Tobacco sector thinks outside the box to survive
THE 2022 tobacco marketing season ended recently with the country raking in a total US$650 million up from US$589 million last year.
This sector is targeting to become a US$5 billion industry by 2025 at a time when the anti-tobacco lobby campaign is getting aggressive and calling for the imposition of tighter regulations and heavy taxes on tobacco — a major source of foreign currency and major employer for Zimbabwe and most other producers in developing countries.
In this report, Fidelis Munyoro (FM), Chief Court Reporter, speaks to Ethical Holdings Group general manager Tyson Ngongoni (TN) to share experiences and explore strategies to save this strategic industry which is increasingly coming under threat.
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FM: Can you tell us briefly about your company’s performance in the 2022 tobacco marketing season. What are your views about your linkages with tobacco growers and the export market?
TN: For the 2021/2022 tobacco marketing season, Ethical Leaf Tobacco performed fairly well out of the 38 tobacco contracting companies registered in the season. We give unparalleled value to our tobacco growers by way of supporting their farming activities. We are undoubtedly a home-grown brand in the industry evidenced by the number of growers that we support and the number of years that we have been in the industry. Tobacco alone is a main livelihood option for hundreds of thousands of households in the country and as a company we are delighted to be part of that transformational journey of Zimbabwe’s agricultural industry.
FM: Quality tobacco is the hallmark of your industry. Is the quality of the golden leaf improving? What are the buyers and export market clients saying about your product?
TN: Zimbabwe is the largest grower of tobacco in Africa and the sixth largest worldwide and quality and flavour are the two factors attributed to our tobacco being the best. Tobacco has also remained a key source of export revenue for Zimbabwe for the past two decades. Having said that, the quality of tobacco grown by our farmers is of utmost importance and we ensure this by providing our growers with the latest tobacco farming techniques, and we ensure the farmers adhere to excellent agronomy practices.
FM: President Mnangagwa is on record call
ing for value addition of Zimbabwean products. What scope is there for value addition in the local tobacco industry? How can this be done?
TN: Value addition is indeed the way to the future as espoused by President Mnangagwa and the work has to start now. A lot of entrepreneurs have great ideas and potential if entirely given the necessary support by the relevant authorities and of course the government. The tobacco value chain is gigantic and it ranges from research and development to the production of tobacco products like cigarettes. However, there are deterrent issues like high cost of setting up manufacturing plants, but if value addition is to be taken seriously in the industry it means the cost of production for the actual tobacco will be significantly reduced as the money will be ploughed back to the start of the value-chain, that is production of the crop. FM: There is a growing global anti-tobacco lobby which is imposing tighter regulations and heavy taxes on the golden leaf, a major source of export earnings for Zimbabwe. What do you think needs to be done to counter this aggressive anti-tobacco lobby?
TN: Listen, anti-tobacco lobby groups, anti-coal lobby groups have always and will always be there. Truth be told we are in Zimbabwe and we are committed to growing our own economy, whatever it takes. We cannot be deterred by people who want to impose their ideas onto us, who also have a sound economy. A few years ago, tobacco industry stakeholders from five African states formed a coalition to fight against anti-tobacco lobby groups and this is still work in progress. As Africans, we understand that the tobacco industry is a massive foreign currency earner for countries and a source of livelihood for countless households. The argument has been yes, we understand the risks associated with certain products and these products are heavily taxed, but there must be a distinction between those products and corporate entities which are actually carrying out legitimate trade activities, sustaining millions of livelihoods in varying capacities from illicit ones. As an industry we need to also lobby against the imposition of heavy taxes and duties on our products to survive.
FM: The tobacco industry is a complex web with various competing interests of both Zimbabwean, African and global multinational corporations. Multinationals still earn billions from tobacco produced by us. Do you think your company, smallholder tobacco growers and the country are getting a fair share of the tobacco earnings? TN: The distribution of resources is always prejudicial and we would obviously benefit from a situation where the earnings from the tobacco that we grow in Zimbabwe profit the smallholder farmer more and ultimately the country. But this situation can be turned around if more local industry players are involved in the tobacco value chain. The tobacco value chain is currently dominated by a few multinational conglomerates at the expense of potential earnings that the country could be currently profiting from.
However, the Government of Zimbabwe
continues to ensure the farmers get more from the work that they put in and for the 2021/2022 tobacco marketing season, the government awarded farmers a 75 percent USD/25 percent rtgs ratio, a situation that I am sure will continuously advance. The country realised USD$650million during the 2021/2022 tobacco marketing season which ended on the 25th of October, these figures were announced a few days ago. This is evidence in itself that the tobacco industry is strategic in growing our economy, and everyone should play their part in growing this industry. FM: Corporate social responsibility is an important issue for your company. What have you done to reach out to local communities that have been a pillar for your survival as a company?
TN: Our work is based in all the tobacco farming regions in the country, meaning we mostly work with rural communities and CSR is part of our corporate objectives which we do not take lightly. We are involved with various community initiatives to develop the communities that we work in. For instance, we have very successful soccer development programs in all regions, we are also involved in various national charitable events for instance we have been involved with the First Lady’s first female open prison in Marondera since the inception of the project. FM: Deforestation and unsustainable tobacco production is increasingly emerging as a major concern both for the producing countries and the export destinations. Climate change and sustainable development are key issues now. What is your company doing to reduce deforestation and other unsustainable production processes? TN: As a company, we have always adhered to international standards of tobacco production, and presently we work using the inter
nationally acclaimed Sustainable Tobacco Program (STP). The STP is a merging of two tobacco industry standards, namely Good Agricultural Practices (GAP) and Social Responsibility in Tobacco Production (SRTP). STP is a robust, comprehensive and focused umbrella sustainability program that ensures there is continuous improvement in tobacco production.
We also work with various stakeholders like the Forestry Commission who provide us with trees to ensure our farmers have viable woodlots. Every year we hold field days and we plant a thousand trees in every region. We are cognisant of the fact that climate change is upon us and we support our growers by ensuring they make use of sustainable agricultural practices. We are assisting the farmers with water harvesting techniques to combat climate change, which is very critical, especially in the dry regions. In the short run, we will be rolling out a campaign to encourage our farmers to embrace new technologies like solar-powered tobacco barns, which will reduce the carbon footprint caused by emissions from firewood barns. FM: Looking ahead, how is your company going to survive the increasingly hostile and aggressive anti-tobacco lobby environment? What are the prospects for the survival of the local tobacco industry? Do you foresee earnings for local tobacco growers improving? TN: Tobacco contracting is a policy that the government put in place to enhance and increase the production of tobacco as one of the key strategic foreign currency earners in the country. Our predictions are that we grow more tobacco, we lobby for inclusion in the tobacco value chain as indigenous players in the industry, we continue to lobby to protect, preserve and empower the livelihoods of smallholder farmers.