H r A. Li 01 71 la -gqi&3 I-NU ?- K, . , wl-_Jll  . A 'T MR.- - 514,11 1 1-74 AK. IN N,! 5fq j 4ggn - OT.,14vt .3 AM E,-4 oRP-1 W A-4 Al no. (U. j!76 gn x 2_1 Ai. IL 1" k- TV & tfv. AY7 1AM, UZ W WZ, N,Ao All ON te ."f Ao THE COSTS AND PROFITABILITY OF TOBACCO COMPARED TO OTHER CROPS IN ZIMBABWE John C. Keyser Completed April 2001, published July 2002 Costs and profitability of tobacco compared to other crops in Zimbabwe HEALTH, NUTRITION AN D POPULATION (HNP) D ISCUSSION PAPER This series is produced by the Health, Nutrition, and Population Family (HNP) of the World Bank's Human Development Network (HNP Discussion Paper). The rapers in this series aim to provide a vehicle for publishing preliminary and unpolished results on HNP topics to encourage discussion and debate. 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Since the material will be published as presented, authors should submit an electronic copy in a predefined format as well as three camera-ready hard copies (copied front to back exactly as the author would like the final publication to appear). Rough drafts that do not meet minimum presentational standards may be returned to authors for more work before being accepted. The Editor in Chief of the series is Alexander S. Preker (apreker(a)worldbank.org); For information regarding this and other World Bank public ations, please contact the HNP Advisory Services (healthpop(P,worldbank.org) at: Tel (202) 473-2256; and Fax (202) 522-3234. The Economics of Tobacco Control sub-series is produced jointly with the Tobacco Free Initiative of the World Health Organizat ion. The findings, interpretations and conclusions expressed in this paper are entirely those of the author/s and should not be attributed in any manner to the World Health Organization or to the World Bank, their affiliated organizations or members of their Executive Boards or the countries they represent. The editors for the Economics of Tobacco Control papers are: Joy de Beyer (jdebeyer@worldbank.org), Emmanuel Guindon (guindone@who.int) and Ayda Yurekli (ayurekli@worldbank.org). ISBN 1-932126-19-8 C 2002 The International Bank for Reconstruction and Development / The World Bank 1818 H Street, NW Washington, DC 20433 All rights reserved. Page ii Costs and profitability of tobacco compared to other crops in Zimbabwe HEALTH, NUTRITION AN D POPULATION (HNP) DISCUSSION PAPER ECONOMICS OF TOBACCO CONTROL PAPER NO. i The Costs and Profitability of Tobacco Compared to Other Crops in Zimbabwe John C. Keyser Consultant Paper prepared for the World Banlc, funded yby the World Bank and the United Nations ect onT P Abstract: 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, financial support, technical infrastructure, land-suitability, marketing difficulties, world demand and production risks. It aims to provide an improved understanding of the trade-offs farmers face in deciding what crops to grow. The analysis is based on an original set of 91 production budgets estirmated in January 2001 specifically for this study. The study finds that tobacco is a highly profitable cash crop for both large and small farners. 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 (maize, 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. Zimbabwe 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 and exports and on the economy than demand- induced changes in the global market for tobacco. Keywords: tobacco yield, cost, profitability, Zimbabwe, tobacco growing Disclaimer The findings, interpretations and conclusions expressed in the paper are entirely those of the author, and do not represent the views of the World Bank, the World Health Organzation, their Executive Directors, or the countries they represent. Correspondence Details: John Keyser, Box 35220 Lusaka, Zambia; Email: jck(zamnet.zm Page iii Costs and profitability of tobacco compared to other crops in Zimbabwe TABLE OF CONTENTS Acronyms and Abbreviations .. vi Currency Equivalents .................... vi Weights and Measures .................... vi Acknowledgements .................... vii Executive Summary ..................... v PART ONE - NARRATIVE TEXT I. INTRODUCTION . . A. Background .2 B. Main Findings .3 II. METHODOLOGY AND PROCEDURES . . 5 A. Approach .5 B. Farm Sectors .6 C. Management Levels .8 D. Main Assumptions .8 E. Financial Indicators .10 F. Sensitivity Indicators .11 III. FLUE-CURED AND BURLEY TOBACCO . .12 A. Flue -cured Tobacco .14 B. Burley Tobacco .17 IV. TRADITIONAL FIELD CROPS . .18 A. Overview .18 B. Maize .21 C. Cotton ..25 D. Groundnuts .27 E. Soybeans .29 F. Wheat .31 V. NON-TRADITIONAL CROPS . 33 Page iv Costs and profitability of tobacco compared to other crops in Zimbabwe A. Overview ...................... 34 B. Coffee ...................... 36 C. Paprika ...................... 39 D. Marigold ...................... 42 VI. HORTICULTURAL EXPORTS . . .................... 43 A. Overview ...................... 43 B. Supermarket Vegetables ...................... 45 C. Roses ...................... 48 VII. SUMMARY AND CONCLUSIONS .51 PART TWO - DATA SECTION The complete quantitative data set is presented in Part Two. There are separate tables for large-scale commercial and smallholder farmers in which the various enterprises are ranked by selected indicators including (i) cash required before sale; (ii) total production costs; (iii) gross profit; (iv) net profit; (v) return to cash; (vi) return to total costs; (vii) total labour requirement; (viii) return per day family labour; (ix) return to total labour; and (x) vulnerability to price. Appendix 1- Map Section Tobacco Growing Districts Natural Regions and Farming Areas Mean Annual Rainfall Road Network Appendix 2 - Basic Agricultural Data Land Classification by Sector Area Planted by Crop and Natural Region, LSC Farmers Area Planted by Crop and Natural Region, Communal Farmers Domestic Tobacco Statistics (1938-2000) Flue-Cured Tobacco, Yield Analysis by District (1999/2000) Flue-Cured Tobacco, Price Analysis by District (1999/2000) Appendix 3- Yield and Cost Assumptions Yield and Fertiliser Assumptions Farmgate Price Assumptions Derivation of Annual Investment Costs - LSC Farmers Derivation of Annual Investment Costs - SSC Farmers Derivation of Annual Investment Costs - Communal and Resettlement Farmers Bibliography and References Page v Costs and profitability of tobacco compared to other crops in Zimbabwe ACRONYMS AND ABBREVIATIONS CFU Commercial Farmers' Union CGA Coffee Growers' Association CSO Central Statistical Office FDT Farmers' Development Trust GMB Grain Marketing Board HPC Horticultural Promotion Council TIMB Tobacco Industry and Marketing Board LSC Large -scale commercial farmer/s SSC Small-scale commercial farmer/s ZFU Zimbabwe Farmers' Union ZTA Zimbabwe Tobacco Association CURRENCY EQUIVALENTS Local Currency = Zimbabwe Dollar (ZWD) USD 1.00 =ZWD 55.00 ZWD 1.00 =USD 0.018 WEIGHTS AND MEASURES I hectare (ha) = 2.417 acres 1 kilogram (kg) = 2.204 pounds 1 kilometre (km) = 0.62 miles Page vi Costs and profitability of tobacco compared to other crops in Zimbabwe ACKNOWLEDGEMENTS The marketing information and crop models presented in this study are based on discussions with large-scale commercial and smallholder farmers, agricultural extension workers, farmers' representatives, commodity associations, agribusiness firms, input supply companies, government officials and others with a detailed knowledge