If you’re looking to start a business in the tobacco industry in Zimbabwe then you are in luck – this is a blossoming and highly profitable business. Zimbabwe is the biggest tobacco producer in Africa and is the world’s 6th largest producer, competing with countries such as China, Brazil and the Unites States of America. For the farmer, for the manufacturer, for the exporter and the economy, the tobacco farming business is extremely rewarding.
Tobacco is a major foreign currency earner with exports amounting to many millions per annum. According to data from the Tobacco Industry Marketing Board (TIMB) in 2020 we sold 180,8 million kilogrammes valued at US$452,3 million. This season’s average price was US$2,50 per kg, 25% firmer than last year’s US$1,99 per kg. Including cigarette production, the industry’s major activities include growing, curing, handling and distribution. Tobacco is a successful cash crop opportunity for all stakeholders.
Over the past few years, tobacco farmers have increased in Zimbabwe highlighting the open an opportunity for growth in this sector. There are at least 140 large commercial farmers and around 2 million small scale farmers.
Challenges in the business
The tobacco sector is faced with restrictive challenges such as increases in cigarette taxes and campaigns against cigarette smoking in some countries. All of this affects the amount of tobacco that is exported annually. Relating to Zimbabwe, farmers face challenges during processing due to shortages and electricity cuts. Capital outlays are also a major challenge since farmers may require funds to purchase equipment, buy inputs and pay wages. Capital is quite difficult to assess with no collateral. As a result most Zimbabwean Tobacco engage in contract farming; an arrangement where the buyer provide the farmer with the inputs for tobacco farming. This reduces the capital required to run a tobacco farming business.