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Zanu PF, China and Rhodesians: Who really is pimping Zimbabwe’s tobacco industry?

By Tsungai Chipato

As different media publications try to figure out who to blame for this years poor tobacco season in Zimbabwe, the usual suspects have already been lined up, fingered and readied for the firing squad; packaged into the usual mantra of the “Mugabe must go” narrative.

Zimbabwe tobacco industry at a crossroads
Zimbabwe tobacco industry at a crossroads

Whether this narrative is true or false, is entirely for you the reader to decide and well, above the pay grade of this article’s author. However understanding how the tobacco industry actually operates; has still remained a mystery to the average Zimbabwean, basically who really benefits from Zimbabwean tobacco?

Dummies Crash Course to Zimbabwe Tobacco, Why the big deal?

For those uninitiated to Zimbabwe agriculture, our soils are considered very fertile and can grow almost anything you can think off, picture or visualize a high value agricultural commodity and we can probably grow it. Rhodesians have always understood this fact, and were therefore content living outside urban areas just for this reason alone.

The knowledge of how a commodities market “realistically” worked in relation to benefiting a Rhodesian farmer, coupled to the fact that they had access to arable land developed over decades of development and subjugation, meant that Rhodesians knew how to work the global system to their advantage.

Which brings me to the first myth circulating within the media which unfortunately many of us end up swallowing up as gospel, attributing our tobacco prices falling this year, due to an influx of new farmers producing bad yields due to inexperience and bad management. This again is only true up to a certain threshold; however not enough to have an effect on the overall tobacco prices falling in Zimbabwe as a whole.

How do we explain the poor quality in tobacco this year?

Firstly do not believe the hype about quality, according to a journal published by George C Davis and William C Hewitt , based on measuring the quality of imported tobacco, they found that the quality of tobacco had been steadily decreasing in quality internationally ever since 1977 due to advances in technology, with cigarette producers finding more effective ways to use lower grade tobacco for blending and mixing their tobacco brands therefore driving prices down.

For the authors “Once the term “quality” is explicitly defined and discussed, the conclusion to be drawn is that quality refers to an ordinal index with no inherent cardinality; and is therefore a subjective norm”, which when translated into basic English simply meant that whoever was buying the tobacco at the auction floors determined what the quality was.

Buying tobacco at the floors is entirely subjective because we all know about geographic climates and where the best tobacco is grown although, that may not translate in those areas necessarily controlling the price structure.

So why do we blame the farmers?

The real elephant in the room is the issue of how very little, farmers can actually do; to control the way in which they set tobacco prices even though they are the backbone of this global hegemony. Regardless of the influx in incompetent farming, just because of our soil types alone, Zimbabwe farmers could be as reckless as possible and still manage to produce a somewhat above average yield globally.

Tobacco has mainly six steps before you buy it at your local store primarily these being, tobacco harvesting, tobacco curing, grading and buying, primary processing, cigarette manufacturing and the packaging.

The moneymaking part of this value chain begins at the primary processing stage where the tobacco is cased, cut, dried, conditioned, aged and blended for a minimum of a year before moving into the next stage. Zimbabweans rarely ever get to this stage and most remain at the auction floors where they wait for buyers to grade and buy their years harvest.

How does this tie in with blaming farmers?

At this point; it is important to note that the group that has been consistently screwed within this value-chain structure, has always been the farmer.

Paying attention to the media complaining about the influx of new tobacco farmers will distract you from seeing the other myth being disseminated, which says that the rise of farmers from 20 000 in 2009 to 89 000 this year has been the main reason to “poor” tobacco yields, this again is very misleading and borderline false.

If compared to the deliberate brain-drain or withholding of social capital that has happened within the tobacco industry ever since the land invasions it is amazing how more coverage is not been done on this issue alone.

Rhodesians whether or not people would care to admit it; have always had the collective “know how” of how to work the global tobacco industry. The “Old boys” clubs and decades of business and farming relationships they built internationally over the years, disappeared immediately after they left their farms.