of sector performance and agricultural conditions in Zimbabwe. This paper would not have been possible without the contributions of these individuals and the assistance of all people met is gratefully acknowledged. Special thanks go to Shepherd Shamu for his help and collaboration during the data collection phase of this project. Special thanks also go to Kuda Ndoro, Richard Amyot, Malcolm Vowles, Stanley Heri, Chris Molam, Jabulani Ndabambi, Dave Golloch, Graeme Evans, Malcolm Jones, Jabulani Marumahoko, Stanley Mutepfa, Dave Rockingham, John Robertson, and Leslie Cousins. Additional advice and comments were provided by Joy de Beyer, Ayda Yurekli and Steven Jaffee of the Wor Id Bank. Victoriano Arias helped prepare the manuscript for publication. Questions and comments on this study are welcome by writing to the author at Box 35220 Lusaka, Zambia or by email to jck@zamnet.zm. Page vii Costs and profitability of tobacco compared to other crops in Zimbabwe Executive Summary Why this study? Zimbabwe's economy depends heavily on tobacco. There is concern that global efforts to reduce tobacco use may reduce demand for tobacco and significantly affect Zimbabwe's economy and tobacco exports. Global tobacco demand has recently been stable or falling very gradually. However, public health efforts to reduce demand are offset by aggressive cigarette marketing, rising population and incomes, and the strongly addictive effects of nicotine. But tobacco prices have softened, and the long-term prospects are uncertain. Governments concerned about the future of tobacco are considering diversification options and strategies to develop other high-value crop substitutes (as well as broader diversification and growth opportunities). The world's fourth largest flue -cured tobacco producer and the largest producer of tobacco leaf in Africa, Zimbabwe exports 90 percent of its raw tobacco and has typically earned around USD 600 million in foreign revenue annually, equal to almost 10 percent of GDP, 30 percent of total exports and 50 percent of agricultural exports. Moreover, 250,000 people or 5% of Zimbabwe's total labor force are engaged in tobacco-related work including tobacco farming, manufacturing and retailing. Most tobacco in Zimbabwe is grown by large-scale commercial farmers, who account for about 87% of the land under tobacco and 95% of the total crop. This study compares the financial costs and retums to tobacco with twelve (traditional and non-traditional) alternative crops, looking at profitability, costs, labor intensity, financial support, technical infrastructure, land-suitability, marketing difficulties, world demand, and production risks. The information may be useful to agriculturalists and government officials who are interested in exploring the potential for diversification by different sized farmers, as Zimbabwe considers options for the future. The study aims to provide an improved understanding of the trade-offs individual growers face in deciding what crops to grow. The analysis is based on an original set of 91 production budgets estimated in January 2001 specifically for this study, that estimated financial costs and returns in Natural Region II at the time. It should be noted that in 2000/2001, veterans of the independence war occupied several commercial farms and Government subsequently gazetted over 5,300 farms for compulsory acquisition and resettlement. This study took place before the impact of these events on agricultural output (and tobacco in particular) was evident, and does not address whether and how they might affect tobacco farming and its contribution to the economy of Zimbabwe. Short summary of the Study The study shows that tobacco is a highly profitable cash crop for both large and small farmers, generating direct income for large-scale farmers, and indirect (wage) income for smallholder farmers. Dramatic changes in prices and yield are unlikely in the near future. And tobacco would remain relatively profitable, even if prices fell considerably. Farmers in Zimbabwe are aware of the risk of depending on one cash crop and have begun diversifying to lessen their tobacco dependence. Large scale commercial (LSC) farmers have diversified into coffee and paprika, and horticultural crops - notably roses and supermarket vegetables- using their tobacco profits. These products can be grown in the Page viii Costs and profitability of tobacco compared to other crops in Zimbabwe same soil as tobacco, and generate high profits as well as employment opportunities. The study discusses the limitations of these alternatives, and notes that despite some rapid increases in same crops (especially horticulture), they are still grown at a very limited scale compared with tobacco. Tobacco Tobacco is one of the most profitable cash crops for both large -scale commercial and smallholder farners. The study shows that tobacco would provide good financial returns even after a large drop in yield or price. Tobacco is likely to remain a very attractive crop for all categories of farmer even under progressively difficult market conditions. There are around 2,000 large-scale commercial tobacco growers, and 16,000 tobacco- growing smallholder farmers - less than 1.5% of all smallholder households. Most smallholders grow only very small amounts of tobacco, in part because few smallholders have land that is suitable for intensive farming of tobacco. Even for farmers in suitable agro-ecological areas, however, tobacco is expensive to grow, with high up-front costs that smallholder farmers may not be able to cover. For example, high costs of production of flue-cured tobacco are a barrier to most cash-poor smallholders in tobacco areas. The financial incentives to smallholder farmers with the appropriate land to grow tobacco are, however, strong with the relative returns to cash and labor considerably higher than for most other crops. Traditional Crops The study examined five traditional crops: maize, soybeans, cotton, groundnuts, and wheat. These crops are cheaper to produce but provide much lower income to farmers. In fact, LSC farmers appear to earn a net loss from many of these crops when the annual depreciation cost of fixed assets is taken into account. In addition to being an important part of most crop rotation systems, however, these traditional crops provide farmers with a steady cash flow, and in the case if maize, are important fcr on farm consumption. For smallholder farmers, maize, cotton and groundnuts are important sources of cash income and an essential part of most household food security strategies. a. Cotton is Zimbabwe's third most valuable agricultural export after tobacco and horticulture and is a key economic sector in terms of contribution to GDP, employment, and export earnings. More than 200,000 smallholder households derive their livelihood directly from cotton. 