US embassy cable - 03HARARE271

UNCLAS HARARE 000271 
 
SIPDIS 
 
STATE FOR AF/S AND AF/EX 
NSC FOR SENIOR AFRICA DIRECTOR JFRAZER 
USDOC FOR 2037 DIEMOND 
PASS USTR ROSA WHITAKER 
TREASURY FOR ED BARBER AND C WILKINSON 
USAID FOR MARJORIE COPSON 
 
E. O. 12958: N/A 
TAGS: EAGR, ETRD, EFIN, ECON, ZI 
SUBJECT: Tobacco harvest may beat early forecasts 
 
 
1. Summary: It remains difficult to forecast Zimbabwe's 
all-important tobacco earnings this year.  Experts agree 
the harvest will be marginally better than initially 
expected, but a steep drop from last year. End Summary. 
 
2. The stakes are high since tobacco will remain 
Zimbabwe's leading export and earner of foreign exchange. 
Also, the GOZ desperately wants newly-resettled 
commercial farmers (known as A2s) to produce sizable 
crops and lend legitimacy to its controversial land 
reform.  Last year's harvest yielded 166 million kgs, 
down from the record year 2000 crop of 237 million kgs. 
Experts still disagree how far tobacco output will slide. 
 
High-End Scenarios 
------------------ 
3. GOZ hawks still occasionally boast about a 150-200 
million kg harvest, but objective and independent sources 
dismiss these numbers.  The Tobacco Industry Marketing 
Board (TIMB), a somewhat independent governmental body 
with a commendable forecast record, told us it is now 
expecting a 85-110 million kg harvest this year, a drop 
of between 33 and 48 percent.  TIMB Executive Director 
Stanley Mutepfa said his agency has been unable to nail 
down a more precise figure for 2003 due to the chaotic 
state of Zimbabwe's agricultural sector.  Usually the 
TIMB offers a crop estimate by February 1 for the year 
that is within 5 percent of the final result.  Although 
Zimbabwe has been hard hit by drought, Mutepfa said 
recent weather conditions have been good for many 
communal tobacco growers in the 7 of 15 districts he has 
surveyed, causing the TIMB to increase its estimate. 
Most communal farmers did not plant until December, when 
they enjoyed 4 weeks of dry weather followed by rains, 
the ideal scenario for non-irrigated tobacco. 
 
Low-End Scenarios 
----------------- 
4. Zimbabwe Tobacco Association (ZTA) Chief Executive 
Chris Molam told us his organization has upped the 
estimate he offered to the Parliamentary Committee on 
Agriculture on Oct 8 from 70-to-80 million kgs.  But he 
said he is confident the harvest will not beat 80 million 
kgs, since he is already factoring in a respectable 
increase for communal as well as A2 farmers from 12-to-25 
million kgs. (He expects 55 million kgs from large 
commercial farmers).  FEWSNET Representative Elliot 
Vhurumuku, an expert in crop forecasts, estimates the 
tobacco crop slightly higher, at 80-85 million kgs. 
 
Comment 
------- 
5. Given initial predictions of Zimbabwean harvests as 
low as 60 million kgs, the slightly higher estimates pass 
for good news.  Nonetheless, the economic cost of land 
reform is still enormous.  Without it, 2003 would have 
been a banner year for tobacco growers here.  The country 
is unlikely to return to lofty 2000 heights unless it 
sorts out an inept land redistribution that exudes 
opacity. 
 
6. Several other variables could affect the country's 
tobacco windfall this year.  Difficult climate conditions 
in Brazil have diminished its expected harvest from 600 
to 515 million kgs, reducing the year's supply and 
potentially increasing the world tobacco price.  On the 
other hand, Zimbabwe's erratic coal supplies from Wankie 
Colliery could hinder the curing of tobacco before it 
reaches the auction floor -- or create a new market for 
wood as a less-efficient coal substitute.  More 
importantly, the GOZ still has not disclosed how much 
export revenue it will allow growers to retain (probably 
through a special exchange rate).  If the rate is too 
low, we're guessing farmers will smuggle tobacco out of 
the country or store it for a future year. 
 
Sullivan