Chapter 5: Future of tobacco Industry

5.1 Introduction
As it has been highlighted from this perspective that despite having economics benefits,
tobacco industry recently has been facing many challenges from health organization like the
World health Organization (WHO) due to its healthy problems that are caused through
smoking, Asamblea Mundial de la Salud (2003) environmental protectionist groups due to
negative environmental impacts by cultivations during tobacco curing, human rights activists
group due to its social problems through child labour and women mistreatments who, (2013)
and Hefler M, Gartner CE (2020). Furthermore, contextually within the Zimbabwe
environment the introduction of policies such as the 2019 monetary policy indeed prove to
have some impacts in the future of the tobacco Industry RBZ, (2019)

5.2 Methodology
To write a good perspective Chapter that would achieve its aim and give the readers the clear
understanding on the subject matter, the researcher followed a well systematic method of
collecting data. Data was gathered from the primary through Interviews of the Key
Informants from the Agriculture personals, Farmers, Health Personals and Secondary data
obtained from the internet from the month of April 2020, published peer reviewed and other
data sources were collected from the search engines of, Google Scholar, ResearchGate, Web
of Science, University Websites and Organization official websites. The strings used to
search data were, Tobacco industry, Zimbabwe tobacco system, Tobacco, and health. To get
up to date data the time frame used was from 2000-2020 only with location form the whole
world to have an in-depth knowledge of the data.

5.3 Global Perspective

The leading tobacco companies worldwide that have been making a lot of sales in billions
USD in the year 2019 in the tobacco industry are British American Tobacco, Phillip Morris
International, Imperial Brands, Japan Tobacco, Altria Group, ITC, Gudang Caram, KT&C
etc. [19] (Figure 5.1). However, having these positive economic benefits, the tobacco
industry through its products like cigarettes has also brought in a lot of negative impacts
through healthy problems like cancer, corona heart diseases, Asthma etc., environmental
degradation using chemicals fertilizer, pesticides and cutting of the tress for fire cured
tobacco, social problems through child labour in many tobacco cultivating estates and women
violence’s and injustices Hu TW, Lee AH (2016). Due to awareness campaigns and
restrictions by heath international organizations championed why WHO by emphasizing the
negatives impacts that tobacco industry has on human beings, the industry has been facing a
lot challenges which could have seen its collapse Asamblea Mundial de la Salud (2003) but
due to its nicotine addictions, the market elasticity of demand for tobacco has not been
responding to these calls especially from the consumers side, furthermore, they have been
inconsistences and varying in many economies on these calls to reduce the production and
consumption of tobacco with just a small reduction when tax measures were used as
compared to civic educations Čizmović M, Laković T, Popović M, Mugoša A, (2018)

Figure 5.1: Leading Tobacco Companies Worldwide in 2019 based on Net Sales (Billion USD).

Source: (Jan Conway 2021)

5.3.1 Gobal Market Size

Figure 2: Global Tobacco Market

Source: GGR (2018)

Throughout these decades tobacco industry has been seen as one of the well-established
industries in the world which has been contributing positively to developments of many
economies through the economic value attached to the chain market like the creation of the
employment to a lot of people and the product itself when its sold and processed product,
having an approximately of USD 694.47 Billion with Compound Annual Growth Rate
(CAGR) of 2.8% by 2021 EHO, (2018) as illustrated on Figure 5.2

5.4 The future of the Tobacco Industry in Zimbabwe

5.4.1 Effect of the new monetary policy on the tobacco farming in Zimbabwe
Even though tobacco is one of Zimbabwe’s most lucrative exports, tobacco farmers aren’t
reaping the rewards. New restrictions on foreign currency and cash payments have made it
difficult for many of them to make ends meet. Tobacco is one Zimbabwe’s top cash crops,
but the country’s ongoing cash shortage and recent currency change have left many farmers
worried that they won’t earn what they need to provide for their families and prepare for the
next season. According to a 2021 Reserve Bank of Zimbabwe policy, tobacco and cotton
farmers are only allowed to retain 20% of their proceeds in foreign currency. The rest must
be paid in local currency, which is valued at a fraction of the U.S. dollar. According to the
RBZ 2021, the tobacco prices have been firmer at an average price of US$2.92/kg during the
just-ended marketing season compared to the previous season where the average price was
US$2.55/kg.

5.5 Thematic analysis

Table 1: Thematic Analysis

How is the implemented new monetary policy affect you as a tobacco farmer
Themes emerged Key informants who mentioned the same.

