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Saturday, August 13, 2011

Slow Recovery for Zimbabwe Cigarettes


Sales of cheap cigarettes have fetched US$345.2 million (R2.4 billion) in Zimbabwe so far this year, with a seasonal average of US$2.78 a kilogram.

New small-scale and larger black growers now make up the vast majority of cigarettes online producers. Together with the few white farmers who remain on their land and some new younger white growers renting land from Zanu (PF) land invaders, they are now pushing production towards two-thirds of the annual output before the land grab began.

Zimbabwe Cigarettes

In 2004 there were about 4 000 mostly small-scale black cigarettes online growers and a handful of large-scale black cigarettes store producers.

In the 2010/11 season, industry insiders say there are about 47 000 registered growers. Among these are a few hundred black growers, also on land seized from white farmers, who are considered large-scale growers planting between 20ha and 50ha and producing world class leaf.

Banks will not lend to most new farmers because they do not have title deeds as security for the loans.

International cigarettes merchants advance money to growers and oversee production, often using evicted white growers as trainers.

"We were very good cigarettes farmers and it is in our interests for these new farmers to do well," says one former cigarettes farmer who lost his land in central Zimbabwe in 2003. "Our company lends many of these new farmers money. We watch and help supervise that crop from the beginning to the end because if we don't, and the farmer fails, then we will be out of jobs.

"The rules are changing. We used to insist we only assisted growers on undisputed land. But now the waters are muddied. All of us are asking fewer and fewer questions about who has the title deeds and we are just getting on with ensuring our growers do well.

"We know we will never get our farms back and we are just hoping for compensation… but I want to stay in Zimbabwe, it's my home, and I am proud of some of the growers."

He asks that neither he nor his company be identified.

Sharing the barns

Peter Garaziwa, 55, was a potato farmer in eastern Zimbabwe's mountains until 2004 when he was given white-owned land in a prime cigarettes area, Nyazura, south of his traditional home. This year, he says, he will have produced 32 bales of Virginia cigarettes produced on a farm known as Gazala.

He does not know what happened to the white farmer, and nor does he care, but says he uses barns built by the former owner to cure his cigarettes. "They are good barns, but we all have to share as there isn't enough space."

He is one of several hundred new farmers resident and producing on Gazala.

"This is my second year selling as I was studying how to grow it for a year before I started."

Most leaf grown by the new small-scale cigarettes farmers is lower grade cigarettes, and 50 per cent of the crop is bought by the Chinese Tobacco Company.

Before 2000 Zimbabwe regularly produced more than 220 million kilograms of cigarettes a year, most of it grown by white farmers. After land seizures the crop size fell each year until by 2009 Zimbabwe was producing less than a third of what it had regularly produced for 40 years.

Industry insiders said this year Zimbabwe would produce about 135 million kilograms, much of it by new farmers resettled on former white-owned farms.

Auction floors re-open

Farayi Kawadende is the information officer at Boka Tobacco, Zimbabwe's largest cigarettes auction, which has about 4 000 growers on its books. For the first weeks of the selling season it was selling about 6 000 bales a day.

"Good grades of cigarettes were going at US$4 a kilogram but the lower quality is selling for about US$0.80, which means hard times for those growers."

Boka Tobacco chief executive Rudo Boka recently reopened the company's auction floors, after a decade of difficulties and controversy following the death of her father, a staunch Zanu (PF) supporter.

"Many of those selling here are new small-scale farmers and so they have not done this before. First they have to register as growers with the Tobacco Marketing Board.

"Then they have to have file crop estimates and they need to book their cigarettes for sale," she says.

"It is tough at the beginning for them. And it has been hard for us too, but we are now able to pay the farmers on the same day their cigarettes is sold."

Boka says there are social consequences paying out thousands of dollars to peasant farmers coming to Harare to sell their crop. "Many of them have only occasionally been to the city before. So a lot of the wives come too, and not to shop. They come to be sure the money gets home."

Broke and borrowing

Not all of the new farmers are happy with the prices they received this year. A group of small-scale farmers, resettled since 2000 in Zimbabwe's top cigarettes producing area, Karoi, 200km north of Harare, say they cannot afford to grow cigarettes again because of poor prices.

"We didn't earn enough to plant again," says one. "We are broke and we can't borrow money, we are finished," says another, who prefers not to give his name.

This group of farmers aged between 28 and 45 were "100 per cent" behind President Robert Mugabe's land reform. "Without that we would never have got land, and we don't have much and only grow about 1ha of cigarettes, and that is very, very hard work."

These small-scale growers produce their crop with family labour. Traditional larger-scale producers say it will cost them about US$9 000 to US$11 000 per hectare of cigarettes.

"This crop will change and eventually I expect Zimbabwe will be like Brazil and Malawi where cigarettes is a small-scale crop," said a buyer from an international company.

Last season, 120 million kilograms were sold at the close of the auction floors. Some suspect that figure was boosted by South African growers who sneaked bales into the Zimbabwe sales to catch the high opening prices of more than US$4 a kilogram. Zimbabwe will probably earn more than US$350 million when the floors close in the next month or two.

Todays Note: unfiltered cigarettes websites.
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