Zimbabwe exports most of her tobacco crop, however, so if global demand for tobacco were to fall in future , the impact on employment would depend on the extent to which commercial farmers were able to switch to other export crops such as roses, paprika, coffee and vegetables which are also highly labor intensive. Many other crops have similar per hectare labor requirements to tobacco, and some have further opportunities for downstream processing and growth linkages. Most of these crops are currently grown on a fairly limited scale, however, so the question would be how quickly and successfully farmers would be able to scale up exports and production of these crops, in the face of declining tobacco markets. This paper considers the financial costs and returns for tobacco and twelve other important crops grown by commercial and smallholder farmers in the intensive farming areas of northern and central Zimbabwe. Tobacco is of critical importance to the Zimbabwean economy and typically generates around USD 600 million in foreign revenue annually,vertical farming supplies equal to almost 10 percent of GDP and 30 percent of total exports.
Although global demand for tobacco is still strong, pressure from international health organisations, anti-smoking groups and new trade protocols all threaten the long-term prospects of this important crop. As Zimbabwe looks to the future, therefore, it is important to consider diversification options and growth strategies in which other crops could play an increasingly important role and eventually substitute for some of the foreign earnings and employment currently accounted for by tobacco.Towards this end, the primary aim of this analysis to provide an improved understanding of the trade-offs individual growers face in deciding which crops to grow. Agricultural production begins with the decisions farmers make and any successful diversification strategy must have the costs and returns for individual producers in mind. More specifically, at this critical juncture in the development of Zimbabwe, how do different crops and production technologies now compare in terms of total production costs, investment requirements, farmer profitability, employment creation, demand for credit and other matters of private and social importance? Are there attractive crop options that would justify farmers making a shift away from tobacco and what would be the implications for Zimbabwe’s trade balance and local employment opportunities? This paper has been prepared to help answer some of these questions and to provide an improved basis for discussion of recent development trends and future growth strategies. In geographic terms, it is first important to note that tobacco is grown almost exclusively in high-potential farm areas of Natural Region II in northeastern and central Zimbabwe.
This zone accounts for less than 15% of Zimbabwe’s total land area , but is ideally suited to intensive farming with a more or less reliable 750 to 1 000 mm of rainfall coming in the summer months from late-October until the end of March.By contrast, Natural Regions III, IV and V are much less suited to intensive farming with progressively arid conditions less suited to tobacco and other crops. Smallholder farmers occupy about 71% of the farmland in these lower-potential areas equal to about 18.7 million hectares in total. Natural Region I is mostly in the Eastern Highlands with a mild climate suited to specialised farming and forestry. Maps showing the location and rainfall expectations of each Natural Region and also the location of Zimbabwe’s 15 main flue-cured tobacco growing districts are given in Appendix 1. Further details on the breakdown of land classification by farm sector and area planted to different crops in each Natural Region are given in Appendix 2. In interpreting the discussion that follows, it is also important to bear in mind that large-scale commercial farmers dominate Zimbabwe’s tobacco sector. Although there are fewer than 2 000 commercial tobacco growers, these producers account for about 87% of area planted and 95% of the total crop equal to some 180 to 240 million kilos of flue-cured tobacco annually. Furthermore, most commercial farmers already have diversified sources of income. Although tobacco is still the backbone of commercial agriculture in most locations, other important crops for large-scale farmers include wheat, soybeans, maize, groundnuts and livestock, which are typically grown in rotation with tobacco.
Most commercial tobacco farmers practice a 5-year rotation and these crops are an important part of the overall land use system and help provide a steady cash flow. More recently, many commercial growers have also introduced other high-value crops including export roses, supermarket vegetables, paprika and coffee as part of their farm system specifically to lessen their dependence on tobacco. More than 80% of all horticultural exports, for example, are grown on tobacco farms and were first developed using tobacco revenue. Smallholder farmers, by comparison, are only marginally involved in the direct production of tobacco. Although there are roughly eight times as many smallholder tobacco growers compared with large commercial farmers, these account less than 1.5% of all smallholder households and just 7% of those in suitable agro-ecological areas. Certainly, the importance of tobacco as a high profit crop with fully developed market outlets cannot be overlooked for these producers, but it should also be noted that maize, cotton and groundnuts are all more important for smallholder farmers in most locations. In this respect, the greatest threat from shrinking tobacco markets for the smallholder sector is not so much the potential loss of direct farm enterprise income, but rather the loss of remittances sent by family members employed on large-scale commercial farms. Before proceeding, it should also be noted that this analysis has been prepared at a critical time in the development of Zimbabwe. Apart from the pressure on tobacco from international health organisations, new trade protocols and other sources, the overall future of the agriculture sector is now facing great uncertainty in terms of the controversial program of land acquisition and resettlement.
