The Costs and Profitability of Tobacco Compared to Other Crops in Zimbabwe

This study compares the financial costs and returns to tobacco growing with twelve (traditional and non-traditional) alternative crops, looking at profitability, costs, labor intensity, and production risks. It aims to provide an improved understanding of the trade-offs farmers face in deciding what crops to grow. This study finds that tobacco is a highly profitable cash crop for both large and small farmers. Tobacco would remain relatively profitable at considerably lower prices or yields than pertained in 2001. However, even for farmers in suitable agro-ecological areas, tobacco is expensive to grow, with high up-front costs and high labor requirements. Many commercial farmers have diversified sources of income, and most smallholder tobacco farmers grow only small amounts of tobacco, and grow other food and cash crops (maise, soybeans, cotton, groundnuts, and wheat) as part of a crop rotation system, to help provide a steady cash flow and/or as an essential part of their household food security strategy. In early 2001, there were about 2,000 large-scale commercial tobacco growers, and 16,000 tobacco-growing smallholder farmers in Zimbabwe. Simbabwe exports almost all of her tobacco crop, so if global demand for tobacco were to fall significantly in the future the impact on employment and the broader economy would depend on the extent to which commercial farmers were able to switch to other high value export crops, which are also highly labor intensive. It should be noted that some analysts predict robust or growing global tobacco demand, others predict a very gradual decline. Changes in Zimbabwe's land policy in 2001/2002 are likely to have a much larger impact on tobacco growing an exports and on the economy than demand-induced changes in the global market for tobacco.