Tag: Zimbabwe

  • Zimbabwe Aims for $1.6 Billion in Exports

    Zimbabwe Aims for $1.6 Billion in Exports

    Image: Tobacco Reporter archive

    So far this marketing season, Zimbabwe has exported more than 98 million kg of tobacco. The country’s goal is to export $1.6 billion total, according to The Herald, an increase from 2022’s $900 million. 

    To date, $502 million has been exported compared to $417 million in the same period in 2022, a 20 percent increase.

    Export value includes what farmers receive in payment for growing, curing and grading the crop as well as what merchants earn for extra processing, packing, application of skills in meeting precise customer orders and final dispatching.

    “In terms of exports from our leaf, we are projecting over $1.6 billion compared to $900 million achieved in 2022, so we are going for growth in every aspect,” said John Basera, Lands, Agriculture, Fisheries, Water and Rural Development permanent secretary. “My expectations are very high; we need to go for better growth.” According to Basera, this year’s tobacco yield is the highest and best ever produced in the country.

    “The season was good, the crop quality was also good and so are the prices,” said Chelesani Tsarwe, Tobacco Industry and Marketing Board (TIMB) public relations officer. “Farmer payments are being done on time as compared to previous seasons. Overall, there was orderly tobacco marketing, and stakeholders are adhering to the board’s compliance frameworks.” 

    “If government continues to empower smallholder farmers like in the case of Pfumvudza, then farmers are assured of getting inputs on time,” said Edward Dune, Tobacco Farmers Union Trust vice president. “Unscrupulous middlemen should totally be eliminated to ensure that farmers get what they actually deserve.”

    “Tobacco has transformed the majority of people, but there is a need to ensure that processing is done in the country to ensure that our farmers get more money,” Dune said.

    Tobacco accounts for the largest foreign currency earning crop in Zimbabwe. The crop is exported throughout the year, but the bulk is bought from contracted farmers. China accounts for 40 percent to 45 percent of total exports. 

  • Zimbabwe Seed Sales Hint at Larger 2024 Crop

    Zimbabwe Seed Sales Hint at Larger 2024 Crop

    Photo: Taco Tuinstra

    Zimbabwe has sold 673 kg of tobacco seed with the capacity to cover 112,104 hectares as of July 20, 2023, reports The Herald, citing Tobacco Industry Marketing Board (TIMB) statistics. The country’s aim, formulated in the government’s Tobacco Value Chain Transformation Plan, is to reach 300 million kg of tobacco a season by 2025. 

    “This season, we are expecting an increase in hectarage, thanks to the coming on board of new growers and players in the industry as well as the decision by those who have already been in the industry to increase production,” TIMB public relations officer Chelesani Tsarwe said.

     “We are currently exploring economically viable alternatives to tobacco through robust diversification programs,” Tsarwe said. “We are glad that we can now ride on the fact that TIMB recently became a certified member of global Good Agricultural Practices (GAP), and we have registered trainers and farm assurers who will work with farmers to ensure compliance with global standards for export crops.”

    Tsarwe also noted that there is a focus on implementing the sustainable tobacco program and becoming environmental, social and governance compliant.

    “Sustainable agricultural practices will reduce the negative effects of tobacco production, and our tobacco products will be better ranked on the global market,” said Tsarwe.

    Tobacco accounts for a large margin of the country’s exports.

    Zimbabwe’s tobacco growers produced a record 291.1 million kg of tobacco worth $882.2 million this season.

  • Zimbabwe to Achieve Target Early

    Zimbabwe to Achieve Target Early

    Workers at Atlas Agri receive bales of leaf at the company’s warehouse in Harare. Zimbabwe is anticipating record volumes this season. (Video: Taco Tuinstra)

    Zimbabwe is poised to reach its 300 million kg tobacco crop target ahead of schedule with 284 million kg already delivered and sold this season, reports The Herald.

    Last season the final count was 212 million kg. If the proportions of the final crop delivered by this time are the same as last year, Zimbabwe should reach its 300 million kg 2025 target within a few weeks.

