Tinashe Kairiza Business Correspondent
Tobacco production this summer cropping season is projected to have received 58 percent of the cumulative loans extended by banks to the agriculture sector, figures show. This translates to about $600 million of the estimated $1 billion that banks budgeted as production support for agriculture during the 2014—2015 season.

The irresistible allure of the “golden leaf” among farmers is already evident, with 88 500 growers having registered to produce the crop this season, up from 6 500 in 1999, prior to the land reform programme.

The southern African country, which is emerging to be among the top producers of premium tobacco, is targeting to produce 222 million kilogrammes of the cash crop this season, up from 216 million kilogrammes realised in the previous period.

Statistics from the Bankers Association of Zimbabwe (BAZ) in a report titled “Supporting Agriculture in Zimbabwe, Opportunities and Challenges” show that financial institutions supported tobacco production on a land area measuring about 37 000 hectares.

This compares with $60 million availed as support for maize production put under 48 000 hectares.

Zimbabwe Farmers’ Union (ZFU) Executive Director Paul Zakariya said banks had appetite to finance tobacco production ahead of other crops because of the limited risks that arise when the crop is auctioned.

“Banks are more keen to support tobacco because of the solid stable policy environment under which the crop is performing.

“This also relates to the organised marketing of tobacco through the stop order system which allows banks to easily follow through their loans,” he said.

The BAZ report indicates that cotton was earmarked to receive close to US$63 million, just about 10 percent of what was budgeted for tobacco.

Only two percent of the $1 billion, translating to about $20 million was set aside for soya beans production.

Market watchers suggest that high tobacco prices averaging $3,17 per kilogram last season are the biggest drawcard attracting farmers to grow the cash crop. Zimbabwe realised $672 million from sales of flue cured tobacco last season.