60% to 80% of Zimbabwe's total cotton crop is produced by communal and resettlement farmers (part of smallholder farms). b. Groundnuts are suited to tobacco soil, which makes it an excellent rotation crop. Smallholder farmers produce 95% of the crop, most for domestic consumption, with only 5% grown as a cash crop. Groundnuts are more labor intensive than other traditional crops except cotton and are one of the most important sources of protein in rural diets. Smallholder groundnuts are generally not exported due to problems with mixed and outdated varieties and with aflatoxin. c. Soybean is mainly produced by LSC farms. Soybeans can often return a net loss, but are inexpensive to produce and can provide a good gross income to finance other more profitable enterprises. Soybeans are the least labor intensive crop and are rotated with irrigated wheat, which is highly profitable. Page ix Costs and profitability of tobacco compared to other crops in Zimbabwe d Wheat is much cheaper to produce than cotton and groundnuts, but more profitable than all other traditional crops and requires very little labor. Wheat prices were controlled until 1994, and all sales had to be through the state-owned GMB. LSC farms are not equipped with storage space for wheat, and therefore need to sell their crops in the high supply season when the prices are low. Zimbabwe is a net importer of wheat. e. Maize is Zimbabwe's primary staple food and arguably more important to the national economy than even tobacco. Communal and resettlement farmers grow 60% of the national maize crop, mostly for their own consumption. Because of low producer prices and market uncertainty, mcst emphasis by LSC and smallholder farmers alike is now given to producing maize mainly for on-farm consumption rather than cash sale. Alternative crops and diversification Most commercial farmers already have diversified sources of income, and have introduced various high-value crops including export roses, supermarket vegetables, paprika and coffee as part of their farm system, specifically to lessen their dependence on tobacco. As with all business decisions, the challenge for farmers is to find the right blend of crop enterprises that works best for them. Beyond the enterprises covered here, for example, the study indicates that, other than the crops discussed in the study, many other niche products also offer diversification potential for smallholder and LSC farmers including mushrooms, flower seeds, medical plants and spices. Citrus crops, including oranges, grapefruit and lemons are an important diversification option with more than 88,000 hectares of orchards planted on LSC farms as of 1999. Game ranching on LSC farms has been another popular diversification activity and can provide an important source of supplemental income. Issues with alternative non-traditional and horticultural crops: Non-traditional crops are costly to produce when comparedto traditional crops but less costly than tobacco and horticultural exports. a. Non-traditional crops have their own limitations. For example, paprika is highly dependent on climatic conditions (rainfall), coffee is a relatively new crop and would require substantial investment. Cotton offers lower income than tobacco but does offer an excellent rate of return on cash and total production costs. b. Smallholder farmers generally enjoy fewer opportunities to grow and market non- traditional cash crops than LSC farmers because of the lack of extension support, uncertain returns and special infrastructure requirements. c. The study shows that these alternative highly profitable crops, specifically horticultural exports - roses and supermarket vegetables - are very expensive to grow and require large capital investment to create specialized infrastructure and processing facilities, (eg special irrigation equipment) and are highly skill intensive. These crops face marketing constraints when compared to tobacco. d The study indicates that horticulture is Zimbabwe's second most valuable agricultural export after tobacco and earned more than USD 124.9 million in gross foreign income in 1999/2000 season, equal to approximately 1.5% of total GDP. More than 80% of horticultural exports are grown on LSC tobacco farms and were first developed using tobacco revenues. Page x Costs and profitability of tobacco compared to other crops in Zimbabwe e. For smallholder farmers, successful horticultural exports depend heavily on technology transfer. The exporter provides extension agents to give advice and ensure that each crop is being grown to the required standards. The study reports that despite the barriers to entry, there are now plans to try and expand to new areas and involve more farmers. Employment and income generating potential One of the main arguments against measures to reduce the demand for tobacco is the worry that falling demand will cause job losses in the farm sector. Tobacco is a good source of indirect income for smallholder farm households with family members who work as wage-laborers on large-scale commercial tobacco farms. Simple calculations suggest that the total wage bill for tobacco grown on LSC farms is around USD 47.3 million. To the extent that a share of this income is sent as remittance payments to family members in communal areas, tobacco can play a major role in helping to finance the inputs needed for improved management of major smallholder crops including maize and cotton. In countries where most of the tobacco crop is consumed domestically, expenditure switching will create demand for other goods and services, and employment gains in these other sectors are likely to offset the losses in the tobacco sector. Zimbabwe exports most of her tobacco crop, however, so if global demand for tobacco were to fall in future (altlough this is by no means certain and some analysts predict robust or even growing global demand), the impact on employment would depend on the extent to which commercial farmers were able to switch to other export crops such as roses, paprika, coffee and vegetables which are also highly labor intensive. Many other crops have similar per hectare labor requirements to tobacco, and some have further opportunities for downstream processing and growth linkages. Most of these crops are currently grown on a fairly limited scale, however, so the question would be how quickly and successfully farmers would be able to scale up exports and production of these crops, in the face of declining tobacco markets. Page xi Costs and profitability of tobacco compared to other crops in Zimbabwe THE COSTS AND PROFITABILITY OF TOBACCO COMPARED TO OTHER CROPS IN ZIMBABWE PART ONE NARRATIVE TEXT Costs and profitability of tobacco compared to other crops in Zimbabwe THE COSTS AND PROFlLTABliLTY OF TOBACCO COMPARED lEO OTHER CROPS Ei ZEMBABWE 1[. INTRODUCTION 1. This paper considers the financial costs and returns for tobacco and twelve other important crops grown by commercial and smallholder farmers in the intensive farming areas of northern and central Zimbabwe. Tobacco is of critical importance to the Zimbabwean economy and typically generates around USD 600 million in foreign revenue annually, equal to almost 10 percent of GDP and 30 percent of total exports. Although global demand for tobacco is still strong, pressure from international health organisations, anti- smoking groups and new trade protocols all threaten the long-term prospects of this important crop. As Zimbabwe looks to the future, therefore, it is important to consider diversification options and growth strategies in which other crops could play an increasingly important role and eventually substitute for some of the foreign earnings and employment currently accounted for by tobacco. 