Sunday, 12 May 2013


Having been involved in tobacco farming for a while I have now learnt a few tips that can make you a successful tobacco farmer in Zimbabwe and I thought I could share some tips with you.   With this experience in tobacco production, I have decided to define  “tobacconomics” as “the combined analysis of production and finance of tobacco farming.” Many farmers make impulse decisions in to growing this golden leaf without full knowledge of what they may be getting into.  Tobacco production has complex elements that are usually overlooked by many “fly-by night” farmers and many have burnt their fingers in the game.  One needs to understand the game in order to make meaningful returns.
At what level do you want to operate?
You can only make money with Commercial Tobacco Farming only when you have access to the RIGHT CAPITAL.  When you chose to go commercial, make sure you are well capitalised in terms of your farming equipment, curing facilities and working capital.  The moment you compromise any of these, then your demise is knocking at your door.  Many small scale farmers have been successful because they have managed to keep their cost down by use of equipment such as ox-drawn equipment and conventional (now constructing rocket barns) which do not attract high costs and makes it profitable for the farmer.  Despite that they get low yields, their costs are also low that they make a reasonable margin. 

The power of leverage
Return on equity (ROE) is the best way to learn how much money a company is making for its investors and is calculated as follows:
Asset Turnover x Sales Profitability  x Leverage      =     ROE

Profitability and Turnover in commercial tobacco production is generally low and hence the need to rely on leverage to make a good return on investment.  This Leverage can be obtained by accessing contracts from tobacco contracting companies, for example.  It is therefore not advisable to use your own capital when engaging into this farming enterprise.

Controlling losses and managing risk
Due to the high financing levels of tobacco required, it is imperative that one controls all possible losses in each operation.  All operations have a high potential for loss, therefore, as a farmer you should be able to identify the risks and losses associated with each process and define clearly how these can be mitigated.  Tobacco responds to good growing and handling conditions and these should be as precise as possible to maximise your profit.  The biggest challenge with our farmers is that they are not aware of these potential losses and so they cannot formulate processes to mitigate the drastic effects of these.  Most of these risks and losses are farm and situation specific and need to be attended situation by situation.  Investing in irrigation is a good way to managed your risk and increase your yield.

Focus on Yield and Quality (then price)
In a compensatory nature, most farmers tend to blame the price matrix for their low yields.  Prioritise yield maximisation, then Quality and then the price will take care of its self.  Normally when your yield is right, it follows that your quality will be good and hence you have a good price.  In some instances I have advised farmers to top their crop at lower leaves eg 14 and 16 so that they can maximise on the length of their leaves.   Long leaves normally attract a good price, yet your weight will not be different from one who has topped at 18.  In cases where the prices are not favourable, as long as you have the yield, you are bound to perform above average.

Efficiency is everything about tobacco production
You cannot compete with the system when your methods of production are extremely inefficient.  Tobacco production systems over the years have been progressing.  Each farmer should be conscious of how to improve efficiency on the following determinants; Labour and curing fuel, as these are the farmer’s major costs.  In modern systems of production, on a communal scale, the use of rocket barns will increase curing efficiency and on a commercial scale, tunnels are much more efficient than any other system of curing tobacco.  Hence, it will be difficult to compete with one who has good curing systems, even when the prices of drop.  Labour efficiency can be achieved by mechanisation and use of tools suck as clips instead of strings.   

It doesn't cost much to pay attention to detail
The cost of ignoring certain detail is greater than paying attention to detail.  A simple misplacement of fertiliser on the station can cost more that correctly placing it.  It is very imperative to be aware of what detail is required on every operation.  In most cases farmers are ignorant of the type of detail that affects their margin. 

Having analysed the above, one should be encouraged to assess their risk involved in tobacco production, prior to engaging themselves fully as many have in actual fact made tremendous losses whilst they thought the game was easy.  Maximum benefits can only be achieved when farmers start engaging themselves in precision farming practices. 

