The government was urged to emphasize production of tobacco ahead of politics for the economy to recover. Though this was said eight years ago it could equally apply today and in any sector and not just tobacco.
At the time tobacco had slumped to its lowest production from a peak of 240 million kgs. At its peak tobacco accounted for 20 percent of gross domestic product, 20 percent of employment, and 33 percent of exports.
These remarks were made by the president of the Zimbabwe Tobacco Association James de la Fargue who admitted that the land reform programme was irreversible but the government had to bring back stability to the farming sector.
De la Fargue said his main conduit to President Robert Mugabe was through Zimbabwe Reserve Bank governor Gideon Gono whom he said was the one senior government official who understood market economics.
“He had proven an honest interlocutor and an effective advocate. Gono had made tobacco a privileged sector, able to obtain foreign exchange from the bank with which to buy needed inputs,” De la Fargue was said to have told United States embassy officials.
But he acknowledged that Gono was one of the senior Zimbabwean officials most able to profit from the lack of convertibility and existence of a parallel currency market, and that the presence of such officials was fast becoming an impediment to reform.
Viewing cable 04HARARE1595, TOBACCO: PRODUCTIVITY OR POLITICS – CHOICE IS
This record is a partial extract of the original cable. The full text of the original cable is not available.
C O N F I D E N T I A L SECTION 01 OF 02 HARARE 001595
E.O. 12958: DECL: 09/23/2014
SUBJECT: TOBACCO: PRODUCTIVITY OR POLITICS – CHOICE IS
Classified By: AMBASSADOR CHRISTOPHER DELL FOR REASONS 1.5(B)
AND 1.5 (D)
¶1. (C) Summary: The Ambassador and DCM met
September 13 with James de la LaFargue and
Andrew Ferreira, President and Vice-President
respectively of the Zimbabwe Tobacco Association.
De la Fargue said tobacco could again become a
major export earner but for that to happen the
government had to restore stability to the
agricultural sector and bring to a close its land
reform policies. The Ambassador said that he was
interested in ideas about how the U.S. might help
agricultural production rebound. End Summary.
Zimbabwe,s Key Crop
¶2. (C) De la Fargue said tobacco had been the most
important cash crop in Zimbabwe. At its peak in
2000, tobacco had accounted for 20 percent of GDP,
20 percent of employment, and 33 percent of exports.
Production that year was 240 million kilograms.
By contrast, production this year would be more on
the order of 60-70 million kilograms. De la Fargue
said it was unlikely Zimbabwe would ever again produce
a crop like that of 2000 but that there was still scope
for Zimbabwe to at least double its production.
Zimbabwe still had a strong comparative advantage
In tobacco production: near ideal climate and soil
¶3. (C) However, de la Fargue said for Zimbabwe to
realize its potential, the government had to make
the decision to emphasize production over politics
and put an end to the uncertainty created by its
approach to land reform. Tobacco was a crop
that required a heavy up front investment. Seedbeds
had to be laid 18 months in advance. His association
was now composed primarily of small growers. There were
roughly 1000 small tobacco growers, virtually all black,
and only around 500 larger commercial growers, of whom
roughly half were white Zimbabwean and the other half
black. For both groups, but especially for the former,
land security was the key to a rebound in production.
The smaller farmers needed a clear title to the land in
order to raise the capital needed to invest in tobacco
Land Seizures Need to End
¶4. (C) The Ambassador said his impression was that
land reform was close to a fait accompli and was
certainly unlikely to be rolled back. He asked
de la Fargue for his views. De la Fargue said
land reform was probably irreversible but said the
insecurity caused by continuing land seizures had
become a principal obstacle to restored production.
His hope and expectation was that following next
spring,s parliamentary elections, President Mugabe
would decide to bring an end to land seizures and to
restore stability to the sector. If he did not and
the government continued to pursue radical policies
that hobbled the economy, the country would likely
see massive emigration.
¶5. (C) De la Fargue said the other major obstacle
to a rebound in production was the unresolved
compensation claims of farmers already dispossessed.
As long as ownership of the land was in doubt, so
was ownership of the crop, and this sort of uncertainty
would impede badly needed foreign investment. At this
point, the dispossessed farmers would likely accept
pennies on the dollar and had already accepted the
principal that they would not be compensated for the
land itself, but only for improvements they had made
to the farms. De la Fargue added that there were 4000
farmers to compensate with an estimated average claim of
US$500,000. Thus for a fraction of US$ 200 million, the
problem could be made to go away. However, the GOZ was
insisting that the UK foot the bill and the UK was
insisting the GOZ pay the farmers.
Dealing with the GOZ
¶6. (C) De la Fargue said his main conduit to Mugabe
was through Zimbabwe Reserve Bank (ZRB) President
Gideon Gono. Gono was the one senior GOZ official who
understood market economics. He had proven an honest
interlocutor and an effective advocate. Gono had made
tobacco a privileged sector, able to obtain foreign
exchange from the bank with which to buy needed inputs.
That said, de la Fargue acknowledged that Gono was one
of the senior Zimbabwean officials most able to profit
from the lack of convertibility and existence of a
parallel currency market, and that the presence of such
officials was fast becoming an impediment to reform.
¶7. (C) De la Fargue is the first interlocutors with whom
we,ve talked who put a price tag on compensation for the
farmers and the number he gave underscores how little it
would take, especially with private sector involvement,
to break one of the logjams on this issue.