2. Towards this end, the primary aim of this analysis to provide an improved understanding of the trade-offs individual growers face in deciding which crops to grow. Agricultural production begins with the decisions farmers make and any successful diversification strategy must have the costs and returns for individual producers in mind. More specifically, at this critical juncture in the development of Zimbabwe, how do different crops and production technologies now compare in terms of total production costs, investment requirements, farmer profitability, employment creation, demand for credit and other matters of private and social importance? Are there attractive crop options that would justify farners making a shift away from tobacco and what would be the implications for Zimbabwe's trade balance and local employment opportunities? This paper has been prepared to help answer some of these questions and to provide an improved basis for discussion of recent development trends and future growth strategies. 3. Table 1 provides a complete list of agricultural enterprises covered by the analysis. Table 1: List of Enterprises Analysed. Large-Scale Commercial Smaliholder Dryland Irrigated Dryland Tobacco Flue-cured X X X Burley X Traditional Field Crops Maize X X X Cotton X X X Groundnuts X X X Soybeans X X X Wheat X Non-traditional Crops Coffee X X Paprika X X Marigold X Horticultural Exports Mangetout X Baby carrots X Baby corn X Roses X Page I Costs and profitability of tobacco compared to other crops in Zimbabwe A. Background 4. In geographic terms, it is first important to note that tobacco is grown almost exclusively in high-potential farm areas of Natural Region II in northeastern and central Zimbabwe. This zone accounts for less than 15% of Zimbabwe's total land area (5.86 million hectares), but is ideally suited to intensive farming with a more or less reliable 750 to 1 000 mm of rainfall coming in the summer months from late-October until the end of March. Large-scale commercial farmers occupy almost 63% of this high potential farmland. By contrast, Natural Regions III, IV and V are much less suited to intensive farming with progressively arid conditions less suited to tobacco and other crops. Smallholder farmers occupy about 71% of the farmland in these lower-potential areas equal to about 18.7 million hectares in total. Natural Region I is mostly in the Eastern Highlands with a mild climate suited to specialised farming and forestry. Maps showing the location and rainfall expectations of each Natural Region and also the location of Zimbabwe's 15 main flue-cured tobacco growing districts are given in Appendix 1. Further details on the breakdown of land classification by farm sector and area planted to different crops in each Natural Region are given in Appendix 2. 5. In interpreting the discussion that follows, it is also important to bear in mind that large-scale commercial farmers dominate Zimbabwe's tobacco sector. Although there are fewer than 2 000 commercial tobacco growers, these producers account for about 87% of area planted and 95% of the total crop equal to some 180 to 240 million kilos of flue-cured tobacco annually. Furthermore, most commercial farmers already have diversified sources of income. Although tobacco is still the backbone of commercial agriculture in most locations, other important crops for large-scale farmers include wheat, soybeans, maize, groundnuts and livestock, which (in tobacco areas) are typically grown in rotation with tobacco. Most commercial tobacco farmers practice a 5-year rotation and these crops are an important part of the overall land use system and help provide a steady cash flow. More recently, many commercial growers have also introduced other high-value crops including export roses, supermarket vegetables, paprika and coffee as part of their farm system specifically to lessen their dependence on tobacco. More than 80% of all horticultural exports, for example, are grown on tobacco farms and were first developed using tobacco revenue. 6. Smallholder farmers, by comparison, are only marginally involved in the direct production of tobacco. Although there are roughly eight times as many smallholder tobacco growers (about 16 000 in total for burley and flue-cured tobacco) compared with large commercial farmers, these account less than 1.5% of all smallholder households and just 7% of those in suitable agro-ecological areas. Certainly, the importance of tobacco as a high profit crop with fully developed market outlets cannot be overlooked for these producers, but it should also be noted that maize, cotton and groundnuts are all more important for smallholder farmers in most locations. In this respect, the greatest threat from shrinking tobacco markets for the smallholder sector is not so much the potential loss of direct farm enterprise income, but rather the loss of remittances sent by family members employed on large-scale commercial farms. 7. Before proceeding, it should also be noted that this analysis has been preparedat a critical time in the development of Zimbabwe. Apart from the pressure on tobacco from international health organisations, new trade protocols and other sources, the overall future of the agriculture sector is now facing great uncertainty in terms of the controversial program of land acquisition and resettlement. Although this paper has no interest to enter the political debate over land or to predict the outcome of current events, it is not possible Page 2 Costs and profitability of tobacco compared to other crops in Zimbabwe to overlook the present situation and implications for development opportunities in agriculture. 8. No matter how one interprets recent events, for example, it is clear that current conditions in Zimbabwe not only discourage new investment but also make it difficult to sustain existing farm production in Lerms of access to seasonal credit, fuel shortages, high inflation, land occupations and foreign exchange controls that distort the cost of imported inputs. For large-scale commercial farmers, the strategy now is mainly one of survival and bracing for the worst rather than to invest in new technologies and infrastructure as part of a drive towards crop diversification. Smallholder farmers have likewise been affected by the poor investment climate and are perhaps even more dependent on improved conditions than commercial growers. One of the key findings from the analysis is that that the most profitable crops and management systems depend on specialised infrastructure and technical support services. Quite simply, until the economic and poliltical situation improves, few entrepreneurs are willing (or able) to invest in these services, thereby limiting the opportunities for broad-based growth and diversification. B. Main Findings 9. Putting aside current political and economic constraints, the overall results of the analysis are encouraging and show that several crops apart from tobacco offer an opportunity for high producer profits and attractive rates of return. Other crops that rival and/or surpass tobacco in terms of potential net profit include roses, paprka, coffee and supermarket vegetables for large -scale commercial farmers and paprika, coffee and cotton for smallholder growers. These crops can all be grown in the same areas as tobacco and provide excellent rates of return to total production costs. On the other hand, these crops are also relatively expensive to produce and, with high- input management, are sometimes more costly than tobacco. This is especially true for high-value horticultural crops and long-season irrigated paprika on commercial farms. 