New Monetary Policy Threatens the Future of Tobacco Farming in Zimbabwe

Even though tobacco is one of Zimbabwe’s most lucrative exports, tobacco farmers aren’t reaping the rewards. New restrictions on foreign currency and cash payments have made it difficult for many of them to make ends meet.

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New Monetary Policy Threatens the Future of  Tobacco Farming in Zimbabwe

Kudzai Mazvarirwofa, GPJ Zimbabwe

Potential buyers inspect tobacco crops at a warehouse in Harare. Buyers worry that a new monetary policy will drive small-scale producers out of business.

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HARARE, ZIMBABWE — Farmers came to this warehouse from hundreds of miles around.

They were wrapped in jerseys and blankets to protect themselves against the cold. Some had sleeping babies strapped to their backs.

The large fluorescent lights in the warehouse illuminated the tobacco and the work-worn hands of the farmers who traveled here to sell their crop after months of hard work.

But this year, sales will be challenging and profits will be low.

Tobacco is one Zimbabwe’s top cash crops, but the country’s ongoing cash shortage and recent currency change have left many farmers worried that they won’t earn what they need to provide for their families and prepare for the next season.

Elvis Zulu, a small-scale tobacco farmer, traveled 170 kilometers (106 miles) from Chiendambuya, a rural area in eastern Zimbabwe, to sell his harvest.

Zulu says he has spent more than four days in the warehouse trying to sell his crop to local buyers, who then resell it on the international market. But thanks to a recent change in monetary policy here, farmers can only receive part of their earnings in U.S. dollars. The rest must be paid in Zimbabwean dollars (ZWL), which became Zimbabwe’s formal currency on June 24.

“They just want to take our tobacco for free,” Zulu says in frustration.

According to a 2018 Reserve Bank of Zimbabwe policy, tobacco and cotton farmers are only allowed to retain 20% of their proceeds in foreign currency. The rest must be paid in local currency, which is valued at a fraction of the U.S. dollar.

Last year, Zulu made about $1,500 from his crop. He says that money allowed him to buy cattle and equipment to expand his farming business. But this year, his harvest only brought 7,500 ZWL ($624).

He received just 20% of that amount in U.S. dollars.

That will only pay for transport costs to and from the warehouse and wages for people on the farm. The little that will be left will not be enough to plant for next season.

“This is the money that I depend on to take care of me and my family until we get to the next harvest,” he says. “But this year has taken us more steps backward than going forward.”

But the currency complications don’t end there.

In addition to receiving most of their payment in local currency, farmers can now only be paid by bank transfer into their accounts, rather than in cash.

The country’s cash shortage, which has been ongoing since 2016, makes it difficult or impossible to withdraw any foreign currency from bank accounts. Farmers must make a specific request to the bank to demonstrate need for U.S. dollars.

All tobacco farmers have been affected by the restrictions on foreign currency, but small-scale growers have been hit the hardest.

Tobacco is a valuable export for Zimbabwe. In 2018, tobacco production reached a record high, recording a 26% increase from the previous year, according to statistics provided by the Tobacco Industry and Marketing Board (TIMB).

The CEO of TIMB, Andrew Matibiri, says that small-scale farmers account for 64% of all tobacco sales in the country. Those tobacco farmers, however, are not reaping the benefits, he says.

Chipo Museti, another small-scale tobacco farmer based in Rusape, about 173 kilometers (108 miles) east of Harare, says she has been successfully farming tobacco for 11 years.

Last year, Museti’s harvest was lucrative. This year, with the 20% rule and the bank transfer requirement, she earned nearly $2,000 less than last year.

“The money is not even sufficient to buy fertilizers which I need for the next season, let alone to pay for my children’s school fees and their upkeep,” she says.

George Sinyoro has been a tobacco buyer since 1989. He says the restrictions on how farmers are paid will have long-term consequences on the amount and quality of the crop that’s on the market.

“Government policies have to change, they have to make sure that money is ready for the farmer in USD. There should be more consultation between the government and the farmer. We export the tobacco in USD and I think that it’s only fair to give farmers U.S. dollars as well,” he says.

Zulu, the farmer from Chiendambuya, agrees. But he says he doubts that he will be able to continue with tobacco farming in the coming season. He is considering abandoning the cash crop for subsistence agriculture.

“I will grow maize and groundnuts which I know I can feed my family,” Zulu says. “They cannot eat tobacco.”

Some interviews were translated from Shona by Linda Mujuru, Gamuchirai Masiyiwa and Kudzai Mazvarirwofa, GPJ.