Negatively affected K101, KI02, KI03, K09

Somehow affected KII10
Positively affected KI01,
Source: Author 2021

“…I spent more than four days in the warehouse trying to sell his crop to local
buyers, who then resell it on the international market. But thanks to a recent change
in monetary policy here, farmers can only receive part of their earnings in U.S.
dollars. The rest must be paid in Zimbabwean dollars (ZWL), which became
Zimbabwe’s formal currency on June 24…. This is the money that I depend on to take
care of me and my family until we get to the next harvest,” he says. “But this year has
taken us more steps backward than going forward.” (KII01_Farmer_Small Scale)

In addition to receiving most of their payment in local currency, farmers can now only be
paid by bank transfer into their accounts, rather than in cash. The country’s cash shortage,
which has been ongoing since 2016, makes it difficult or impossible to withdraw any foreign
currency from bank accounts. Farmers must make a specific request to the bank to
demonstrate need for U.S. dollars. All tobacco farmers have been affected by the restrictions
on foreign currency, but small-scale growers have been hit the hardest.

Tobacco is a valuable export for Zimbabwe. In 2018, tobacco production reached a record
high, recording a 26% increase from the previous year, according to statistics provided by the
Tobacco Industry and Marketing Board (TIMB). The CEO of TIMB, illustrated that,

“… small-scale farmers account for 64% of all tobacco sales in the country. Those
tobacco farmers, however, are not reaping the benefits…”

“…The money is not even sufficient to buy fertilizers which I need for the next season,
let alone to pay for my children’s school fees and their upkeep..”
(KII02_Farmer_Smallscale).

Another small-scale farmer interviewed indicated the implications of the monetary policy on
the long run of the tobacco industry as he illustrated that,
 “…the restrictions on how farmers are paid will have long-term consequences on the
amount and quality of the crop that’s on the market…Government policies have to
change; they have to make sure that money is ready for the farmer in USD. There
should be more consultation between the government and the farmer. We export the
tobacco in USD, and I think that it’s only fair to give farmers U.S. dollars as well,”

Another frustrated farmer firmly and clearly elaborated that,

“I will grow maize and groundnuts which I know I can feed my family,” Zulu says.
“They cannot eat tobacco.” (KII03_Farmer_Small Scale)

The Interviewed Key informant illustrated that the 2020 – 21 season was generally good, and
this can resort to a bright future of the Tobacco Industry. He further buttressed this statement
by mentioning that.

“…The season has progressed well with the average price being firmer by 12 percent
as compared to that paid last year. Generally, the quality of the crop and yields
realised for this season have been quite good. We attribute this to the above normal
rainfall, which was received throughout the country.” (TIMB _ Managing Director)

5.5.1 Challenges within the Tobacco Industry

How is the implemented new monetary policy affect you as a tobacco farmer
Major Themes emerged Key informants who mentioned the same.

Lack of sustainability Poor Viability of growers

Environmental Implications Deforestration
Poor Agricultural practices
Lack of crop value addition
Health Implications Anti-Smoking Campaigns Covid 19

From the participants’ responses with regards to major challenges that they face as TIMB, he
identified Lack of sustainability, Negative Environment and Health Implications. These will
be presented below as sub themes below.

The respondent illustrated Lack of sustainability within the tobacco industry as one of the
major challenges which was due to the poor variability of growers.

The Interviewed Key Informant echoed the following sentiment:

“One of the major challenges is the issue of sustainability which has become more
prominent in the tobacco industry. Deforestation caused by growers cutting down
 indigenous trees for curing tobacco has also affected the industry. There is need to
plant more fast-growing tree species to supply firewood for curing tobacco to ensure
that 100 percent of the crop is cured from renewable sources of energy by 2025…
There is also need for more research and development of curing systems that can
burn coal more efficiently and at the same time reducing the carbon footprint of coal
on the environment e.g., the use of catalytic convertors to reduce carbon emissions
from burning coal. The other challenge facing the industry is the reduction of
viability of tobacco growers because of high-cost structure of producing tobacco…
The re-tooling rates are generally not pegged on foreign currency auction rates
leading to high cost of production…” (TIMB_MD)

Amongst major challenges being experienced by the tobacco Industry the results also
elaborated the loose of revenue through the exporting of unprocessed tobacco. This was
emphasised by the statement below form the Key Informant

“…The global tobacco market was valued at US$849,09 billion in 2019 and grew to
US$878,35 billion in 2020 and is projected to reach US$1,08 trillion by 2027.
Zimbabwe's dilemma is that while it is the fifth largest producer of flue cured tobacco
in the world, the country earns a fraction of the global tobacco market value.
Zimbabwe still earns a paltry 0,17 percent of global tobacco value when it produces
7 percent of world production instead of earning 7 percent of US$878,35 billion
(global tobacco value) which translate to US$61,48 billion…Value addition of
tobacco presents an opportunity since less than 2 percent of total tobacco produced is
manufactured into cigarettes. The Zimbabwe tobacco industry has a potential value
of US$15 billion from cigarettes export, yet currently, US$ 0,9 billion is realised from
leaf exports. There are seven cigarette manufacturing companies operating in
Zimbabwe…In 2019, a total of 3,1 billion cigarettes were manufactured in Zimbabwe,
and over 1,8 billion sticks were exported. The shortage of foreign currency needed
for recapitalisation is a huge drawback to the expansion of tobacco production and
processing. Most of the equipment used is outdated and requires a lot of upgrading to
efficiently work at minimum running cost. There is need to create an enabling
environment for value addition through the establishment of an Export Fund for
exporters and offering export incentives and favourable foreign currency retention
thresholds.”
When directly asked about the future of the tobacco Industry the Managing Director has the
following to say

We envision a collective sustainable production of tobacco as the future for tobacco in

Zimbabwe. This will entail efficient production of quality tobacco in conditions that
limit the impact on the natural environment and that will improve the socio-economic
conditions of the people and communities involved in its production in line with the
Sustainable Tobacco Production (STP) standard produced by the global cigarette
manufacturing companies.