10. The analysis also shows that many traditional agricultural crops including wheat, soybeans, groundnuts and maize are now marginal activities for large-scale commercial fanners and, in some cases, even return a net loss and fail to cover the long-run depreciation cost of fixed assets. On the other hand these traditional crops do, in most cases, provide a positive gross income and are therefore important in terms of helping to finance other more profitable and expensive crops like tobacco, paprika and coffee. In turn, the very good financial returns from these high-value enterprises help offset the net losses from traditional field crops and the analysis shows these are still a fundamental ingredient to most successful farm strategies. 11. For smallholder farmers, the opportunities to earn high profits from crops other than tobacco are more limited. Although paprika, coffee and cotton do, in certain cases, offer a potential for more income compared with burley tobacco and low -input flue -cured tobacco, these crops each have their own limitations. 12. In the case of paprika, for example, which is the most profitable smallholder crop apart from tobacco, yields are highly dependent on rainfall and can easily be wiped out by adverse growing conditions. Whereas large-scale farmers are able to protect themselves from some of these risks through irrigation, most smallholder farmers do not have access to this technology and paprika is typically considered a risky enterprise for smallholder growers. Coffee is likewise an attractive possibility and can provide a net income that rivals many tobacco scenarios, but is a relatively new crop in tobacco areas and would Page 3 Costs and profitability of tobacco compared to other crops in Zimbabwe require a substantial investment in farmer training and also pulping and processing facilities before it can be widely promoted in these locations. With respect to cotton, this enterprise generally provides a much lower income that tobacco (except compared with some levels of burley management), but does offer an excellent rate of return to cash and total production costs. At the national level, cotton is the most widely grown smallholder cash crop. 13. Importantly, for all categories of farmer, the analysis shows that the most profitable crops and production technologies require specialised infrastructure, processing facilities and other support services. This is especially true with respect to roses and vegetable exports, which can be very profitable but are also extremely expensive to grow and extraordinarily skill intensive. These enterprises also require a large capital investment in processing and packing facilities, special irrigation equipment and other infrastructure including greenhouses and insulated trucks for roses. Some large vegetable exporters have been working with smallholder farmers near Harare to povide inputs and develop a network of collection points for baby corn and mangetout, but these programs are expensive to establish and are still relatively small with only limited farmer participation. 14. In this respect, marketing constraints are one of the main obstacles to success with most high-value crops that could compete with tobacco in terms of profitability and potential export earnings. Again, this is most obvious in the case of roses and export vegetables, which must be grown to exacting European standards and delivered in fresh condition according to a tight time schedule. Paprika, on the other hand, is far more forgiving and can be sold to local export agents and processing companies on forward contract. Although this helps to minimise some production and marketing risks, relatively small world demand for paprika means that prices are highly sensitive to increased production and the crop could never substitute for tobacco on its own. 15. In terms of labour requirements, the data show that tobacco generates more employment opportunities per hectare than nearly every other enterprise analysed. This is one factor often noted by proponents of tobacco to illustrate the overall importance of the crop to the national economy and the calculations here suggest that the total wage bill for tobacco grown on large-scale commercial farms could be as high as ZWD 2 600 million (USD 47.3 million). 1 To the extent that a share of this income is sent as remittance payments to family members in communal areas, tobacco can play a major role in helping to finance the inputs needed for improved management of major smallholder crops including maize and cotton. 16. Although these benefits of tobacco cannot be ignored, the data show that many other crops are also very labour intensive and so offer similar opportunities for employment creation on a per hectare basis. Roses are perhaps the best example of this where just one hectare generates almost as many jobs as 25 hectares of flue -cured tobacco. Of the other (more comparable) field crops, paprika, coffee and export vegetables all demand a similar amount and sometimes more labour than tobacco with further opportunities for downstream processing and growth linkages. Because of limited market outlets and intensive management requirements, however, these crops are mostly grown on a much smaller-scale than tobacco and it is unlikely any single enterprise could ever I Calculations based on average per hectare wage bill for LSC flue-cured tobacco of ZWD 34 053 (USD 619.14) and total area planted in 2000 (76 1 10 hectares). Page 4 Costs and profitability of tobacco compared to other crops in Zimbabwe subst.itute for a loss of tobacco employment without growth in other economic sectors including industry and tourism. It should also be noted that crops with a high labour requirement are not always attractive from the farmer's point of view. Given the potential for labour unrest, concerns over security and still rising rates of HITV infection, machine cultivated crops can sometimes be more attractive even with lower financial returns. 17. Finally, in terms of vulnerability to variations in price and yield, the analysis shows that tobacco is one of the most robust options available to both large -scale commercial and smallholder farmers in that the crop is still able to provide good financial returns even after a large drop in yield or price. Although Zimbabwe's ability to compete in world tobacco markets also depends on the costs of production compared with other tobacco growing countries, this finding is important and suggests that tobacco is likely to remain a very attractive crop for all categories of farmer under progressively difficult market conditions. This statement is not to suggest that Zimbabwe can afford to be ccmplacent in terms of aiming for an agriculture sector that is less dependent on tobacco. The long-term future of tobacco is still under considerable pressure. The analysis does, however, suggest that time may be on Zimbabwe's side as it works to develop other high-value crop substitutes. 