    “Over 284 million kgs of tobacco have been sold this season, surpassing the set targets, meaning we had a good and very productive season,” said Chelesani Tsarwe, public relations officer at the Tobacco Industry and Marketing Board, which regulates the trade.

    In an attempt to extract more value from the country’s tobacco business, the government of Zimbabwe has formulated the Tobacco Value Chain Transformation Plan. The blueprint aims to create a $5 billion tobacco industry by 2025 through a combination of value addition and increased leaf production.

    The 284 million kg compares with 190 million kg sold in the same period last year and represents a new record.

    The Herald, which tends to tow the government line, attributes the country’s productivity to its controversial land reform program in the early 2000s, which involved the confiscation of primarily white-owned commercial farms and redistribution of land to smallholders.

    Prior to land reform, Zimbabwean tobacco was produced by about 1,500 commercial farmers who sold their tobacco at auction. Today, tobacco is produced by tens of thousands of small-scale farmers, most of whom contract directly with leaf merchants because they lack the means to finance their own operations.

    Zimbabwe produces 6 percent of the world’s tobacco. The country reportedly has enough tobacco seed to cater for the next eight years.

  • Waste Not, Want Not

    Waste Not, Want Not

    Photos: Taco Tuinstra

    Atlas Agri wants to help Zimbabwe achieve its volumes by reducing post-harvest losses.

    By Taco Tuinstra

    Anybody who has worked in the trade knows that leaf tobacco can be a hairy business. Changing weather patterns, mounting regulations and cutthroat competition keep merchants on their toes. But few dealers will have experienced the industry’s hirsute dynamics as intimately as the people that built Atlas Agri. Not only did its management team get the company up and running in record time; they also vowed to refrain from shaving until they had bought 20 million kg.

    The idea for Atlas Agri arose when a group of like-minded tobacco veterans sat down and agreed that the time was right to establish a new company. Tobacco was in short supply globally, partly due to miscalculations of how Covid-19 would impact cigarette consumption (it went up instead of down). In Zimbabwe, the cabinet had just approved the Tobacco Value Chain Transformation Plan, which, among other things, calls for a significant crop boost. “There was lots of opportunity,” says Atlas Agri Managing Director Alex Mackay, who previously served as CEO of leaf operations at Premium Tobacco International. “It just made sense.”

    Atlas Agri incorporated in June last year—just in time to participate in Zimbabwe’s 2022–2023 crop cycle—and went to work immediately. The company set up an office and tobacco receiving/storage area in Harare in the cavernous halls of the Boka Tobacco Floors off of Simon Mazarodze Road. With an eye on future expansion into additional markets, Dubai made sense as the seat of Atlas Agri’s global headquarters.

    The startup process was made easier by the facts that the company’s leaders knew each other from previous engagements and had extensive experience in the tobacco business. In addition to Mackay, the management team includes Geoff Martin, who oversees finance and administration; Peter Kockott, who leads the agronomy department; and Eric Le Patourel, who is in charge of operations. International sales are coordinated from Dubai by Global Chief Finance Officer Michael Rust and Global Sales Executive Albert Edwards, whose career includes senior positions at Premium Tobacco, Imperial Brands and Limbe Leaf Tobacco Co.

    A hairy business:  Several members of the Atlas Agri team vowed to refrain from shaving until the company had bought 20 million kg.

    Brandon Palmer
    Benjamin Edwards
    Craig Dollar
    Craig Bydawell
    Dylan Jones
    Ross Mackay
    Jordan Allatt

    Supporting Farmers

    Atlas Agri’s experience also helped it quickly recruit farmers. Many growers remembered the company’s representatives from their roles at other leaf buyers, creating instant trust. Another factor driving growers’ enthusiasm, according to Kockott, was the fact that Atlas Agri offered them a well-thought-out package. Because most small farmers in Zimbabwe lack the means to finance their operations, contractors provide them with inputs ahead of the season and recover the cost after the tobacco has been grown. The system works if implemented carefully but also carries risks. In some cases, growers have been unable to repay their loans. Atlas Agri aims to prevent defaults by lending growers a practical input package without unnecessary fills and high-cost items. “It all comes down to debt bondage,” says Mackay. “Once you have a farmer who is less beholden to the contractor, he has a better chance of repaying his loan and to profit.”

