Home » Business » Value Addition Critical for Zim’s Golden Leaf

The booming tobacco industry that led to the emergence of black barons has made significant changes to the lives of many rural Zimbabweans following the country’s land reform programme. About 36 million kg of flue-cured tobacco worth US$135 million have been auctioned at an average price of US$3.70 per kg since the tobacco marketing season started in February.

According to media reports, last year 30 million kg with a value of US$91 milion had been auctioned during the same period at an average price of US$3,03 per kg.

Currently, the country is exporting raw tobacco and the question is why the country is not promoting value addition to the tobacco leaf?

About 98 percent of the tobacco Zimbabwe exports is raw and this is unsustainable.

The tobacco industry should embark on value addition throughout the country in support of the economic development of the industry.

The Pan-African Development Foundation estimates that the country is losing between US$20 billion and US$100 billion in revenue annually by failing to add value to its products before exporting.

In the true spirit of indigenisation, there is need to curb the loss of potentially phenomenal revenue to outside players through value addition to our resources before they are exported. The 2014 season is expected to rake in US$650 million from 180 million kg of tobacco at an average price of US$3.65 per kg.

However, earnings can only be meaningful if Government takes measures to capacitate the industry, the productive sector which should stabilise the economy.

Value addition will also address challenges such as depressed prices and lower profit margins due to sourcing of inputs at high prices, lack of adequate funding for growers, lack of organised and co-ordination of farmers’ sales bookings.

Currently, the major activities in the tobacco industry are the growing, curing and subsequent handling and auction of tobacco leaf.

The country does not have a large tobacco manufacturing industry and produces only enough cigarettes to supply domestic demand and relatively small export volumes, leaving a large percentage of tobacco to be exported in its raw state.

Marketing of tobacco in its raw form has seen the country losing opportunities for higher earnings and generating employment, especially in areas such as Hurungwe and other parts of the country where the crop is grown.

Key issues in this debate include high costs of setting up processing plants and high costs of starting new business in the country given the liquidity crunch that the country is currently facing.

Despite these constraints, agro-processing has a tremendous potential for increasing income through value addition and increasing shelf life and access to food security through the establishment of value addition plants, including small scale agro-processing businesses and rural agro-based industries.

Zimbabwe is currently facing huge job losses due to low industrial capacity utilisation. The agricultural sector is said to employ close to 80 percent of the country’s workforce.

This figure will increase if the country introduces value addition for the agricultural sector, specifically the tobacco industry. Products manufactured from dried tobacco leaves include cigars, snuff, pipe tobacco, chewing tobacco and flavoured shisha tobacco.

Beyond smoking, other uses of tobacco include plant bioengineering and ornamentals, while chemical components of tobacco are used in some pesticides and medications.

Apart from products such as cigarettes, there is need for Zimbabwe to look into alternative products.

This is because, according to the World Health Organisation, tobacco is the single greatest cause of preventable death globally.

Despite this plant’s modern day reputation for causing long term ailments, tobacco leaves should be considered ideal for homoeopathic practices, self-reliant living as well as a great bartering item for a long-term emergency.

Some countries have gone a long way to prove that tobacco is not only for smoking as they are aanced in terms of beneficial uses of tobacco. Some of the uses include aphid control, gardening and for medicinal use.

The Research Council of Zimbabwe and other scientific and research institutions should be key in ensuring that Zimbabwe significantly reduces export percentage of raw tobacco. This will benefit both the farmer and the country.

Source : The Herald

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