Zimbabwe-Sino tobacco contract farming transforms subsistence farmers to commercial entrepreneurs

Zimbabwe’s empowering former landless rural farmers’ policy is bearing fruit as the traditionally
subsistence farmers are venturing into tobacco contract farming schemes with private international
investors. This has seen most of them establishing viable commercial tobacco farming
agribusinesses.
Small-scale farmers drive Zimbabwe’s agriculture, which in turn drives the country’s economy. The
livelihoods of more than half of the 16 million citizens depend on agriculture but productivity is
generally low due to input shortages and limited knowledge of good agronomic practices.
China has been a key investor in Zimbabwe’s economy. As part of this initiative, a Chinese state-
owned company, China National Tobacco Corporation, the world’s biggest cigarette producer,
through its subsidiary, Tian Ze, has struck a thriving contract farming deal with indigenous tobacco
farmers who had long been marginalised and duped of their hard earned cash by unscrupulous
middle-men.
“Our standard contract loan packages comprise crop chemicals, seed, fertilizers, fuel, coal, packaging
equipment, labourers’ wages, insurance, protective clothing and extension services on good
agricultural practices,, ‘’ said Tian Ze public affairs manager, Wenjie Li, adding; ‘’Our package is also
tailor-made to allow flexibility to our farmers to purchase inputs according to their individual
farming requirements. ‘’
Tian Ze also provides funding for the acquisition of capital equipment such as irrigation centre
pivots, tractors, vehicles, generators, tobacco curing facilities, food, and solar installation among
other things.
Currently, the company contracts around 130 beneficiaries of the country’s land reform programme,
who now form the majority of the popular ‘’golden leaf’’ growers. About 85 percent of Tian Ze’s
farmers are indigenous Zimbabweans,
As part of the contract farming legal requirements, the farmers are expected to sell their crops to
the Chinese firm or its agents. About 95 percent of Zimbabwe’s tobacco crop is financed through the
contract farming system say tobacco industry officials.
Contract farming is when agricultural production is carried out according to a prior agreement in
which the farmer commits to producing a given product in a given manner and the buyer commits to
purchasing it.
Zimbabwe is the largest producer of tobacco leaf in Africa and the world’s fourth-largest producer of
flue-cured tobacco, after China, Brazil and the United States of America. Since cigarette production
in Zimbabwe is conducted on a small scale, the major activities in the local tobacco industry are the
growing, curing and subsequent handling and distribution of the tobacco leaf.

The country does not have a large, sophisticated tobacco manufacturing industry and produces only
enough cigarettes to meet domestic demand and provides a relatively small volume for export. As a
result, 98 percent of all the tobacco produced is exported.
In recent years, Zimbabwe has rapidly increased the size of its crop, regaining its spot as one of the
world’s top five exporters of tobacco, peaking at 261 million kilogrammes this year.
“Tian Ze also sources tobacco from other tobacco merchants in Zimbabwe and exports to China.
Annually, about half of Zimbabwe tobacco is sold and exported to China,’’ said Li.
Every year, Tian Ze finances farmers to the tune USD80 million to help jump-start their tobacco
enterprises. With Tian Ze’s financial, training and technical support, most farmers have increased
their tobacco hectarage from a meagre 10 hectares to more than 100 hectares, and the tobacco
quality keeps improving.
The tobacco contract scheme has seen some farmers improving their livelihoods. Others have
managed to buy houses in the leafy suburbs while some are sending their children overseas for
university education.
In an interview, one of the farmers, Foster Gwanzura, who farms in Beatrice, near Harare, applauded
Tian Ze for funding the tobacco sector.
“When the Tian Ze Company started investing in the tobacco industry in Zimbabwe, l joined in 2006
and l was the fourth person to join them.
‘’I have benefitted greatly from the contract farming deal. ”
Over the past few years, China National Tobacco Company has been purchasing about 65 million kgs
packed tobacco from Zimbabwe worth USD600 million annually.
The company supplies 18 million kgs of unprocessed tobacco, taking up 25 percent of China National
Tobacco Company’s total purchase and playing a critical role in the Zimbabwe-Sino-trade relations.
“From this year, China National Tobacco Company will be purchasing 70 million kgs packed tobacco
from Zimbabwe”, Li said.
Li also said the company had changed the tobacco production landscape since its entry in Zimbabwe
in 2005 and does not have any challenges of side marketing by contracted farmers.
“We do not have challenges with side marketing The Tian Ze contract scheme has matured,
Contracted farmers now take farming as a serious family business and do not want to spoil their
chances of participating in the scheme by side marketing. As a result, our loan repayment rate was
almost 100% in the previous farming season.
In addition, Li said, “We have concessionary funding with low input prices and competitive prices at
the tobacco auction floors. We have also been very thorough in exercising due diligence in recruiting
contract farmers. ”
Tobacco production generates considerable employment. Tian Ze has 79 employees including five
China National Tobacco Company expatriate staff and 74 local employees. In addition, the company
hires 300 seasonal staff during the tobacco selling season, provides direct and indirect employment
to over 20, 000 people in the form of farm labour through the out-grower scheme.

Though more jobs are created but as long as Zimbabwe does not process tobacco into cigarettes,
more jobs are exported.
In an interview with Africa News, Vice President, Dr Constatino Chiwenga highlighted the problem of
Zimbabwe not processing tobacco into cigarette locally when he spoke at the auction floors official
opening in March this year. He said that Zimbabwe requires 30 percent of the crop to be processed,
blended and manufactured into cigarettes by 2025 to boost-value added exports. He added that
currently, only two percent of the crop is locally processed into cigarettes. This means that
Zimbabwe is exporting jobs and value.