Although this paper has no interest to enter the political debate over land or to predict the outcome of current events, it is not possible to overlook the present situation and implications for development opportunities in agriculture. No matter how one interprets recent events, for example, it is clear that current conditions in Zimbabwe not only discourage new investment but also make it difficult to sustain existing farm production in terms of access to seasonal credit,vertical lettuce tower fuel shortages, high inflation, land occupations and foreign exchange controls that distort the cost of imported inputs. For large-scale commercial farmers, the strategy now is mainly one of survival and bracing for the worst rather than to invest in new technologies and infrastructure as part of a drive towards crop diversification. Smallholder farmers have likewise been affected by the poor investment climate and are perhaps even more dependent on improved conditions than commercial growers. One of the key findings from the analysis is that that the most profitable crops and management systems depend on specialised infrastructure and technical support services. Quite simply, until the economic and political situation improves, few entrepreneurs are willing to invest in these services, thereby limiting the opportunities for broad-based growth and diversification. Putting aside current political and economic constraints, the overall results of the analysis are encouraging and show that several crops apart from tobacco offer an opportunity for high producer profits and attractive rates of return. Other crops that rival and/or surpass tobacco in terms of potential net profit include roses, paprika, coffee and supermarket vegetables for large-scale commercial farmers and paprika, coffee and cotton for smallholder growers. These crops can all be grown in the same areas as tobacco and provide excellent rates of return to total production costs. On the other hand, these crops are also relatively expensive to produce and, with high-input management, are sometimes more costly than tobacco. This is especially true for high-value horticultural crops and long-season irrigated paprika on commercial farms. The analysis also shows that many traditional agricultural crops including wheat, soybeans, groundnuts and maize are now marginal activities for large-scale commercial farmers and, in some cases, even return a net loss and fail to cover the long-run depreciation cost of fixed assets. On the other hand these traditional crops do, in most cases, provide a positive gross income and are therefore important in terms of helping to finance other more profitable and expensive crops like tobacco, paprika and coffee. In turn, the very good financial returns from these high-value enterprises help offset the net losses from traditional field crops and the analysis shows these are still a fundamental ingredient to most successful farm strategies. In the case of paprika, for example, which is the most profitable smallholder crop apart from tobacco, yields are highly dependent on rainfall and can easily be wiped out by adverse growing conditions. Whereas large-scale farmers are able to protect themselves from some of these risks through irrigation, most smallholder farmers do not have access to this technology and paprika is typically considered a risky enterprise for smallholder growers.
Coffee is likewise an attractive possibility and can provide a net income that rivals many tobacco scenarios, but is a relatively new crop in tobacco areas and would require a substantial investment in farmer training and also pulping and processing facilities before it can be widely promoted in these locations. With respect to cotton, this enterprise generally provides a much lower income that tobacco , but does offer an excellent rate of return to cash and total production costs. At the national level, cotton is the most widely grown smallholder cash crop. Importantly, for all categories of farmer, the analysis shows that the most profitable crops and production technologies require specialised infrastructure, processing facilities and other support services. This is especially true with respect to roses and vegetable exports, which can be very profitable but are also extremely expensive to grow and extraordinarily skill intensive. These enterprises also require a large capital investment in processing and packing facilities, special irrigation equipment and other infrastructure including greenhouses and insulated trucks for roses. Some large vegetable exporters have been working with smallholder farmers near Harare to provide inputs and develop a network of collection points for baby corn and mangetout, but these programs are expensive to establish and are still relatively small with only limited farmer participation. In this respect, marketing constraints are one of the main obstacles to success with most high-value crops that could compete with tobacco in terms of profitability and potential export earnings. Again, this is most obvious in the case of roses and export vegetables, which must be grown to exacting European standards and delivered in fresh condition according to a tight time schedule. Paprika, on the other hand, is far more forgiving and can be sold to local export agents and processing companies on forward contract. Although this helps to minimise some production and marketing risks, relatively small world demand for paprika means that prices are highly sensitive to increased production and the crop could never substitute for tobacco on its own. In terms of labour requirements, the data show that tobacco generates more employment opportunities per hectare than nearly every other enterprise analysed. This is one factor often noted by proponents of tobacco to illustrate the overall importance of the crop to the national economy and the calculations here suggest that the total wage bill for tobacco grown on large-scale commercial farms could be as high as ZWD 2 600 million .To the extent that a share of this income is sent as remittance payments to family members in communal areas, tobacco can play a major role in helping to finance the inputs needed for improved management of major smallholder crops including maize and cotton. Although these benefits of tobacco cannot be ignored, the data show that many other crops are also very labour intensive and so offer similar opportunities for employment creation on a per hectare basis. Roses are perhaps the best example of this where just one hectare generates almost as many jobs as 25 hectares of flue-cured tobacco. Of the other field crops, paprika, coffee and export vegetables all demand a similar amount and sometimes more labour than tobacco with further opportunities for downstream processing and growth linkages. Because of limited market outlets and intensive management requirements, however, these crops are mostly grown on a much smaller-scale than tobacco and it is unlikely any single enterprise could ever substitute for a loss of tobacco employment without growth in other economic sectors including industry and tourism.