18. No matter how the results are interpreted, it is important to stress that the analysis has been prepared mainly to stimulate discussion of the opportunities for agricultural growth and diversification and cannot point to optimal or best farm strategies for individual tobacco growers. Profitability, risk and production costs are important to the process of farm decision-making but only tell part of the story. Each grower must consider their own cash flow requirements, distance to market, local climate and personal preferences among other factors in deciding which crops to grow. Many other farm enterprises besides those covered here also offer diversification potential including spice crops, game ranching, medicinal plantsand sun-dried vegetables. These and other crops can all provide an important source of farm income and the challenge for each farmer is to find. the right mix of enterprises that works best for them. H. METHODOLOGY AND PROCEDURES 19. This section summarises and explains the methodology, key assumptions and financial indicators used for the analysis. All monetary values are expressed in Zimbabwe Dollars (ZWD) using observed financial prices prevailing in late January 2001. The official exchange rate of ZWD 55.00 = USD 1.00 was used to convert foreign values as needed. A. Approach 20. The quantitative analysis is based on a set of 91 production budgets estimated specially for this study to reflect current financial costs and returns to agriculture in Natural Region II to the best extent possible. These budgets cover fourteen distinct crop enterprises including flue-cured and burley tobacco plus twelve other crops that either cornplement tobacco or offer diversification potential. To provide a broad indication of the relative costs and returns for different crops, several levels of farm management are considered for each enterprise. Livestock enterprises have not been covered, but do offer a certain amount of diversification potential in terms of their capacity to provide a regular income and help in sustaining other farm activities. Page 5 Costs and profitability of tobacco compared to other crops in Zimbabwe 21. Data collection was carried out in Zimbabwe during the second half of January 2001 with assistance from a local counterpart. This exercise involved first-hand discussions with large and small commercial farmers as well as other smallholder growers, input dealers, commodity brokers, extension workers, government and donor representatives, farmer unions and others with a first hand knowledge of agriculture conditions in Zimbabwe. Draft crop budget data were supplied by the Commercial Farmers' Union (CFU), Zimbabwe Farmers' Union (ZFU), Agritex, Zimbabwe Tobacco Association (ZTA), Farmers' Development Trust (FDT), Horticultural Promotion Council (HPC) as well as other corporate and private producers met along the way. 22. Based on the results of this exercise, the next step was to prepare the full set of indicative production budgets being analysed here. This was done by comparing the draft budget data and other information collected in Zimbabwe for consistency and by crosschecking this with CSO and other statistical data for general accuracy. Yield and input assumptions are based on high-potential farm areas in Natural Region II where most tobacco is grown. 23. Although great care was taken to produce a consistent data set based on current prices, standard investment costs and realistic yield assumptions, it should be stressed that these models do not provide a definitive picture of all the costs and returns for individual producers. Rather, the overall objective is to provide an indication of the costs and returns for a broad range of crops and it is most helpful to think of the results as a continuum of production possibilities. Specific levels of input use, actual yields and overhead costs all vary substantially from producer to producer. It must also be emphasised that the analysis cannot point to optimal farm strategies. Profitability, risk, operating costs and investment requirements are critical to the process of farm decision making but only tell part of the story. Many other demand-side factors, including regional market conditions, price trends and consumer preferences must also be considered in deciding which enterprises should be pursued and how best to allocate scarce investment resources. 24. In presenting the results for each enterprise, a brief overview of production trends and marketing issues is given to help interpret the quantitative indicators. Brief summary tables with key financial results for each crop accompany the narrative test. The complete data set is presented in Part Two with separate tables ranking each enterprise by selected indicators. B. Farm Sectors 25. The production models developed here cover three farm sectors including (i) large - scale commercial farmers; (ii) small-scale commercial farmers; and (iii) communal and resettlement farmers. These distinctions are especially important to how annualised per hectare investment costs for each enterprise are calculated. They also help to separate farmers in terms of management skill, input use, labour requirements and access to technology and credit. 26. Throughout the text, the term "smallholder farmer" is often used to refer both to small-scale commercial (SSC) and also communal and resettlement farmers. Although SSC farmers generally produce at a much higher level than communal and resettlement farmers, this approach is consistent with the use of crop budgets to represent a continuum of production possibilities. A distinction is still made in terms of how annual investment costs are calculated for each sub-sector based on the additional inputs required for more intensive management. Page 6 Costs and profitability of tobacco compared to other crops in Zimbabwe 27. Large-scale commercial farmers (LSC). LSC farmers are characterised by their use of modem machinery, overhead and drip line irrigation and permanent waged labour. Holdings in this sector can be very large and it has been estimated that fewer than 5 000 LSC farmers occupy 21% of Zimbabwe's total land area equal to 8.2 million hectares, including 3.69 million hectares in Natural Region II. Less than 20% of all LSC farms are smaller than 200 hectares and half are greater than 1 000 hectares. Of this total, however, only a relatively small area may be suitable for cultivation and most LSC farmers crop between 100 to 500 hectares annually. The majority of LSC farms are under freehold ownership by individuals, limited liability companies and large corporations. 28. For this study, it is assumed that LSC farmers in tobacco areas cultivate a total of 300 hectares annually of which 80 hectares are irrigated and therefore double cropped. This gives a total farm size of 380 hectares against which the per hectare depreciation 2 costs of basic machinery, vehicles and buildings are calculated. Again, specific conditions can vary quite considerably from farm to farm with important implications for overall crop profitability. 29. Small-scale commercial farmers (SSC). Loosely defined as indigenous commercial farms, these holdings were first developed by the Rhodesian Government between 1931- 1961 in an effort to reduce congestion in communal areas reserved for the indigenous population. There are about 9 000 holdings in the SSC sector occupying a total area of 1.4 million hectares including 240 000 hectares in Natural Region II. Half of these farms are under conditional freehold title, while others are under a long-term lease with an option to buy. Although not as advanced as LSC growers, most SSC farmers still produce at a reasonably high level and enjoy good access to basic equipment including ox ploughs and carts, hand sprayers sufficient bam space for curing tobacco and baling equipment. It is not unusual for some SSC farmers to cultivate by own or hired tractor. 