Sunday, 18 November 2012

Review of the National Budget

The 2013 National Budget
Focus on Agriculture
Analysis by Agri-access (Pvt) Ltd
Date of budget presentation                        15 November 2012

It is of commendable effort that The Minister of Finance, Tendai Biti, has prioritised Agriculture and Food Security in the national budget because of its major contribution in the GDP of 17.6% and contribution of 16% of exports. 
Major sector contribution to GDP

Source: Dealing with export commodity price shocks : The Zimbabwean Experience – W. L. Munungo
Agriculture has recorded a dip in the annual growth from 5.1% in 2011 to 4.6% in 2012.  This has been mainly as a result of the drought conditions experienced in the country.  Another major contribution to this is the lack of knowledge or lack of access to information pertaining to agricultural trends, markets and warnings.  This has led to farmers making irrational decisions in the course of their farming  ventures.  However, a growth of 6.1 is expected during the 2013 season in the Agricultural sector.  Despite this poor performance, agriculture still remains a major contributor in the Country’s GDP, which means that the cause of this performance can also be attributed to the poor infrastructure in the country such as load shedding, a decline in Foreign Direct Investment (FDI), low adoption of technology and a use of obsolete equipment and machinery, which has equally all other sectors of the economy.
In His Budget Minister Biti has allocated $159.4 million  towards agriculture.  With the state of our Agricultural infrastructure, for full recovery, Agriculture would  require an estimated budget of $2 Billion, with funds coming from the Government, banks and other stakeholders including the farmers.  In our $3.8 billion budget, it would mean more than half of the Total Budget would be allocated to Agriculture . 

A comparison has been compiled below to outline the role of agriculture in Zimbabwe against other Countries in the region.
A comparison of Other Economies in the region
Budget allocation to agriculture
Agriculture’s contribution to GDP
Agriculture’s contribution to exports
National employment
Major farming activities              
Poultry, cattle, maize and wheat.
Tea, coffee, floriculture and horticulture
Tobacco and horticulture

The Minister of Finance rolled out a 3 Year financing strategy whilst presenting the 2012 National Budget, which was aimed at addressing timeous allocation of resources to farmers, but it has not been effected in 2012/13 season.  Up to now, many farmers are still not sure how they are going to farm, yet the season has already begun. 
Addressing the implementation the issuance of the “99 year lease” is also welcome.  A bankable “99 year lease” will enable farmers to access finance much better than where there is no secure land tenure.  However, this can only be possible after the land has been surveyed by The Surveyor General and this requires $4000 per farm unit.  The Government has proposed to place $2 million for the surveying and is expecting the private sector and farmers to contribute the remaining $3 million required for surveying 1260 Farm units during 2013. 
Irrigation rehabilitation and development programmes have been allocated $9 790 000 a figure $5 210 000 less than that allocated on the 2012 National budget of $15 million, of which only $3 million was actually directed towards this programme.  With the persistent droughts and on-going climatic shifts, it is of great importance that Irrigation development be prioritised in order for the country to produce enough food to feed the nation and the region.  This sector has been on the cards for a long time and we feel the implementation should begin with seriousness.  In the Lowveld areas, where there is a dense network of rivers,  should be given priority to this development so that food can be produced optimally in these sections.
Tobacco, a major exporter performed quite well because of the firmer prices experienced over the previous season.  These prices are expected to remain firm for a while due to the high demand of Zimbabwean style by the world over and the Chinese apetite for our “lemon leaf”.  Both Tobacco and  Cotton yields increased to 144.5 million kgs and 350 million kg from 133 million kgs and 250 million kgs, respectively, as a result of the firmer prices. Cotton production is expected to decline to 283 million kgs as a result of the poor prices experienced during the 2012 selling season.  The prices of cotton declined from $0.85 to $0.45 as a result of the high reserves of cotton in India and China.   Though a controversial subject in the country, it could be high time Zimbabwe adopts GMO cotton so that it can be able to compete with international cotton produces and remain viable in production.
The commodity exchange markets has been on the cards for long and is way overdue. This has been one of the mandate of the Agricultural Marketing Authority – “To regulate the participation in production, buying and processing of Agricultural products in Zimbabwe.”  The implementation of the Commodity exchange Market will be beneficial to farmers since a fair price will be paid on produce as buyers would be competing on an open market system.
Initially projections where that Agriculture would decline by 5.8%, but that  has this has been revised to a growth of 4.6%.  This is so because of the firmer prices realised in tobacco and also to a lesser extent a financial support base of about $814 million.  2013 projections indicate a growth of 6.4%, but we have noticed a decline in the amount that will be channelled towards agriculture compared to the previous season, a figure of approximately $ 700 million. This is quite worrying especially when projection are of a growth of 6.4% but with lessor funding. 
Though it is commendable to have the stakeholders pledging their support in financing Agricultural activities, how much of this fund will actually be available to farmers?   Last season AMA floated some Agro-bills amounting to $50 million to raise funding for soya bean farmers.  These only raised $17.7 million a figure that was not substantial in supporting the registered farmers in soya beans.  Despite these 360 Tenor bills having  special features including tax exemption; they was low consumption from the market due the present economic environment where the demand of money outstrips supply – the liquidity crunch.   This season, AMA is floating $25 million bills, that we hope will receive a good market uptake and will see the funds being directed towards production; in the same way, we would like to encourage the government to prioritise irrigation development as mentioned above.