    The strategy paid off. Despite its relatively late start last year, Atlas Agri signed contracts more than 15,000 farmers. Once the season got underway, the company kept supporting its growers. “We did not just give them a contract and then waited six months to collect the product,” says Mackay. Traveling in four-wheel drive vehicles and on motorbikes, Atlas Agri’s agronomy team frequently ventured into the countryside to assist its contracted farmers with agronomic advice. Such trips were made not only by junior leaf technicians but also by upper management, allowing growers to interact directly with company officials whose rank may have kept them in the office if they had worked for other tobacco buyers. “That personal touch—that has been a strong point of our approach,” says Mackay, borrowing a slogan popularized by Souza Cruz in Brazil.

    Due to inadequate infrastructure and other limitations, Zimbabwe’s small-scale growers lose up to 50 percent of their crops.

    Reducing Field Losses

    In addition to supporting its growers and serving its customers, Atlas Agri is eager to help Zimbabwe achieve the goals of its Tobacco Value Chain Transformation Plan. As Minister of Agriculture Anxious Masuka explained in Tobacco Reporter earlier this year (see “The Man Behind the Plan,” Tobacco Reporter, May 2023), the country aims to preside over a tobacco industry worth $5 billion by 2025. Part of that growth is to be achieved by moving beyond green leaf and processed tobacco into value-added products such as cut rag and cigarettes.

    Opportunities for such expansion, however, depend heavily on the willingness of international tobacco firms to invest in Zimbabwe—a factor outside of the nation’s control. This means that much of the desired income will likely have to be realized by bringing more leaf to market. The transformation plan aims for a 300 million kg crop by 2025—70 million kg more than its farmers were expected to deliver this year.

    One of the ways in which Atlas Agri hopes to boost production is by reducing growers’ post-harvest losses. Following a massive land reform program at the turn of the century, Zimbabwe’s tobacco sector is dominated by small-scale farmers. Whereas in 1998, the crop was produced by 1,500 commercial growers and fewer than 1,000 smallholders, the industry now comprises about 144,000 small farmers and between 300 and 400 commercial operations.

    Unlike their commercial counterparts, who are heavily mechanized with tractors, irrigation systems and forced-air curing tunnels, the smallholders run barebones operations. Due to inadequate infrastructure and other limitations, Zimbabwe’s small-scale growers may lose up to 50 percent of their crops, according to the Tobacco Research Board (see “The Scientific Approach,” Tobacco Reporter, June 2023).

    One of the major constraints is curing barn capacity. Many smallholders grow more tobacco than their barns can accommodate. Tobacco that ripens after the curing barn has filled up is often left to rot in the field. While this could be remedied by building more curing barns, Atlas Agri considers this a less-than-ideal solution for small growers. Erecting such structures, the company argues, will not only push farmers deeper into debt but also boost demand for wood as the fuel to cure tobacco and additional bricks, contributing to deforestation.

    So instead of constructing additional curing barns, Atlas Agri is encouraging its contracted farmers to build inexpensive, natural air-curing systems, known in southern Africa as a “Chigaffas.” Already used to cure burley in many countries, a Chigaffa is a simple, inexpensive wooden structure with racks to dry tobacco and a roof made out of plastic tarp or thatch. “We say to our farmers, if your curing barn is empty, reap straight into the curing barn,” says Kockott. “But if your curing barn is full, instead of waiting for the barn to be empty, by which time your tobacco in the field becomes overripe, reap on the day you are supposed to and put it in the Chigaffa.”

    The purpose of the Chigaffa is to alleviate pressure on the barn and prevent tobacco from sitting too long in the fields. “If you put overripe tobacco in the barn—by the time it is wilted and ready to fix color, it will have turned brown, so you have lost quality and yields,” says Kockott. Using a Chigaffa allows farmers to market tobacco that would otherwise be lost. Even if the Chigaffa leaf does not attract premium prices, the potential for additional volumes presents opportunity for additional income.

