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HARARE, Zimbabwe (AP) — Zimbabwe’s tobacco is thriving again. And the same goes for auctions where high prices are paid for the “gold leaf” that is exported around the world.
Most growers are black, a historic shift from when tobacco was largely produced by white farmers. But many small farmers complain of being impoverished by intermediary merchants who lure them into a debt trap.
Rosemary Dzodza recently traveled 200 kilometers (125 miles) to the capital, Harare, with her tobacco crop for what she hoped would be a good payday.
The 60-year-old farmer ended up sleeping under the stars for two weeks while waiting for payment. When the money finally arrived, it was a tiny fraction of what his tobacco had actually fetched at auction.
“My tobacco sold for $7,000, but I only come home with less than $400,” she said, shaking with anger. The rest of the money went to the trader who gave him a loan to pay for fertilizers, seeds, labour, firewood for drying and even household food items as part of a contract cultivation program.
In addition to repaying the loan with interest, Dzodza was obliged to sell her harvest to the merchant, at the price he set. The merchant then sold the tobacco to the highest bidders at the auction or to wealthier merchants, mostly buyers who will export the crop to China.
For more than 60 years, tobacco was a lucrative export crop from which white farmers profited. But after the year 2000, when supporters of Robert Mugabe began to take over white-owned farms, often violently, tobacco production plummeted. The blast-cured tobacco crop fell from a peak of 260 million kilograms in 1998 to just 50 million kilograms in 2008.
Since then, tobacco production by black farmers has increased. A few thousand white farmers produced the bulk of the tobacco crop before land reform, but now the number of mostly small-scale black farmers has risen to over 145,000. The recovery has been stunning in recent years, with Zimbabwe’s tobacco harvest is estimated at 200 million kilograms this year, up from 180 million kilograms last year.
Commercial banks in Zimbabwe gave loans to white farmers so that they could buy inputs for their crops. But the banks pulled out years ago because the government failed to issue transferable title deeds to black farmers resettled on land formerly held by whites.
The contract farming program helped desperate black farmers take advantage of the tobacco windfall. It was started mainly by Chinese buyers but is now so lucrative that it attracts dozens of Zimbabwean merchants.
According to the regulator, the Tobacco Marketing Industry Board, 96% of tobacco growers have been funded under the contract cultivation program.
The contract system is hailed for reviving tobacco and cementing Zimbabwe as the biggest producer of the crop in Africa. But many black farmers say greedy merchants are impoverishing farmers.
Farmers pay high interest on their loans and many fall prey to predatory entrepreneurs, said Zimbabwe Tobacco Association chairman George Seremwe.
“It’s a loss-making company. The farmer is still in debt because as soon as he repays the loan, he has to take out another one. Year after year they are in debt,” he said.
Some are losing livestock – their only wealth – to merchants after failing to repay loans due to poor harvests, while “unethical” merchants are also “a threat”, Seremwe said.
The Tobacco Industry Marketing Board this year freed 20,000 farmers from contracts with traders who tried to deceive them by inflating the value of inputs supplied.
According to a study published last year by Tobacco Control, a journal devoted to tobacco research, more than 90% of tobacco growers want off-contract cultivation, but cannot find alternative financing.
Nearly 60% of farmers said they were in debt, according to the research.
“There is no evidence to suggest that tobacco farming, in its current state, has benefited (black) tobacco growers. Tobacco growers are largely victims rather than beneficiaries of the industry,” says the report.
“The model is now expensive and needs to be reviewed,” Reserve Bank of Zimbabwe Governor John Mangudya told state media in April after complaints from farmers.
At the heart of the problem is the inability of resettled farmers to raise their own funds from banks, said economist and analyst John Robertson.
“Banks fear they will end up with a piece of paper if a farmer does not repay. They can’t touch the ground,” Robertson said.
The government says the solution lies in the Public Land Bank launched in April, which would lend money to farmers for their tobacco crops at reasonable rates. Some are skeptical, but farmers like Dzodza can only pray for his success.
“Otherwise I will have to stay in contract farming,” she said. “It’s as if we were chained.”