Nearly 20 years on, that seems almost unimaginable. Production of Zimbabwe’s flagship “golden leaf” tobacco hit a record 296 million kilograms in 2023, and the country’s tobacco authority set a goal of producing 300 million kilograms during the upcoming 2024–2025 growing season.
A key turning point for the industry was the entry of Chinese companies, which spearheaded the adoption of contract farming, in which the company provides farmers with the necessary material and technical support for tobacco cultivation in exchange for the right to purchase the resulting crops at an agreed-upon price — usually greater than what it sells for at auction. Dr. Hillary Mugiyo, an official from Zimbabwe’s Ministry of Agriculture, revealed that this model now dominates the country’s tobacco sector, accounting for over 95% of the country’s total tobacco yield.
Today, contract farming usually involves a choice between Chinese and Western capital, with the two often depicted as being in competition. However, the role of global investors in Zimbabwe’s tobacco sector is neither a straightforward triumph of “South-South cooperation” between China and Africa, nor a tale of rivalry between China and the West. Instead, I found that Chinese and Western investors play complementary roles in Zimbabwe’s tobacco market.
Although Africans had been using tobacco pipes centuries before colonization, it was the Europeans who began growing the crop commercially in Africa in the early 20th century. African tobacco proved wildly popular, and by 1990 Zimbabwean “golden leaf” was considered one of the finest tobaccos in the world.
At the time, tobacco was sold from auction floors to the highest bidding merchant, which typically rotated between large companies like British American Tobacco (BAT). A decade later, however, Western sanctions against Zimbabwe drove many of these firms out of the market and opened a window for Chinese investment.
In April 2005, China signed a memorandum of understanding with the Zimbabwean government to found a new tobacco firm: Tian Ze. Backed by the China National Tobacco Corporation, one of the most powerful Chinese state-owned enterprises, Tian Ze enjoys ready access to state loans and exemptions from certain regulations. This institutional advantage, coupled with huge demand from the Chinese market — China buys roughly 40% of Zimbabwean tobacco annually — quickly put Tian Ze in a commanding position.
According to Tian Ze’s managing director, Wang Hua, though the contract farming practices used by different companies are broadly similar, Tian Ze possesses two primary advantages over its competitors: lower-interest loans and higher buying prices. Prior to 2023, Tian Ze offered farmers interest-free loans. The company now charges 4%, but even this is considerably lower than the average of 12% charged by other contracting companies. As for pricing, according to sales documents, Tian Ze offered up to $3.58 per kilogram on average for contract farmers in 2023, while few other firms offered more than $3.20 per kilogram.
By comparison, while Western and local investors have lost market share in recent decades, they still retain considerable influence due to their historical roles in the region. Apart from BAT, major players include the Dutch-owned Northern Tobacco (NT), the locally registered and American-invested Zimbabwe Leaf Tobacco (ZLT), and Mashonaland Tobacco Company, a subsidiary of the U.S. tobacco giant Alliance One International and one of the largest contractors of small-scale tobacco farmers in the whole of Zimbabwe.
The farmers I spoke to generally shared Wang’s assessment of the relative strengths of Tian Ze and its Western counterparts. “Tian Ze is better than ZLT,” one leading farmer and ZLT contractor told me. “From 2007, I’ve only received one center pivot (irrigation device). But my friend next door who is contracted to Tian Ze has 24 center pivots. Compared to Tian Ze, ZLT doesn’t give you money and support for such things.”
His view was shared by a local farmer I spoke to who has partnered with Tian Ze since 2014. He noted that, in his experience, Tian Ze not only guides farmers all the way through the farming process, but also offers higher prices for the resulting crop.
But if Tian Ze offers such good terms, then why do farmers still partner with Western companies? What prevents them from making the switch?
One explanation is that the threshold of entering into contract with Tian Ze is comparatively high, with the company requiring prospective contract farmers to undergo assessments of their growing history and the quality of their crop. This point was confirmed by a Chinese merchant I spoke to. “Tian Ze mainly works with those who are already independent,” he explained.
Even though in recent years the company has started purchasing more tobacco from small-scale, inexperienced farmers, in such cases it does not partner with the farmers directly but rather works through two surrogate companies responsible for overseeing the entire production process. Tian Ze attributes this approach to the company’s “state-owned nature.” According to Wang, whereas British and American capital can afford to take certain risks by cooperating with small-scale farmers, Tian Ze is more risk-averse due to its direct affiliation with Chinese state assets.
Specifically, because smallholder farmers have relatively little experience and poor infrastructure, it takes more work for Tian Ze to keep track of their progress and ensure that every investment produces returns. This may not be a severe problem for companies like NT or ZLT, whose shareholders primarily evaluate the company’s performance based on overall profitability, but bad debts are a serious problem for Chinese state-owned enterprises tasked with the preservation and appreciation of national assets.
For similar reasons, Wang also confirmed to me that Tian Ze invests comparatively less money per hectare into tobacco farms, averaging about $6,000–$7,000 compared to NT’s $10,000 average. While its interest rates are more favorable, that still limits the company’s appeal to economically disadvantaged farmers who need greater up-front investment.
Another allegation commonly leveled against Tian Ze is that it traps farmers in debt and treats them poorly. However, according to George Seremwe, the president of the Zimbabwe Tobacco Growers Association, these accusations are either unfounded or they involve problems endemic to the industry. According to Seremwe, investors are often blamed for the inherently unstable economic situation faced by Zimbabwean farmers.
To give a recent example, a sudden spike in fertilizer costs caused by the conflict in Ukraine devastated farmers in the region — one farmer I interviewed said his fertilizer costs doubled in 2022. These disruptions have caused widespread anxiety among farmers, regardless of which company they partner with.
That is not to say Tian Ze’s operating model is without problems. While it has long touted its role in the “win-win” narrative of Global South cooperation, true success on that front requires cooperation with more than just influential, large-scale farmers. What about the smallholders who constitute the majority of the Zimbabwe tobacco farmers and with whom Tian Ze’s engagement remains indirect and limited? In this regard, at least, the Chinese latecomer still has something to learn from its Western counterparts.
The author’s research was produced as a result of a grant provided by the Africa-China Reporting Project at the Wits Centre for Journalism at the University of the Witwatersrand, Johannesburg. The opinions expressed are of the author.
(Header image: Workers sort tobacco at a farm on the outskirts of Harare, Zimbabwe, 2022. Tsvangirayi Mukwazhi/AP Photo via VCG)
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