    While some have expressed concern that the Chigaffa system will bring lower quality tobaccos to market, Mackay notes that those styles are in line with prevailing customer preferences. “Global demand for value and super-value styles currently exceeds that for top quality tobacco,” he points out. Another advantage: Using the Chigaffa reduces the time spent in the traditional curing barn by a few days, lowering wood consumption, thus contributing to sustainability—a fact that should appeal to international customers, who expect their tobacco to be grown according to strict environmental, social and governance requirements.

    Convinced by the merits of natural air curing, the Tobacco Industry and Marketing Board endorsed the system earlier this year. “The introduction of this natural Virginia tobacco product is in line with the Tobacco Value Chain Transformation Plan,” the regulator wrote in a press note. “By producing more natural Virginia tobacco […] we believe the local tobacco industry will generate a wider range of qualities for customers on the global market, creating demand and encouraging investment for the ultimate longevity of the Zimbabwean tobacco industry.”

    Just by reducing post-harvest losses, a small farmer could increase his or her volume by up to a quarter, according to Atlas Agri. If the entire smallholder sector optimized its operations, it would go a long way toward achieving the 300 million kg proposed in the transformation plan. “Think about it,” says Mackay. “Smallholders produced approximately 200 million kg out of this year’s 260 million-plus kg crop. If they can add a quarter to what they already deliver, the country will be quite close to the desired 300 million kg—without claiming a single additional hectare of farmland or increasing pressure on our woodlands.”

    Even if the Chigaffa leaf does not attract premium prices, it still represents potential for additional income to the farmer.

    Beyond Tobacco

    In addition to boosting tobacco volumes, Atlas Agri is exploring complimentary crops, such as soya and cotton, to enhance farmer viability. Already, the company has provided its contracted growers with inputs for 700 hectares of soya. According to Mackay, diversification will not only improve farmers’ financial security but also rehabilitate their soils through better crop rotation. This in turn should ease the pressure from pests and disease, reducing the need for chemical crop protection agents, thereby creating a more sustainable product.

    Atlas Agri has made tremendous progress since its incorporation last year. “We are starting to reap the fruits of our heavy lifting,” says Mackay. “It’s incredibly gratifying when you see farmers smiling because you know you have exceeded expectations.” When the business hit its 20 million kg milestone in May 2023, the company’s by now shaggy crew broke out the champagne, along with the razors, and took advantage of a rare opportunity to unwind—but only momentarily because it’s time already to start thinking about the next crop.

    Like this season, the upcoming production cycle will throw up plenty of regulatory, environmental and competitive hurdles. If Atlas Agri’s first year of operation is any indication, however, the team members will overcome them with their trademark combination of passion, professionalism and persistence, ready to take each of the challenges on their freshly shaven chins.

    What a difference 20 million kg makes: Upon achieving their buying target, Atlas Agri’s team paid a well-deserved visit to the barber.

    Banjamin Edwards
    Brandon Palmer
    Craig Dollar
    Craig Bydawell
    Dylan Jones
    Ross Mackay
    Jordan Allatt
  • Minister Expresses Support for Tobacco at ITGA Meeting

    Minister Expresses Support for Tobacco at ITGA Meeting

    Photo: Taco Tuinstra

    Zimbabwe’s minister of agriculture, Anxious Masuka, opened the International Tobacco Growers Association’s (ITGA) 2023 Africa regional meeting June-28-29 expressing strong support for the tobacco sector

    Growers’ representatives from four of the leading tobacco producing markets in Africa—Malawi, Tanzania, Zambia, and Zimbabwe—gathered in Harare to debate the challenges and opportunities facing their sector. Participants requested the support of their governments in the face of multiple threats affecting tobacco production, which brings considerable socioeconomic benefits to the region. Among other topics, they discussed growers’ sustainability efforts and the situation of in their respective markets.

    Highlighting the central role of tobacco growing in Zimbabwe’s economy, Masuka provided details about the country’s Tobacco Value Chain Transformation Plan, which is supposed to increase value addition of the crop and improve local earnings (also see “The Man Behind the Plan,” Tobacco Reporter, May 2023). Masuka aims at record volumes, record earnings and record average prices for tobacco growers. He stated that the actions of the World Health Organization Framework Convention on Tobacco Control (FCTC) are “ill-informed and ill-timed.” “Tobacco in Zimbabwe is an important crop and we are not making any apologies about it,” said Masuka.

