Zimbabwe's annual tobacco auctions this year were notable for record prices and the second smallest crop in more than 50 years. Thousands of new small-scale tobacco farmers failed to grow tobacco this season because neither commercial banks nor the government had money to lend for inputs such as fertilizer.

Zimbabwe's 2009 tobacco crop will earn about $160 million this selling season. The average price was about $3.60 a kilogram. Most tobacco will be exported to Europe with China now also an important buyer.

About 50 million kilograms was produced, more than 80 percent of that grown by the few remaining white farmers on the tiny portions of land left untouched by President Robert Mugabe's ongoing seizures of white-owned land.

Until land invasions began in 2000, large-scale white tobacco growers and growing numbers of black farmers produced more than 220 million kilograms of tobacco each year. This was the bedrock of Zimbabwe's economy and the country's largest foreign currency earner.

Farm invasions cause uncertainty

This year, as farm seizures were stepped up by those loyal to President Robert Mugabe in the wake of the formation of the unity government, cash strapped banks refused loans to farmers.  The banks said the current wave of farm invasions resulted in uncertainty about the farmers' tenure on their land, and that the farms or potential harvests were therefore no surety for the lenders.

Consequently these farmers sold their crops to foreign buyers who fund their inputs, such as fertilizer.  Andy Ferreira, outgoing president of the Zimbabwe Tobacco Association says it is a pity the economy is so difficult, because commercial farmers forced to forward sell their crops are getting about 20 percent less than prices on the auction floors in Harare - the largest in the world.

He said until land tenure was settled and banks felt secure to lend money to commercial farmers, this system would continue, to the detriment of Zimbabwe's foreign earnings.

Nowadays, only small-scale farmers sell at the auction floors, and their numbers dropped to about 8,000 from 15,000; many who would normally be selling say they were unable to raise loans to buy inputs. 

A small-scale producer in northern Zimbabwe, said his output was affected this season because he could not borrow enough money to buy inputs. Ideally, he would like to double his output.
"I am at Karoi, Hurungwe, I am an old farmer. Last year it was better than this year; and last year I [planted] one hectare [and] I produced more [kilograms] than this season. I haven't any inputs," he said.

Some small-scale farmers now growing tobacco were given white-owned land by President Robert Mugabe.

New farmers satisfied with prices

One new farmer said he had a fair season and wants to plant more, but says he needs a loan for his next crop. He says he grew one hectare of Virginia tobacco, sold it on auction and was paid well.

"Last year it was similar to this year," he said. "For this year it is good quality tobacco. Prices for last year and this year [are] similar. Just because, this year according to my tobacco, it is selling well. The sales are really quite good. So far I have sold 700 kg for $3.69 [per kilogram] [and] I am going to plant more."

Despite increased anti-smoking laws in many parts of the world, and declining numbers of smokers, Ferreira says Zimbabwe's tobacco is still prized by top manufacturers of cigarettes.

Many commercial growers have already planted seedbeds for next year's tobacco crop despite not knowing if they will still be there to reap the crop for the 2010 selling season.