The review of the chicken importation duty to $1.50 per kg or 40% (whichever is higher) is quite commendable to rescue our local chicken producers.  This will result in an increased production of the birds by local farmers as farmers are immune to external competition in the production of the birds. 

The deferment of the VAT on capital goods is also welcome in recapitalising the agricultural sector which has high cost of production due to the use of obsolete equipment.

In conclusion we would like to commend the Ministry of Finance for the effort in drafting this budget, however, Agriculture unlike many other sectors of production is unique and dependent on many other factors of production, among them time and season.  This means that resources should be allocated to this sector timeously for farmers to be able to be productive.


Compiled By
Tapiwa J Mugabe
Farm Advisor
Agri-access (Pvt) Ltd
Skype: tapiwa.mugabe1
twitter: Agriaccess
Phone +263 774 157 581

Monday, 27 August 2012

potato production

Potato production 1
Date: 19 August 2012
Compiled by Tapiwa Mugabe – Agronomist Agri-access (Pvt) Ltd

Now that the frost prone period is gone, it is advisable to start planting potatoes as early as possible, because you do not only escape frost and late blight attack, but your yield potential is marginally the highest of all the 3 planting seasons.

By delaying your planting from now you increase your chance of late blight and other disease susceptibility; as the weather will become more conducive for disease spread ie. Hot and humid.  However, when you plant now you need to be alert for potato tuber moth, because they can be high during this season.  For control of potato tuber moth you can use carbaryl and monocrotophos.

Potato Tuber Moth

True Potato Seed
The major challenge being faced by many aspiring potato farmers is the prohibitive cost of the seed (tubers).  There is now a company in Harare called EDDA Seeds which is now supplying True Potato Seed (TPS).  This is real potato seed and not tubers.  This is currently being imported from India. On establishing the crop out of TPS, you make seedbeds just as you would do with tobacco seedbeds and then after 4 to 6 weeks your seedlings will be ready for transplanting.  1 x 30m bed will be enough for a ha. In the lands the crop will take between 90 to 120 days depending on the variety.  The seed actually cost less than half the cost of Tuber Seed.  Currently, TPS is being sold for $800/ ha  plus $200 for agronomy and assistance in establishing the crop, making it a total of $1000/ha.  If you were to purchase tubers, you need to budget on around $2200/ha. I personally still need to verify the yield potential of these varieties, because some farmers have and extension officers have told me that the yield is not comparable to tuber seed potatoes. In actually fact the yield is incremental as you retain seed up to a certain level then it begins  to decline.  What that means is that you will realise a higher yield as you retain your seed tubers once or twice.   I will keep you informed on the performance of these varieties.

True Potato Seed

Some of the advantages of this TPS are:
1.      It is cost effective
2.      It is transport convenient.  You need 100g per ha
3.      You can retain your seed for 2 or 3 seasons
4.      Some frost tolerant varieties are available.

Cut tubers
Cut Tubers

This another way of reducing the cost of seed.  However before dwelling much on this type of seed production, one should be fully aware that the major success factor of this type, is good hygiene.  With this type of seed production, large tubers are cut into small “cubes”.  These cut tubers should have at least 2 eyes or shoots.  When cutting the tubers, all cutting utensils should be disinfected in a sterile solution, during the cutting session, such as formalin to avoid diseases spread.  After cutting, the tubers should then be dipped in a fungicide such as Bravo  to help protect the cut tuber from fungal attack.  The cut tuber should be stored for at least 10 to 14 days at 7-18oC and as near 100% humidity to encourage formation of the suberin layer (protective layer) over the cut surface. It is important to observe every process stated above, because a deviation or ignoring certain points stated above will result in losing the benefits of using this type of seed.  This type of seed production is widely being used in countries such as China, but is not common here in Zimbabwe.

There is always an argument around the agric circles that “ don’t we need new strain or new potato varieties in our local Zimbabwean market”.  This is because over the years our own varieties have been realising diminishing returns in term of yield.  While we struggle to achieve  40T per ha, other countries like Kenya are talking of 80T/ha and more.  Is it because there is no constant research and development going on concerning potato varieties? Why not go ahead and try the new varieties and rate them against your conventional varieties.