    Ryan Swales, the president of Zimbabwe Tobacco Association (ZTA), highlighted the important opportunity presented by the meeting in debating the regional and national issues, given the specific challenges attached to the market, predominantly in sustainability.

    Governments need to look at farmers as their main strategic partners and support their efforts.

    ITGA’s President Jose J. Aranda called on governments to support growers in their sustainable tobacco production efforts as the livelihoods of millions of people around the world depend on it. Tobacco growing, he said, brings valuable contributions to local economies in the form of labor, income, and further opportunities for growth. Aranda also emphasized that tobacco growers operate within a legal framework. “Governments need to look at farmers as their main strategic partners and support their efforts.”

    During the Open Session, participants were able to follow presentations about the current developments in the global leaf market, with focus on African production and pricing, the outlook of the regulatory environment and possible implications for growers, along with a detailed analysis of the ITGA 2023 Market Survey, which highlights the economic, social and environmental challenges for growers in all leading tobacco growing areas. Finally, there were two comprehensive debate sessions with key stakeholders in the four represented markets discussing sustainable tobacco productions and the efforts made to overcome the pressing challenges of the region—cost of production, deforestation, climate change, poverty and lack of opportunities for the youth.

    The ITGA also highlighted its World Understanding Tobacco Farming Day campaign. Aranda urged the sector to work together against the demonization of tobacco growing. ITGA is raising awareness about the realities of tobacco farming to stop the unfounded claims by the WHO FCTC in their World No Tobacco Day.

  • Zimbabwe Sales Surpass $800 Million

    Zimbabwe Sales Surpass $800 Million

    Photo: Taco Tuinstra

    Since auction and contract floors opened in March, Zimbabwe has sold more than 270 million kg of tobacco worth $817 million, reports The Herald.

    The target this year was 230 million kg compared to last year’s 212 million kg.

    Tobacco Industry and Marketing Board (TIMB) data shows that this year’s sales have increased 52 percent from 2022 sales of 177 million kg during the same period.

    The highest price at the contract floors was $6.10 per kilogram while the highest price at the auction floors was $4.99 per kilogram.  

    “The prices are hovering around $3.02 per kilogram, and we hope they will improve as the marketing season progresses. If the prices continue like this, we will manage to go back to the field again,” said Marjory Munengerwa of Rusape.

    So far, farmers have been happy with the marketing season and the fast, fair payments. TIMB has been working to create a marketing season without side marketing.

    Zimbabwe generates $1 billion annually from tobacco exports to over 60 countries around the world, among them China, Japan, the United Arab Emirates, Indonesia, Belgium, the United Kingdom, the United States, Brazil, South Africa, Botswana, Malawi, Egypt, Tanzania, Zambia, Mozambique and Lesotho.

     A new target of 300 million kg per year has been set with plans to transform the sector into a $5 billion industry by 2025.

  • Zimbabwe Leaf Sales Approach $800 Million

    Zimbabwe Leaf Sales Approach $800 Million

    Photo: Taco Tuinstra

    Since Zimbabwe’s tobacco auction and contract floors opened in March, at least 256.6 million kg of leaf worth $774.4 million have been sold, according to ZimLive.com. During the same period last year, 165.4 million kg of leaf worth $500.5 million were sold.

    The government’s target for tobacco sales was 230 million kg.

    The increase in sales has been attributed to good rains and an increase in farmers planting tobacco.

    According to the Tobacco Industry and Marketing Board, sales have increased 54.72 percent from the same period in 2022.

    The average price at auction and contract floors was $3.02 per kilogram, with the highest price at $6.20 per kilogram and the lowest price at $0.10. Rejected bales rose to 88,057 this year from 63,842 in 2022.

    “We have surpassed our 2022/2023 target of 230 million kg and are bound to break the all-time record of 259 million kg,” said John Basera, lands and agriculture permanent secretary.