3 30. For this study, it is assumed that SSC farmers have access to a total of 10 hectares of arable land of which 6 hectares are cultivated each year. These farmers are assumed to own two teams of work oxen and most basic implements. 31. Communal and resettlement farmers. Communal areas were previously referred to as native lands or tribal trust lands and collectively occupy about 42% of Zimbabwe's total land area equal to 16.4 million hectares. Although most of Zimbabwe's 1.13 million communal farmers are located in the relatively drier parts of the country outside Natural Region II, there are still an estimated 243 000 holdings (covering 308 000 hectares) in high potential areas suitable for tobacco. The concept of resettlement farming was introduced shortly after independence in 1980 to ease congestion in communal areas, and also to resettle landless people. There are approximately 71 000 resettlement farms occupying a total area of 3.3 million hectares, including 590 000 hectares in Natural Region II. Especially in areas where farmers have recently been resettled, however, limited access to rural services and other infrastructure needed to support commercial and subsistence agriculture is often a major constraint. 32. For this study, it is assumed that communal and resettlement farmers have access to 5 hectares of arable land of which 3 hectares are sown to crops each year. These 2This applies to most field crops. For coffee, roses and export vegetables separate calculations of appropriate investment costs have been carried out. See Appendix 3 for details. 3Because of recent fuel shortages, most of these farmers have had to revert to ox cultivation. Page 7 Costs and profitability of tobacco compared to other crops in Zimbabwe farmers produce at a fairly basic level, but still use some purchased inputs including fertiliser and agro-chemicals at most management levels. It is assumed that cultivation is by hired ox plough. C. Management Levels 33. Several levels of commercial and smallholder management are analysed for most enterprises. For LSC farmers, the first or "low" input level is intended to reflect fairly basic management practices and is characterised by relatively light application of fertilisers, pesticides, herbicides and other inputs. The second, or "medium" production level is based on a more intensive use of inputs and, in a broad sense, is roughly indicative of the management practices employed on most LSC farms. The third, or "high" input level is based on even more intensive use of crop inputs and yields that can be achieved through very good management under most normal conditions. 34. For smallholder farmers, similar definitions of low, medium and high input management apply. Each successive level is based on better weed control, timelier planting and more intensive use of purchased inputs. For many crops, only three levels of smallholder production are considered. In these cases, production using low and medium management is attributed to communal and resettlement farmers and production at the high level is attributed to SSC growers. In the case of tobacco and maize where management practices vary more widely, three management levels are considered for each sub-sector. Again, actual conditions can vary quite considerably from farm to farm it is most helpful to think of the results (for all farm sectors) as a continuum of production possibilities rather than a literal expression of the costs and returns for individual growers. D. Main Assumptions 35. Yield. Yield assumptions are intended to reflect the output farmers in Natural Region II can expect in a year with normal growing conditions using the inputs costed in each production model. These assumptions are based on budget information collected during fieldwork and discussions with farmers, crop experts, input dealers and others with a detailed knowledge of farm conditions in Zimbabwe. To ensure that these estimates reflect actual performance by each farm sector, CSO data for the past six agricultural seasons were also compared to derive the estimates used for budget analysis. A complete list of all yield assumptions is given in Appendix 3. 36. Prices. Current prices as of January 2001 are applied to the analysis of each enteryrise. This snapshot approach assumes that domestic inflation will affect all prices to the same extent so that future costs and returns for each enterprise retain their same general relation. The only exception to this approach is the case of maize where additional calculations are made based on the higher cost of purchasing grain ten months after harvest when local supplies are scarce. More detailed analysis would require estimation of a monthly cash flow using expected future prices. 37. Crop marketing. Marketing arrangements vary by crop. For most commodities, it is assumed that farmers transport their output to Harare where it is sold directly to the Grain Marketing Board (GMB), a private buyer or, in the case of tobacco, by auction. With vegetable exports, it is assumed that farmers deliver their crop to a nearby depot where it is collected by an export agent. For roses, two marketing arrangements are considered in which farmers either sell 100% of their flowers through the Dutch auction or Page 8 Costs and profitability of tobacco compared to other crops in Zimbabwe as part of an export consortium with a direct contract for delivery to a European buyer. 4 As noted, a special exception is also made in the case of maize, which is grown by both LSC and smallholder farmers as a cash crop and for on-farm consumption. In this case, imputed farmer profits are calculated for growers who sell different shares of their total harvest. 38. Transportation costs. So that the results for each enterprise can be compared directly, all farms are assumed to be 100km from Harare. This is where all crop inputs are procured and most outputs sold. A standard cost of ZWD 680.00 (USD 12.36) per ton is charged in all production budgets for fertiliser and other heavy items that must be moved over this distance. For coffee, an additional cost of hauling green coffee 250km to the Mutare Coffee Mill is included.5 Other adjustments have been included depending on the marketing arrangement for each crop. 39. Labour. For LSC farmers, a distinction is made between permanent waged labour and casual workers. As is standard practice, permanent waged labourers are provided housing, medical benefits and education support for children. A standard cost of ZWD 84.00 (USD 1.52) per day is used in all budgets for this labour including direct wages and additional benefits. For casual workers on LSC farms, a daily rate of ZWD 54.00 (USD 0.98) is used. 40. On smallholder farms, a distinction is made between family and casual labour. Casual workers are paid a standard fee of ZWD 40.00 (USD 0.73) per day and are employed only for tasks where there is a shortage of family labour. The cost of family labour, on the other hand, is not included as a financial charge in the production budgets since this does not have to be paid for with an actual expenditure of cash. The availability of family labour is estimated on the basis of a five-member household with adjustments for specific tasks that must be carried out over a limited number of days. 41. Interest. No charge for seasonal credit is included in the crop budgets. Although nominal interest rates are currently very high at around 65%, these charges are much lower in real terms and have even been strongly negative in recent times (measured as nominal interest minus inflation). Given that the analysis works entirely in current prices, therefore, it would not be appropriate to include nominal interest charges since these would be offset by inflation when the loan is due. Furthermore, the credit requirements of individual producers vary greatly depending on the range of farm enterprisesand each system's cash flow requirements. 