Mugabe Snuffs Zimbabwe Tobacco, Fueling Zambia Boom (By Antony Sguazzin and Anthony Mukwita
Feb. 1 (Bloomberg) -- Miklos Marffy lost his home, his farm
and his crop two years ago when Zimbabwe's government seized his
land near the northeastern town of Mvurwi. Last year, he grew
$460,000 of tobacco in neighboring Zambia after a ``reassuring'
visit from President Levy Mwanawasa.
Zimbabwe's neighbors are profiting from President Robert
Mugabe's land redistribution program, which has ravaged the
world's second-biggest tobacco export industry since 2000. More
than 340 commercial farmers have relocated to Zambia, Mozambique,
Malawi and Tanzania, creating jobs and boosting exports from some
of the world's poorest countries.
``The entry of Zimbabwean farmers into Zambia is a blessing
to agriculture,' says Chance Kabaghe, 50, the chairman of Zambia
Seed Co., who was deputy agriculture minister until last month and
lives in the capital, Lusaka. ``They bring with them the latest
technology and knowledge.'
Universal Corp., the world's biggest tobacco-leaf merchant,
and No. 3 Standard Commercial Corp. are backing the farmers so
they can get loans from banks such as Barclays Plc and Standard
Chartered Plc. The aid helps ensure supplies of the flue-cured
tobacco used to flavor cigarette brands such as Reynolds American
Inc.'s Camel and Altria Group Inc.'s Marlboro, after Zimbabwe's
production fell by three-quarters in the past four years.
Zimbabwe last year accounted for about 4 percent of global
exports of the highest quality flue-cured tobacco, which cigarette
makers buy for characteristics such as color and oil content. Five
years ago, Zimbabwe had about 20 percent of world exports, second
only to Brazil.
`Big Imbalance'
Farmers received an average of $2.02 a kilogram (2.2 pounds)
for leaf sold at Zimbabwe's annual tobacco auctions last year, up
from $1.69 in 2000, according to the Zimbabwe Tobacco Association,
based in the capital, Harare.
``Some of the world's best quality tobacco suddenly
disappeared,' says Antonio Abrunhosa, chief executive officer of
the International Tobacco Growers Association, based in Castelo
Branco, Portugal. ``This created a big imbalance in supply and
demand for quality tobacco.'
Farmers have to invest at least $150,000 to buy land, install
irrigation equipment and build the barns and furnaces needed to
produce flue-cured tobacco, and some have borrowed more than $1
million, says Chimwemwe Mtonga, senior manager of business support
at Lusaka-based Barclays Bank Zambia Plc.
Lower grade burley and fire-cured tobacco, which are cheaper
to produce, garner lower prices.
`Mentoring System'
Richmond, Virginia-based Universal and Wilson, North Carolina-
based Standard Commercial are contracting farmers to grow the
tobacco at guaranteed prices, helping them win loans from banks
such as Standard Chartered and Barclays, both of which are based
in London. They are also asking larger farmers to advise smaller
growers on sowing, tending and curing the crop.
``We expect the commercial farmers will provide expertise to
small farmers in a sort of mentoring system,' says Karen Whelan,
a Universal spokeswoman. ``The large-scale growers, many of whom
were forced out of Zimbabwe, have long experience in growing the
quality of leaf required in the international market.'
Universal last year bought 15 million kilograms of flue-cured
tobacco and 3.5 million tons of burley from 47 large growers in
Zambia and 5,515 small farmers. That compares with 3.1 million
kilograms of flue-cured and 1.8 million kilograms of burley in
2000. The company forecasts Zambia will produce 26.7 million
kilograms of tobacco this year.
In Mozambique, Zimbabwe's neighbor to the east, Universal
bought 591,000 kilograms of flue-cured tobacco from 12 large-scale
farmers last year. It bought none in 2000. Universal forecasts
tobacco production will rise to 4.3 million kilograms this year.
Malawi Production
Malawi, which juts into Mozambique from the north and shares
its western border with Zambia, produced 23.2 million kilograms of
flue-cured tobacco last year, up from 11.2 million kilograms in
2002, Universal says. The 2005 forecast is for a crop of 30
million kilograms.
The increased purchases in neighboring countries helped make
up for the decline in Zimbabwe. Universal bought about 14 million
kilograms of tobacco in the country last year, down from 100
million kilograms four years earlier.
Speaking of the farmers who have moved into the surrounding
area from Zimbabwe, Abrunhosa says: ``They have been very
important in boosting tobacco production. The economic impact is
huge.'
With backing from Standard Commercial and a loan from London-
based Standard Chartered, Marffy paid $108,000 for two irrigation
pivots, and installed pumps and curing equipment on the 700
hectares (1,730 acres) of land he bought near Mkushi, 100 miles
northeast of Lusaka.
Presidential Welcome
Marffy, 48, who lives with his wife and three children in a
farmhouse on the property, says he reaped 230,000 kilograms of
tobacco last year and plans to grow 300,000 kilograms this year.