5.5.2 Zimbabwe tobacco Industry future with respect to the Health Campaigns
(Anti Smoke Campaigns)
Tobacco farmers in Zimbabwe, Africa's largest tobacco producer, are pinning their economic
hopes on the addictive plant. Despite anti-smoking campaigns ahead of the World Health
Organization's No Tobacco Day on May 31, farmers say the crop is one of their biggest
sources of income.

Figure 3: Workers at a tobacco auction floor in Marondera about 100km east of east of Harare, Zimbabwe, Apr. 10, 2021.
Source: Columbus Mavhunga/VOA)

After gold, tobacco is Zimbabwe’s biggest foreign currency earner. The cash-strapped
government expects earnings this year to jump from last year’s $452 million U.S. dollars to
$800 million. On the future of the tobacco Industry despite all the Health campaigns
Zimbabwe has projected the to increase their annual production from 200milion kilograms to
300milion kilograms thus it will increase by a magnitude of 100million kilograms 150%

“The tobacco’s potential is immense," he said. "It is in this regard that the
government, together with stakeholders in the industry, is at an advanced stage of
developing a three-pronged strategy. First, to increase annual production to 300
million kilograms largely from small holder farmers by 2025." (Agriculture Minister)

For farmers like Mr Gumbo, also supported the above illustrations indicating that the crop
remains one of the best options to make a living in Zimbabwe’s long-struggling economy.
Gumbo says he plans to use more hectares for the 2021/2022 growing season, which begins
mid-year.

Campaigners say Zimbabwe should instead work to replace tobacco, which is known to cause
cancer, with other crops that are less damaging to health. Sharon Nyatsanza of South Africa-based
National Council Against Smoking (Apr. 12, 2021) says Zimbabwe should work to replace tobacco with
other crops that are less damaging to health. She further went on, saying

“…people who use tobacco are more vulnerable to the coronavirus, the cause of the
COVID-19 disease. Emerging signs show that people who are exposed to tobacco are
at higher risk of developing worse COVID-19 outcomes. But beyond COVID-19
pandemic is a threat to humanity and it kills millions each and every year. It is very,
very key for Zimbabwe to start to take significant strides to move away from tobacco
farming and to invest more and to promote more alternative livelihoods for tobacco
farmers,”

The World Health Organization says tobacco kills more than eight million people each year
globally. There is evidence that tobacco through smoking cigarettes has caused death to more
than 6 million people in the whole world and its furthermore estimated that more deaths are
to be registered by 2030 whereby making the WHO declaring it as an epidemic and calling
upon all governments to implement necessary measures to reduce the consumptions of
tobacco. Vardavas C, Nikitara K, (2020) most of the healthy problems associated with the
cigarettes smoking are lung cancers, reproductive health problems, coronary heart diseases,
nasal irritation, Asthma etc. Drope, Schluger, Cahn, Drope, Hamill, (2018).
Furthermore, Current studies have found and reported that people with underlying heathy
conditions like of hearts disease, diabetes, lung diseases are more prone to COVID-19 than
those that are not Velavan TP, Meyer CG, (2020). This clearly indicates that they are high
risks associated with people that smoke and consume tobacco which may bring to them these
underlaying healthy conditions that may be easily make them vulnerable to contact the Virus
Vardavas C, Nikitara K, (2020). Therefore, the aftermath of the COVID-19 will have a
negative impact on the tobacco industry as health organizations like WHO, other Non-
Governmental Organization (NGO) and even government authorities will be pressing more
and more pressure in the reduction of the production and consumption of the tobacco related
products in the world which at the end will have a negative impact to the tobacco industry, as
many people may also be voluntarily stopping to smoke due to fear which the COVID-19 has
brought to the whole world. However, we cannot rule out the fact of the addictions and
elasticity that the tobacco industry is attached to which will also in the other way help the
industry to keep struggling regardless of the pressure which will be put on it.

5.6 Summary
Its therefore recommended that countries and companies that depends mainly on tobacco as a
sole main activities to further consider other cash crops and ways of diversification in their
industry respectively, which may be introduced to replace tobacco which has been their cash
crops and sole product for many years, however this will be a difficult task upon looking at
the way the industry is established, but the policy makers should also look at the cost benefit
analysis before making this hard decision as a lot funds are also diverted to cater for the cost
which comes with tobacco consumption. Furthermore, the government needs to support and
establish many innovative initiatives that sustain the Tobacco industry as it is improving
remarkably.