No matter how much money and resource allocation a government administration would have thrown at an industry it could never have been able to compensate for these symbiotic farming relationships and huge social capital flight that occurred with the Rhodesians fleeing.

Are we blaming Rhodesians?

Rhodesian farmers having realized that they were the bottom-feeders of the global tobacco production chain, over the decades developed a collaborative, data information, finance sourcing and resource sharing network that helped them leverage their yields in policy making and market price fixing, at times having the power to threaten withholding harvests for certain years in order to negotiate better terms.

Organically they developed an “open source community” whereby only amongst themselves did they share information and kept track of losses or dead-weight farmers, whilst figuring out ways to reduce cost for their industry as a whole.

According to Professor Ricardo Hausman, during a lecture for the Practice of Economic Development at Harvard Kennedy School he noted that, “the world has become more educated but not richer”, mainly because the actual skill sets required to be successful in an economically productive industry are usually only acquired from actually being practically involved within the industry and learning from within it, rather than from an education alone.

Looking at the amount of social capital depleted from our tobacco industry which many conspiracy theorists think was intentional, it should come as no surprise why we struggle to maintain a consistent foothold within a field we know we should be excelling.

Is this all Zanu PF’s fault?

This leads us to the obvious conclusion of blaming everything on Zanu-PF and its policies which again may not be actually true. Whether or not you may agree with the current government policies,ineptness or corruption, this alone cannot simply explain the systemic malignancies within the tobacco industry.

In 2013 cigarette sells amounted to US$722 billion globally, with analysts expecting an increase in volume production by 4% with tobacco price value rising by 29% within the next five years.

More facts that should have been good news for countries such as Zimbabwe were trends showing that international sales were shifting from developed markets with more restrictive laws, and migrating to emerging markets giving more opportunity for producing countries to take a larger control of the production chain and therefore retain more profits.

Unfortunately the problem actually came back not really on government policy, but lack of adequate capital resources to reinvest on capturing a market share globally. In a US$722 billion dollar industry, Zimbabwe only made US$651 million last year and that was considered to be a good year.

To understand how little control the government has over prices; according to a study done by William Barnett on the global tobacco industry in 2007, he found that for every dollar spent on a tobacco leaf, 21 cents went to its wholesale and retail, 43 cents went to its manufacturing, 7 cents went to all additives and non materials needed in its manufacture with the actual plant and its farming only getting 4 cents, the 4 cents representing what farmers got at the auction floor with the 25 cents going to taxes benefiting the countries where the companies were headquartered.

Should China be blamed for our problems?

The “look east policy” is another misconception again used to explain the tobacco industry woes with certain partisan camps blaming the rise of contract farming funded by China as a cause.

Again to reiterate, tobacco is directly tied to the land and soil which explains why Zimbabwe is still highly regarded, this however does not mean tobacco companies have no qualms in taking advantage of Zimbabwe’s political woes, buying dirt cheap and then reselling outside its borders at higher prices or simply smuggling the tobacco to neighbouring markets in Malawi or Zambia.

China is actually part of the global monopoly that runs the tobacco world, therefore if one thinks a competitor may offer a better price they would be sadly mistaken. The world has default tobacco monopolies that are Philip Morris (American), British American Tobacco (British), Japan Tobacco International (Japan), Imperial Tobacco Group(British) and China Tobacco International Corporation(China) all of which have merged together or have joint ventures or collective agreements meant to control prices and structure.

The fact that China is in Zimbabwe instead of Britain or the United States, actually does not make a difference to the industry itself beside capital allocation, funding and what types of tax incentives and policy that is passed legislatively on behalf of tobacco companies or whether their home country has a foreign policy objective.

At the end of the day we still have little say in the machinations of this global industry which all comes back to the most important individual in this conversation which is the Zimbabwean farmer and how to help them.

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