In addition to tobacco, the 150 Zimbabwean farmers who have
moved to Zambia grow soy, wheat and flowers. Some export seed corn
to Zimbabwe, once an exporter of crop seeds. Marffy grows soybeans
for sale on the market and corn to help feed his workers.
Mwanawasa in August met with about 20 former Zimbabwean
farmers at the Mkushi Country Club and promised that the
government would obey the law and respect their property rights.
``President Mwanawasa visited us and told us that we should
treat Zambia as our home,' Marffy says. ``It was really
reassuring to have the president welcome you.'
Tobacco production is helping reduce Zambia's dependence on
copper and cobalt, which made up more than half of exports last
year.
Agriculture now accounts for 17 percent of economic output,
Kabaghe says. In 1990, the figure was 12 percent, according to the
Washington-based International Monetary Fund. Tobacco production
has more than tripled in the past four years, and the government
forecasts exports of the crop will total $40 million this season.
Skills and Experience
``Large-scale farming is beginning to pick up, and that is
helping diversify the economy,' says Jan Duvenage, an economist
at Standard Bank Group Ltd. in Johannesburg. ``Africa needs
skills. The Zimbabwean farmers have skills and the experience of
running large farms.'
Zambia is the 10th-poorest nation among 134 countries ranked
by the Washington-based World Bank, with per-capita gross national
income of $770. About 73 percent of Zambia's people live in
poverty, and life expectancy at birth is 33.4 years.
Marffy says he employs as many as 200 people and pays them at
least 6,500 kwacha ($1.42) a day. That's about twice the minimum
wage for non-union workers.
``In the past, it was easy to find farmworkers. All you had
to do was walk to the main road and recruit some people,' says
Clifford Musonda, 31, a farmworker in Mkushi. ``Now it's not
possible because everybody has jobs. The only ones who don't have
jobs are the lazy ones.'
Nigeria Next?
While Zimbabwe's neighbors have been the first to benefit,
other countries are keen to follow.
The Nigerian government is offering 1,000 hectares of land
and loans of as much as $1 million to farmers who relocate to the
West African country from Zimbabwe, says Bruce Gemmill, whose farm
was seized in 2002.
``I am looking at Nigeria,' says Gemmill, 70, who grew
tobacco and fruit on his property 70 miles east of Harare. ``The
government there has been helpful. It has gone out of its way.'
Zimbabwe, once southern Africa's second-biggest economy after
South Africa, has been hit hard by the departure of its farmers.
The land seizures, which began in 2000 as Mugabe pledged to
return land stolen from blacks in colonial times, have shut down
most of Zimbabwe's 4,000 commercial farms, displaced many of the
country's 310,000 farmworkers and deepened a six-year recession.
Zimbabwe's Recession
The economy shrank 30 percent in the five years to 2004,
according to the IMF. Unemployment is more than 70 percent, and
the United Nations' World Food Program estimates that 41 percent
of the country's 11.8 million people may not have enough to eat
until the next harvest in April and May.
A 2003 study commissioned by Mugabe found that 127,000
families had moved onto the confiscated farms. While some of the
resettled farmers have taken up tobacco production, quality and
production have fallen.
The record 237 million kilograms of tobacco harvested in 2000
were grown by 8,531 farmers, compared with the 12,700 who grew 68
million kilograms last year, according to the Web site of the
Zimbabwe Tobacco Association. Universal expects Zimbabwe to
produce 90 million kilograms of tobacco this year, while the
government forecasts 115 million kilograms.
The small growers favored by Mugabe reap about 900 kilograms
from each of their one-hectare plots. Commercial farmers produce
more than 3,000 kilograms per hectare on 45-hectare plantations,
says Rodney Ambrose, CEO of Zimbabwe Tobacco.
`Massive Decline'
Production of corn, wheat, soy, cut flowers and paprika has
also slumped. Zimbabwe, which once ran the highest-yielding corn
farms in southern Africa, is importing the grain from South
Africa, Zambia, Argentina and the U.S.
``In the commercial sector there has been a massive decline,
as much as 90 percent in some crop sectors like soy and corn,'
says Kuda Ndoro, an economist at the Commercial Farmers Union in
Harare.
Agriculture now makes up 14 percent of Zimbabwe's economy,
down from 18 percent in 2000, the union's figures show.
Even if Zimbabwe were to change its policies, many farmers
say they won't return.
``At 48, I am getting too old for a new start,' says Marffy,
who moved to Zimbabwe with his family in 1960 after their farm in
Hungary was confiscated by the socialist government. ``Whatever
happens in Zimbabwe, whether there is a new regime or not, I can't
go back, even though I love the country so much.'
--With reporting by Brian Latham in Harare. Editors: Morris,
Henry, Swardson.
Story illustration: {CNP02642120104 <GO>} for a series of
Bloomberg functions related to Zimbabwe.
To contact the reporter on this story:
Antony Sguazzin in the Johannesburg bureau (27) (11) 286 1934,
or asguazzin@bloomberg.net
To contact the editor of this story:
Stephen Farr at (44) (20) 7673-2640 or sfarr@bloomberg.net |
