside the regular classifications of the TIMB. It wasn’t too much of an issue for the tobacco that met shisha standards, but, in the case of lower grades that were unsuitable for shisha, the company was obliged to pay regular market prices for tobacco of substandard quality.

    But at least the next season, 2024–2025, should see farmers keen to grow LNFCT—in fact, any tobacco type or variety. “Overall, prices for all tobacco have been good this year, so I don’t see many farmers complaining,” said Monkau. “I expect current prices will push more farmers back into tobacco growing until we see more balance between supply and demand.”

  • Zimbabwe Leaf Sales Reach $721 Million

    Zimbabwe Leaf Sales Reach $721 Million

    Photo: Taco Tuinstra

    So far this marketing season, Zimbabwe’s tobacco farmers have brought in $721 million from the tobacco auction and contract floors, down from $832 million in the same period last year, reports The Herald.

    This year, 208 million kilograms have been delivered to the marketing floors so far compared to 275 million kilograms last year. The target this year is 265 million kilograms, which is lower than last year’s target; however, this year’s crop was affected by El Nino induced drought.

    The Tobacco Industry and Marketing Board noted that 11.7 million kilograms have been delivered to auction floors and 197 million kilograms have been delivered to contract floors. The average price is $3.45 with the highest price at $6.99. Fewer bales have been rejected this year compared to last year.

  • Zimbabwe Cigar Tobacco Marketing Season Opens

    Zimbabwe Cigar Tobacco Marketing Season Opens

    Image: Taco Tuinstra

    Zimbabwe’s 2024 cigar tobacco marketing season opened in Manicaland with a high price of $7.05 per kilogram recorded on the first sale, according to The Herald. The crop is in its 10th year of production.

    Growers have sold 5,200 kg of cigar tobacco worth $16,432 at an average price of $3.16 per kilogram, according to Tobacco Industry and Marketing Board (TIMB) statistics.

    “Growers comprised 11 small-scale growers all doing half a hectare each and one commercial farmer doing four hectares. The highest price fetched was $7.05 per kilogram,” said Chelesani Tsarwe, TIMB public affairs officer. Sales took place at Mapeto Farm in Burma Valley in the Manicaland province.

    “The first of the anticipated three sales saw 5,022 kg of the crop undergoing sale at an average price of $3.16 per kilogram. The crop was grown under contract with 14 small-scale farmers and one commercial grower,” said James Lindsay Guild, owner of Mapeto Farm. The crop was fermented at the farm for at least a year, according to Guild.

    “The premium tobacco from the crop is destined for the American cigar market. The average yield is around 1,500 kg per hectare,” Guild said.

    The small-scale farmers produced the crop under dryland, and the commercial farmer used irrigation.

  • Farmers Want Improved Local Funding

    Farmers Want Improved Local Funding

    Photo: Taco Tuinstra

    Tobacco farmers in Zimbabwe have called on the government to improve local funding of the country’s leaf production to ensure that farmers are receiving maximum benefits from their crops, reports The Herald.

    Tobacco farming is financed mainly through offshore funding; 95 percent of farmers work under contract, and 5 percent are self-financed.

    Zimbabwe only retains about 12.5 percent of its tobacco value as the remainder goes toward paying back loans and interest from offshore financiers.

    According to George Seremwe, chairman of the Zimbabwe Tobacco Growers Association, production costs have increased, and local banks cannot finance farmers.

    “We are not happy with the current model of contract farming because these merchants are not for the benefit of most of us, so we would like to change that. We are not happy with the current contract system because we are not getting any benefit from anything as farmers. Actually, we are getting poorer.

    “We have to raise local funding. As farmers, we are going to look at ways of how we are going to raise capital. We can raise funding to be able to support ourselves. Foreign funding is costly, and it has restrictions on it, and it is not benefiting us at all. Let us rectify this because our government is the one which controls the financial institutions.”

    “We have over 30 percent of farmers who are doing side marketing because these offshore beneficiaries entice them,” said Edward Dune, vice president of the Tobacco Farmers Union Trust. “We are very aware of these surrogate players in the industry, but as farmers, we are very much in support of local funding. As farmers, we need good agronomic practices to put in place so that we get maximum benefits out of it.”

  • Leaf Sales Down

    Leaf Sales Down

    Photo: Taco Tuinstra

    Contracted and self-financing growers had earned more than US$600 million by Day 56 of Zimbabwe’s 2024 tobacco selling season, down from $722 million earned by the same day last year, reports The Herald.

    The most recent season was impacted by an El Nino-induced drought, which caused the season to start late and end early.

    Tobacco Industry and Marketing Board statistics revealed that farmers had cumulatively sold 173.76 million kilograms of tobacco worth $607.08 million by Day 56 under both the auction and contract systems. This represents a 16 percent decline in earnings from the comparable 2023 period.