  • Zimbabwe Fights Land Reform Ruling

    Zimbabwe Fights Land Reform Ruling

    Image: Hakan

    Zimbabwe has urged a Washington, D.C., federal judge to deny a German and Swiss family’s bid to enforce a multimillion-dollar arbitration award that stems from the country’s controversial land reform program, reports Law360.

    After gaining independence in 1980, Zimbabwean officials looked to give land owned by white farmers back to the country’s indigenous communities.

    When the white farmers refused to sell their land, Zimbabwe enacted legislation in 1992 that enabled it to seize control of properties in exchange for “fair compensation.” Frustrated with the slow progress of the land reform program, officials in 2000 unsuccessfully attempted to pass legislation that would allow them to seize land without compensation.

    Ultimately, Zimbabwe enacted a “fast track” version of the program that required the government only to compensate landowners for “improvements” made to agricultural properties rather than for the land itself.

    Before the reform program was enacted, the von Pezold family owned three estates in Zimbabwe comprising tens of thousands of acres, including the country’s largest tobacco growing and curing operation.

    The family initiated arbitration in 2010 under the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States, also known as the ICSID Convention, claiming Zimbabwe’s reform program violated two treaties the country had signed with Germany and Switzerland.

    In 2015, a ICSID tribunal issued the $277 million award in the family’s favor, finding that Zimbabwe had expropriated the von Pezolds’ property and breached international law through its land reform program.

    After Zimbabwe’s failed to pay the reward, the family filed the current D.C. federal court enforcement action in July 2021.

    Zimbabwe accuses the family of trying to increase its litigation burden and costs by filing a premature judgment motion.

  • Zimbabwe Sales Surpass Half a Billion

    Zimbabwe Sales Surpass Half a Billion

    Photo: Taco Tuinstra

    Through the first 40 days of the 2023 marketing season, Zimbabwe tobacco leaf growers have sold 168 million kg of flue-cured tobacco leaf for $500 million, generating an average leaf price this season is $3 per kilogram, reports The Herald.

     At the same corresponding point of the 2023 marketing season, growers had sold 116 million kg of leaf for $348 million, generating an average leaf price of $2.99 per kilogram.

     Leaf sales on contract floors this marketing season totaled 153 million kg for $461 million while leaf traded on the auction floors totaled 14 million kg for $39 million.

     The highest sales price recorded this season was $6.20 per kilogram while the lowest was $0.10 per kilogram.

    This marketing season, leaf growers will retain 85 percent of their earnings in hard currency, up from last season’s mark of 75 percent. The remainder of the earnings will be in local currency pegged at the current interbank exchange rate.

    Total tobacco leaf sales for the entire season are expected to reach 230 million kg compared to 212 million kg sold last season.

    This season, tobacco growers planted on 112,293 hectares of land, down from 116,454 hectares last season.

    The Zimbabwean government aims to create a $5 billion tobacco industry by 2025 by boosting leaf production and moving up the value chain.

  • Zimbabwe Tobacco Sales Bring in Millions 

    Zimbabwe Tobacco Sales Bring in Millions 

    Photo: Taco Tuinstra

    Zimbabwe’s tobacco revenue has reached $258 million, 19 percent more than in the comparable 2022 period, reports NewsDay.  

    “Income/revenue to farmers increased by 19 percent from $216 million to $258 million this year owing to the tobacco value chain transformation strategy, which is currently in motion, and this is likely to increase the country’s chances of achieving the objectives of V30,” said John Basera, permanent secretary of Lands, Agriculture, Fisheries, Water and Rural Resettlement, referring to the government’s strategy to reduce poverty. “Tobacco output grew marginally by 1 percent from 211,100,219 kg produced during the 2020/2021 production season to 212,711,370 kg in the 2021/2022 season.” 

    Tobacco production is expected to increase by 9 percent from 212,703 tons. 

    Total deliveries were up by 18 percent to 86.14 million kg compared to 72.21 million kg in the same period last year while the average price firmed by 1 percent from $2.97 per kilogram in 2022 to $3 per kilogram in the same period this year.