Hazel Marimbiza
THERE is growing poverty among tobacco smallholder farmers as their profits have been declining due to mounting debts owed to contractors.

Tobacco farmers have raised poverty concerns after the tobacco sales season kicked off recently with an impressive harvest.

Mr Pardon Mhuri, the 2020 Young Farming Champion, said he can’t help but notice that most smallholder farmers are struggling to make ends meet despite growing a valuable crop.

Mr Mhuri produces about 250 000 kilogrammes of cured tobacco on his Kasimure farm, which is 30km from Karoi. He said tobacco farmers should get profits that enable them to cater for their basic needs.

“Most smallholder tobacco farmers will not get much from their labour as they will be paying their debts mostly to contractors. The money smallholder farmers get does not enable them to have decent livelihoods. They are not able to give their children a decent education,” said Mr Mhuri.

The 36-year-old farmer, who started farming when he was 27 years old after being inspired by his grandparents, said debts were depressing most growers.

He said while he appreciated Government efforts in increasing tobacco prices which will see farmers receiving 60 percent of their sales in foreign currency this year compared to 50 percent last year, more still needs to be done to improve prices associated with smallholder farmers’ crops.

“I feel if we get more than 60 percent in forex, A1 grade tobacco farmers will be able to pay their debts and continue producing quality tobacco. Most smallholder farmers are in poverty because after getting the money they have to pay their debts,” he said. Mr Mhuri said this year most farmers produced high quality tobacco due to favourable rains and good weather conditions.

“We were looking forward to being paid more than 60 percent in forex considering that we have a very good crop this season compared to last season,” said Mr Mhuri.

About 90 percent of Zimbabwe’s tobacco farmers have been thrown into a vicious debt trap that could be difficult to exit unless the Government announces a payment model that addresses glaring shortcomings, the Zimbabwe Tobacco Association (ZTA) said before the marketing season.

ZTA said the debt situation had hit crisis levels with only US$150 million out of about US$600 million generated by farmers annually flowing into the country.

ZTA added that while the Government has recently increased farmers’ foreign currency retention to 60 percent, it is insufficient to solve growers’ problems.

“Growers’ viability will not improve with the retention levels announced,” said ZTA CEO Mr Rodney Ambrose.

There are various hurdles which prevent tobacco farmers from greatly benefiting from their hard labour and these obstacles usually leave them in huge debts. Broadly, most tobacco farmers sell their crops either through an auction or through a contract system. Farmers who sell their tobacco through the auction system independently acquire inputs for production and sell their produce to the highest bidder at auction floors. Independent farmers typically pay out of their pocket for inputs. However, researchers state that tobacco-farming inputs are out of reach for many smallholder farmers.

The lack of capital, combined with the initial attractiveness of the inputs provided by tobacco companies, incentivises most farmers to choose the contract system.

Farmers enter into a credit agreement with a private company, where the company supplies the farmer with inputs (such as technical advice, pesticides and seeds) at the start of a growing season, and the farmers pay the company back after selling their produce. In most cases, contract farmers are left without profits after paying back input debts.

Researchers further highlight that the challenge is that contract farmers often purchase inputs from contracting companies at higher prices than in the competitive market.

“This can trap tobacco farmers in a cycle of poverty and indebtedness. The pay-outs they receive are not sufficient to pay off the loans, and do not adequately compensate them for their labour,” said researcher Ms Chengetai Dare.

She added: “The majority of tobacco farmers are in debt, and tobacco-related indebtedness is concentrated among contract farmers.

Extensive discussions with farmers in the course of conducting surveys indicate that most contract farmers incur losses, which perpetuates their indebtedness to the contracting company. The debt compels them to grow tobacco in the following farming season, in an often-vain attempt to repay the debt. The cycle is usually repeated, making tobacco-growing a debt-trap, leading to a vicious cycle of poverty.”

The farmers said tobacco prices at auction floors should be looked into as they demoralise most of them from growing the crop.

The President of Tobacco Farmers’ Union of Zimbabwe, Mr Believe Tevera, said low prices resulted in a decrease in the number of farmers who registered to grow the crop for the 2020/21 season.

“Companies are paying close to nothing for high-quality tobacco and this worsens the suffering of farmers who are already left with nothing after their sales. Farmers are complaining about the prices offered by companies buying at auction floors saying it’s daylight robbery considering the time and labour required by the crop. Tobacco farmers are always on the losing side and this will see a decrease in tobacco production next season as farmers are losing hope,” he said.

Mr Tevera urged the Government to consider the farmers plight and provide better loans for farmers affected by low prices.

“The Government should through the Reserve Bank of Zimbabwe (RBZ) unveil low-interest loans for tobacco farmers especially women and youths who are finding it difficult to fund their projects. This will certainly see an increase in tobacco production,” he said.

The union also urged Government to push all auction floors to put in place measures that allow the presence of farmers in auction floors during buying sessions so that their right to cancel and withdraw their bales if not happy with the prices is maintained.

Tobacco generates 30 percent of Zimbabwe’s foreign currency, bringing in more than $600 million annually. Given that tobacco is the country’s largest single foreign currency earner after gold, there is a need to promote and support the growing of the crop. Zimbabwe needs high prioritisation of smallholder tobacco farming since tobacco is a lucrative economic option for the majority of rural farmers.

Increasing agriculture productivity often stimulates growth and has strong effects on poverty reduction because of the high numbers of people engaged in the sector.

Smallholder tobacco farming is a rural livelihood resilient strategy to reduce poverty in rural areas and may also help to secure food security in Zimbabwe and in Southern Africa. The Government should intervene to improve the economic conditions of tobacco smallholder farmers. For example, imposing some ‘meaningful’ price control on the tobacco leaf would allow farmers to get more revenue for their tobacco and improve their chances of breaking out of the poverty cycle.