A value chain analysis of flue cured virginia leaf tobacco in Zimbabwe

Nhorido, Emillia Precious (2013) A value chain analysis of flue cured virginia leaf tobacco in Zimbabwe. UNSPECIFIED thesis, UNSPECIFIED.

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Official URL: http://hdl.handle.net/10646/3358

Abstract

Tobacco is undoubtedly the major agricultural export crop for Zimbabwe raking in close to a billion United States dollars in 2012. Flue Cured Virginia tobacco remains one of the few economically viable options for Zimbabwe after maize and cotton have been greatly crippled by low prices originating predominantly from world market price distortions. Tobacco production in Zimbabwe is therefore a valuable resource for the country and maintaining a favourable pattern in production becomes a priority for the Government of Zimbabwe. The study undertook to investigate the current state of tobacco production in Zimbabwe through a complete enquiry on the major tobacco players and establishing their value along the tobacco value chain. A value chain analysis into the key stakeholders was done to establish the players in the industry and their dominance. The study found out that the industry is more dominated by the contracting companies who are in most cases the buyers at the auction floors as well as at the contract floors. These contracting companies are also vertically integrated with the processing and cigarrete manufacturing companies to form a vertically integrated tobacco value chain. The study also found out that the vertically integrated value chain has the most significant share of the tobacco value chain. The study also undertook a trend analysis into the tobacco production in Zimbabwe. Trend Analysis using t-tests and Regression analysis were employed on the time series data on tobacco production in Zimbabwe. The study found out that there was a very significant change in the number of growers over time. Similarly the study shows a very significant increase in the volume of production over time. Finally, the study investigated whether contract farming is more cost effective than non-contract farming. The study used Gross Margin Analysis to investigate Flue Cured Virginia tobacco profit differences between contracted and non-contracted Flue Cured Virginia tobacco growers. Contract and auction performance was compared on the basis of average grower prices, cost of production, Flue Cured Virginia production volumes of as well as revenues. Results showed that there are no significant differences between average grower prices and input costs between contract and non-contracted farmers. The results further showed that there is no significant difference in the mean price between the auction and contract floors. There was insufficient data to show any significant differences in production volumes between contract and non-contract growing. There were significant differences in the revenue and profit between the two marketing arrangements. The results showed that there are higher revenue and profits when tobacco is marketed through the contract system. Important policy messages that were drawn out of the research are that the Government of Zimbabwe should promote tobacco contract growing to boost the crop tapping into available and reasonably priced money from the contracting companies. However the study recommends that policy makers help upgrade locals to participate into the most profitable stages of the value chain through the indigenisation programs to enable locals to participate in high value functions of the value chain which are contracting, processing through to cigarette manufacturing.

Item Type: Thesis (UNSPECIFIED)
Uncontrolled Keywords: Flue cured tobacco,Tobacco production,Tobacco varieties,Tobacco farming,Tobacco farmers
Divisions: Universities > State Universities > University of Zimbabwe
Depositing User: Mr. Edmore Sibanda
Date Deposited: 05 Aug 2017 22:00
Last Modified: 05 Aug 2017 22:00
URI: http://researchdatabase.ac.zw/id/eprint/4892

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