     In volume terms, the leaf sold was 27 percent below the 239.56 million kg sold last season. The average auction price was $0.12 higher than that at the contract floors.

    Some stakeholders remained positive about the remainder of the season. “On the back of an El Niño-ravaged season, we need to celebrate the 174 million kilograms achieved to date,” said Paul Zakariya, secretary general of the Zimbabwe Farmers Union. “The marketing season is still underway and we expect more tobacco to come through. We may not necessarily reach the desired target, but we will not totally be out of range .”

    Others were less optimistic. Tobacco Farmers Union Trust Vice President Edward Dune said it was highly unlikely that the 240 million kilogram target would be reached in the wake of the drought.

    “Deliveries should definitely be declining now that the marketing season is almost coming to an end. Firewood cutting and nursery preparations are the major farmer activities currently taking place on farms,” he said.

  • Investor Plans Nicotine Extraction in Zimbabwe

    Investor Plans Nicotine Extraction in Zimbabwe

    Photo: Tobacco Reporter archive

    A Chinese investor plans to build a multi-billion dollar nicotine-extraction factory in Zimbabwe, reports The Herald. The plans are at an advanced stage, according to the country’s former ambassador to China, Christopher Mutsvangwa.

    The facility will extract nicotine from tobacco stalks, leaves and flowers for the cigarette alternatives, such as e-cigarettes. Once established the factory is expected to also process tobacco from neighboring countries including Malawi, Mozambique and Zambia.

    “There is going to be a very big industry to extract nicotine from the by-products after selecting the premium tobacco leaves,” Mutsvangwa told participants in meeting of the ruling  Zanu PF’s party’s Mashonaland West provincial coordinating committee in Chinhoyi.

    “The Chinese firms have an interest in setting up the factories here in Zimbabwe because of our production levels,” he said.

    The investor’s board of directors reportedly met on May 31, 2024, to finalize the modalities of setting up the factory, which will likely be built in Karoi, in one of Zimbabwe’s largest tobacco producing districts.

    Zimbabwe is also expected to be a major producer of cannabis seeds following plans to establish a US$400 million factory. “We now have capacity to produce cannabis seed in the country. After an initial investment of $30 million, the company now wants to set up a seed production factory,” said Mutsvangwa.

    The investments in nicotine extraction and cannabis production will boost Zimbabwe’s attempts to extract more value from its tobacco industry, as detailed in the government’s Tobacco Value Chain Transformation Plan.  

  • Digital Tobacco Platform Launched

    Digital Tobacco Platform Launched

    Photo: Taco Tuinstra

    ModernLeaf AI has launched a digital platform offering artificial intelligence solutions to increase productivity for Zimbabwe’s tobacco growers and exporters across the value chain, reports the Zimbabwe Independent.

    “Looking beyond Zimbabwe envisions opportunities to expand the platform’s usage across Africa, signaling the need for investment in this ambitious endeavor,” said Takudzwa Sambo, founder of ModernLeaf AI. “ModernLeaf AI is poised to play a pivotal role in advancing the tobacco industry on the continent.”

    “With cutting-edge AI technology, ModernLeaf AI empowers you with precision crop monitoring, advanced predictive analysis, early disease detection, premium quality control updates, strategic market insights, cost-efficient solutions, export strategy and compliance in international markets, [and] tobacco business intelligence in over 120 countries,” said Sambo.

    Sambo emphasized that leveraging AI to propel Zimbabwe’s tobacco sector onward is a necessity. “I am grateful to the government for its vision outlined in Vision 2030, emphasizing the importance of youth involvement in realizing the strategic goals set forth in the National Development Strategy 1.”

  • Zimbabwe Tobacco Export Earnings Jump

    Zimbabwe Tobacco Export Earnings Jump

    Photo: Taco Tuinstra

    Zimbabwe’s tobacco export earnings increased by a whopping 138 percent year-on-year to reach $436 million leaf in the first quarter of 2024, reports The Herald, as cigarette manufacturers were urged to explore high-paying markets.

    Traditionally a leading exporter of leaf tobacco, the country aims to extract more revenue from the business by moving to higher value products, such as cigarettes. In 2021, the government adopted the Tobacco Value Chain Transformation Plan, which seeks to build a $5 billion industry by 2025.

    Statistics from the Tobacco Industry and Marketing Board reveal that cigarettes were the most lucrative export product, attracting prices of up to $7.44 per kilogram. Partly or wholly stemmed/stripped tobacco took second places, with earnings of $7.39 per kilogram, and smoking tobacco was third, earning $6.45 per kilogram.

    Zimbabwe Tobacco Growers Association chairman George Seremwe attributed the gains to hard work by farmers and other stakeholders along with the favorable weather in the 2022–2023 growing season, which resulted in good-quality leaf.

    He encouraged cigarette manufacturers to continue targeting markets that guarantee high prices for their products.