See also:
» 07.01.2011 - Record Zimbabwe debts to Equatorial Guinea
» 17.11.2010 - Zim diamond certification scandal revealed
» 04.03.2010 - Britain no yet convinced to lift Zim sanctions
» 02.03.2010 - Obama extends Zim sanctions for another year
» 01.03.2010 - Heading for another economic disaster
» 26.02.2010 - Evicted Zim farmers in another ‘victory’
» 17.02.2010 - Not so quick Robert...
» 27.01.2010 - Australia entrust SA with Zim recovery funding











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Zimbabwe
Economy - Development | Agriculture - Nutrition

Tiny tobacco crop spells doom in Zimbabwe

Misanet / The Standard, 7 November - Zimbabwe is now trapped in a precarious foreign currency crunch after annual tobacco auctions - usually a key indicator of the country's economic performance - closed down with a discouraging and undersized harvest. This year's production is less than one third of the good harvest in 2000 and prices are lower due to a poorer quality.

By the close of the 2005 marketing season last week farmers had produced yet another tiny crop amounting to 73.4 million kgs, an insignificant increase over the 69 million kgs sold in the 2003/04 season, falling short of the glory that was associated with the golden crop four years ago.

At its peak in 2000, a record 237 million kgs of the golden leaf were moved in the southern African country racking in US$ 400 million. But the value of this year's crop fell to US$ 118 million from the US$ 137 million earned during the previous season, representing a 13,9 percent decline.

With Zimbabwe's six-year old foreign currency crisis slowly choking the country, the harvest of the golden leaf - usually vital to the country's public purse - was anticipated to bring relief to President Robert Mugabe's forex-starved administration which is battling to import grain, fuel and essential medical drugs. But as the effects of the impulsive farm seizures take toll, yields of the crop have drastically plunged down.

Until the government began confiscating thousands of white-owned farms in 2000, tobacco underwrote the economy, supplying up to 40 percent of its foreign currency. Since 2000 when roving bands of black Zimbabweans - masquerading as war veterans loyal to the governing Zanu PF party - began seizing productive commercial farmland, tobacco harvests started plummeting.

Some of new farmers who benefited from the parcelling of productive farmland previously utilized for the crop have opted out of production in preference for traditional crops such as maize, worsening the country's economic woes.

Critical observers note that the perpetual hard currency shortage will speed up Zimbabwe's economic meltdown. "It's a disaster," warned Peter Robinson, economic analyst at Zimconsult. "We are going to see further contraction of the economy, a reduction in economic activity and few people in employment."

Although, in the past season two state-owned companies - ZESA and TelOne, a fixed telephony provider - invested massively in contract farming, critics say the venture is part of a trade for barter deals with Asian companies meant to halve the two companies' massive foreign debts and hence will not ease Harare's hard currency woes.

Over the years, the wealth generated by leaf tobacco marketing and production has assisted to improve the quality and standard of life, create employment and was attracting educational, health and social facilities in relatively impoverished rural areas.

But with a small crop coming out of Zimbabwe, merchants are shifting their attention to nascent regional tobacco growing competitors such as Zambia, Malawi and Tanzania, which are taking steps to increase their production.

Critics attribute this year's pitiable earnings to the poor quality of the leaf, which fetched less on the market. The quality of the crop has been collapsing since 2000 when new and inexperienced farmers, benefiting from the government land grab programme, ventured into tobacco farming,

"We have new and inexperienced farmers that delivered a crop with a lot of foreign material hence the poor prices. And this is also coming at a time when there is a lot of tobacco in the world," a buyer told Standardbusiness.

With Harare caught in the grip of hyperinflation and foreign currency shortages, industrial production has also been declining. At the recently abolished auction market, dejected industrialists and businesspeople failed to access hard currency for critical imports almost daily.

The harvest of the tiny tobacco crop could be yet another kick in the teeth to the government - which in conjunction with the central bank - had embarked on a programme codenamed "Vision 160" to produce a crop of a minimum 160 million kgs annually.

However, the Zimbabwean government and the central bank have realized the special value of tobacco and other cash crops and have jointly set up an Agricultural Productivity Enhancement Facility (ASPEF) to enhance productivity in the agricultural and export sectors and for ensuring food security. Tobacco growers are largely expected to benefit from this initiative.

Other incentives include the Z$ 150 billion recently released by government for tobacco seedbed inputs and land preparation. In addition, ABSA, a South African bank, has provided a US$ 25 million loan facility guaranteed by the RBZ and a commercial bank, the Zimbabwe Allied Banking Group (ZABG) on behalf of Mordish Farming, which trades as Tobacco Development Corporation (TDC).

But analysts still say money raised so far is just a drop in the ocean as financing of the crop remains critical because of the hyper inflationary environment.



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