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Up
In Flames 23rd
May 2002 The
Movement for Democratic Change, has been waiting for Zimbabwean tobacco growers
to set out in clear terms, just what is going on in an industry that is so
important to the economy of Zimbabwe. This past week it was left to the
small-scale growers to lodge the first effective protest at recent government
actions, and to demand redress. The large-scale growers remain silent and, by
implication, complicent. Once
again Simba Makoni has rushed to what he sees as a localized crisis, and applied
a patch up remedy to try and resolve the complaints of the small-scale growers.
After three days of hurried consultation, the government has given the tobacco
industry the same treatment as that granted to the gold industry. They have
agreed to a special exchange rate for tobacco sold on the local market in US
dollars. The
facts of this action are quite clear – tobacco growers will get an 80%
premium, paid by the Reserve Bank, for the tobacco they sell on the auction
floors in Harare. This will raise the Zimbabwe dollar price to about Z$180 per
kilo on average for the season and represents an exchange rate of about 90 to 1
against the US dollar. This
will cost the Reserve Bank about Z$16 billion in the year and will allow farmers
to earn a similar price in local dollars to that which they earned in 2001. In
an environment where inflation is running at over 100 per cent per annum and
actual costs on many items has escalated by two or even three times in the past
year, this action will not solve the basic problem which is to allow farmers to
earn a profit on their production. It is simply a palliative to try and get the
small-scale growers out of the auction floors where they have effectively
blocked the sale of the present crop. The
state, desperate for the nearly US$400 million that will be earned by the
present crop is hoping that this action will bring the crop to the floors and
that sales will now get under way in earnest. But it will do nothing to halt the
decline in an industry that has been the corner stone of the economy for 50
years. After
50 years of effort, Zimbabwe has captured 25% of the global demand for flue
cured tobacco. This makes Zimbabwe one of the top three exporters of flue cured
tobacco in the world, along with Brazil and the USA. This is no small
achievement. It is the result of many years of research and development and the
training of farmers and their staff. The
industry employs directly and indirectly about 300,000 people throughout the
economy and generates about 25% of total export earnings. In addition the
Zimbabwe industry with its well-developed technological base and industrial
firms, has helped develop thriving industries in Malawi, Zambia and Tanzania.
All these countries sell their crops to merchants who are attracted into the
region by the Zimbabwe crop with its reputation for quality and presentation.
The sale of the crop at free market auctions is also a feature of the Zimbabwe
industry that buyers find attractive. Harare has some of the largest auction
floors in the world. In
recent years the industry has sponsored the entry to tobacco production of some
10,000 small-scale growers who are now beginning to make a significant
contribution to the crop. This is the first time that this has happened and is
largely the initiative of the established large-scale growers. This is a
commendable development which has received scant recognition from the Zanu PF
regime or the Minister of Agriculture. The
illegal and irresponsible programme of farm invasions and acquisition conducted
by this regime over the past two years, has reduced production from 236,000
tonnes in 2000, to 216,000 tonnes in 2001 and 165,000 tonnes in 2002. Weather
has got very little to do with this decline in output and in fact it is
remarkable that farmers were able to grow as much tobacco as estimated this
year. Land preparation for the coming season – normally completed by now, is
barely underway in most districts and if nothing is done to redress this, then
the 2003 crop is likely to be well below 50,000 tonnes. Not
satisfied with the systematic and deliberate destruction of the farming industry
that grows this lucrative crop in the face of intense global competition, the
Zanu PF regime has now signaled its death warrant by in effect, stealing the
crop for half or less of its real value. By
demanding that all buyers pay for the crop in US dollars on the pretext that
this will ensure that all the foreign exchange comes into Zimbabwe and then
denying the industry a special exchange rate to protect grower’s interests,
tobacco farmers are being forced to sell their 2002 crop at prices that are a
quarter of what they should be. Even with the 80% premium paid by the Reserve
Bank, growers will still receive less than they got last year. This is a blow to
all producers but especially the newer growers and the small-scale growers whose
costs are higher than the established large-scale growers. This could be a
deathblow to an industry that has been a mainstay of the country for half a
century. It also has serious long-term consequences for the region as a whole
and for the food industry that employs the resources created by the tobacco
industry to support the production of other crops. The
reason for the government action is a desperate attempt to secure supplies of
hard currency at these dramatically discounted rates. Essentially they are
asking the growers and their workers to subsidize government to the extent of
over Z$40 billion dollars or Z$250 per kilogram. What government does with the
hard-earned foreign exchange is also anyone’s guess. We can only hope they
spend it on food and not more anti riot equipment to suppress the people’s
democratic rights or luxury vehicles and travel for Zanu PF cronies and
officials. But for
the workers involved in this vital industry, their employers and their families,
this is yet another blow to the economy of Zimbabwe by an irresponsible,
illegitimate and delinquent regime. It is a further example that it cares little
for the country or its people and is only concerned about its own future to the
detriment of everyone else, and especially the poor. MDC
Economic Affairs Committee |