The tobacco industry is pivotal to the Zimbabwean economy. The tobacco industry in Zimbabwe started off around 1894. That is when it is believed flue-cured tobacco was first produced in Zimbabwe. Zimbabwe is now the leading tobacco producer in Africa and amongst top producers globally. We export tobacco to over 70 countries. The Zimbabwean tobacco industry is vast; consisting of growers, unions, merchants, agro-dealers, financiers, processors, manufacturers, and training or research organizations. Today we are discussing the Zimbabwe tobacco industry.
Production And Processing Capacity
The tobacco industry in Zimbabwe is mostly characterised by small scale producers. Over 220 000 tonnes of tobacco was produced by small scale farmers during the 2021 tobacco farming season. That constituted approximately 63 percent of the national total output. Tobacco is amongst the top earners of foreign currency in Zimbabwe. In 2021, over US$1 billion was realized from tobacco exports. The tobacco is mostly exported in semi-processed form. Zimbabwe’s average tobacco processing capacity goes beyond 250 000 metric tonnes every year. This is made possible by 3 main processing facilities.
Production Trends Over The Years (1980 – Present Day)
Just after the attainment of independence in 1980 there was an initial dip in tobacco production. However, by the end of 1980 tobacco production had spiked and exceeded 120 million kilograms. The number of large scale tobacco producers had surged to over 1500. Over 57 000 hectares was now under tobacco. By end of 2000, there were over 6500 indigenous producers; large scale producers rose to over 1700 in number. By 2014, over 107 000 hectares were under tobacco farming.
Between 2001 and 2008, the number of producers increased leading to increased tobacco production. From 2009 to 2020 we continued to see the perpetuation of the same trend of increased production. 2021 saw production levels reaching well over 200 million kilograms. Of note is that the contract production and marketing system contributed 94 percent of total output.
Summarized Overview Of The Zimbabwe Tobacco Industry
The Zimbabwe tobacco industry is mainly comprised of 3 layers or let me call them clusters. These clusters are made up of a number of specialist areas. Here is the breakdown (or hierarchy):
Commercial, A1, Communal
RESEARCH AND EXTENSION SERVICES
Tobacco Research Board
Blackfordby Agricultural College
Farmers Development Trust
TIMB & Contractors
Zimbabwe Tobacco Association
Zim National Farmers Union
Zim Association of Tobacco Growers
Zim Farmers Union Tobacco Association
SEED PRODUCTION SERVICES
Kutsaga Seed Association
Zimbabwe Tobacco Seed Association
TOBACCO INDUSTRY AND MARKETING BOARD
Tobacco Sales Floor
Boka Tobacco Floor
Premier Tobacco Auction Floor
MERCHANTS AND MANUFACTURING
LEAF MERCHANTS AND ASSOCIATIONS
‘A’ CLASS BUYERS
Tobacco Leaf Exporters Association of Zimbabwe
Zimbabwe Association of Tobacco Merchants
Pacific Cigarettes, Olomide
Cutrag Processors, MaxiAfrica
Tobacco Processors Zimbabwe
Zimbabwe Leaf Tobacco
Mashonaland Tobacco Company
Cutrug Processors Zimbabwe
The Tobacco Marketing and Levy Act was enacted in 1936. This is the Act that culminated in the formation of the Tobacco Marketing Board. Later on the Tobacco Marketing Board was changed into what is now the Tobacco Industry and Marketing Board (TIMB). This name change was made possible by the Tobacco Industry and Marketing and Levy (Amendment) Act, 1997. Today, the tobacco industry in Zimbabwe is regulated by the Tobacco Industry and Marketing Board (TIMB). This means the TIMB oversees everything from production to marketing. They play both a regulatory and advisory role.
During the marketing season, the TIMB oversees 3 licensed auction floors. These are Tobacco Sales Floor (TSF), Boka Tobacco Floors (BTF), and Premier Tobacco Auction Floors (PTAF). There are 29 companies, licensed by the TIMB that can buy tobacco at the auction floors. Then there are about 38 licensed companies that facilitate tobacco contract farming. Any interested companies can come in to join those lists; of course they would have to be licensed by the TIMB. As for tobacco exporters, they must acquire export permits from the TIMB too. More comprehensive details on TIMB can be found on its website.
Tobacco Export Incentives In Zimbabwe
There are a number of incentives that aspiring tobacco exporters can take advantage of.
Duty-free importation of raw materials for the manufacture of goods for export (IPR) is allowed. There is a provision that caters for drawback of certain duties applicable to imported goods, raw materials and components used in manufacturing, processing or for export under the Inward Processing Rebate Scheme. There is a double deduction allowable for income tax purposes in respect of export market development expenditure. Taxable income from a manufacturing or processing company which exports fifty per cent or more of its output is taxed at a reduced rate of 20% after 11 years. Any investor or investment vehicle who wishes to apply for a Special Economic Zone Licence may apply and submit their application physically at First Floor, ZB Life Towers. The processing of applications and the issuance of licence takes a maximum of 5 day upon submission.
Sustainable Tobacco Production
Tobacco production comes into the spotlight when it comes to issues of sustainability. That is why the world over, there are increasing calls for sustainable tobacco farming. Tobacco farming tends to be responsible for environmental degradation and climate change. For instance, deforestation is a major concern due to trees being used in tobacco curing processes. Fortunately, there is already an Afforestation Levy that all tobacco farmers are obligated to pay. On the other hand, tobacco buyers formed the Sustainable Afforestation Association. The TIMB is also working on putting together a Sustainable Tobacco Programme (STP). The thrust is to raise awareness and institute mandatory Environmental Social Governance initiatives in tobacco production in Zimbabwe.
It is evident that tobacco farming can be lucrative farming consideration in Zimbabwe. The Zimbabwean government projects to push tobacco exports to over US$5 billion within the next 3 years. This means existing tobacco farmers needs to increase their output whilst new players come in as well.