42. To avoid possibly serious error, therefore, the approach taken is simply to identify all expenses that must be covered before each crop is sold. Depending on real movement in interest rates, it should be stressed that this approach risks of a bias in favour of crops that require heavy material inputs that are often borrowed for. This should be kept in mind when interpreting the results that follow. More advanced farm modelling based on the costs and returns fcr different cropping patterns would be needed to estimate indicative credit requirements for an entire production system. 4In these scenarios, 15% of flowers are still sold through the auction to establish their benchmark price. 5Actual transport costs for coffee (and all other crops) vary depending on the location and specific marketing arrangement used by each farmer. As a new crop in northern areas, many tobacco farmers that have introduced coffee are also installing their own hulling equipment with the aim of selling coffee directly to international buyers form their own farmngate. Page 9 Costs and profitability of tobacco compared to other crops in Zimbabwe 43. Investment costs. The annual per hectare cost of long-term investment items including tractors, ploughs, ox drawn equipment, tobacco barns, sprayers, buildings and other crop inputs with a useful life spread over more than one season have been estimated for each farm sector. Briefly, the approach taken was to determine the so-called capital recovery cost of each fixed investment required by different crops. Specifically, this cost is the annual payment that will repay the cost of a fixed input over its useful life and provide an economic rate of return on the investment. This approach has the advantage over the simple division of an input's value by its useful life as it accounts for the fact that if the farmer did not purchase the input, the money could have been invested in some other on- or off-farm enterprise.6 44. Capital recovery costs have been estimated for several different sets of farm machinery. These include a standard cost for all basic machinery, vehicles and buildings used by each farm sector plus separate calculations for special equipment and materials required for specific enterprises. In the case of irrigated wheat for example, this crop must cover per hectare depreciation costs of all basic machinery plus irrigation equipment. Dryland maize only has to cover the per hectare cost of basic machinery whereas irrigated tobacco must cover the cost of basic machinery, irrigation equipment and specialised tobacco implements. Full details of the calculations for implements used by each farm sector are given in Appendix 3. E. Financial Indicators 45. The spreadsheet models calculate a broad set of financial indicators to help interpret the financial costs and profitability of each enterprise and production level. Unless noted, all values are expressed in per hectare terms to allow cross -commodity comparisons. 46. Production costs. Five cost measurements are provided for each enterprise as follows. * Cash costs before sale are inputs that must be paid for before the crop is sold including seed, fertiliser, agro-chemicals, packing materials, coal, firewood, vehicle and tractor operation, wages and crop insurance. These costs must either be financed with seasonal credit or income from other farmn activities. * Cash deductions after sale include auction fees, crop levies and other marketing charges that are deducted after each crop is sold. For smallholder farmers, it is assumed that the farmer strikes a deal with a local vehicle owner so that transportation costs to market are treated as a cash deduction. * Total variable costs are all cash costs incurred on a seasonal basis. These exclude family labour for both LSC and smallholder farmers. * Investment costs are measured as the annual per hectare share of the capital recovery cost for each implement as described above. 6 Annual cost per hectare = purchase price of implement * per hectare share of use * capital recovery factor. CRF = ((I+i)^n)*i/(l+i)An-l where i = real interest on savings and n = number of years in the implement's useful life. For a full description of this methodology see Monke and Pearson (1989), The Policy Analysis Matrixfor Agricultural Development, Cornell University Press, Ithaca. Page 10 Costs and profitability of tobacco compared to other crops in Zimbabwe * Total production costs include all variable or cash costs and fixed investment costs. These do not include an imputed value for family labour. 47. Farmer income. Farmer income is measured in gross and net terms. Gross profit shows the seasonal income from each enterprise; net profit measures the ability of each activity to cover the long-term depreciation cost of fixed assets. * Gross profit = total revenue - all cash costs. * Net profit = total revenue - all cash costs - annualised investment costs. 48. Rates of return. The returns to cash and total expenditure are measured as follows. Enterprises with a high ratio provide a better return to the expenditure on inputs than those with a low ratio. * Return to variable costs = gross profit/total cash costs. * Return to total costs = net profit/total production costs. 49. Labour. In addition to the estimated number of days of family and hired labour required for each enterprise, the following information is also provided. For LSC enterprises, the total wage bill includes the cost of both permanent and casual workers. * Wage bill = days hired labour * applicable wage rate. * Gross profit per day family labour = gross profit/days family labour. * Gross profit per day total labour = gross profit/days family and hired labour. F. Sensitivity Indicators 50. Of the risks farmers face, variations in yield and price are among the most important. These risks are particularly evident in Zimbabwe due to the threat of drought and uncertain economic and political conditions. Because fluctuations in yield and price are of direct importance to crop profitability, the yield and price at which each enterprise retur ns gross and/or net profit equal to zero have also been calculated. A crop that is able to withstand a relatively large drop in price or yield before returning a financial loss is said to be more robust than those where only a small variation in yield or price results in the loss of all profits. 51. When considering crop risk, farmers must also make an additional calculation of how likely a variation in price will be. A crop that is able to withstand only a small variation in price before returning a net loss could be entirely acceptable from the farmer's point of view if that crop is certain to attract the expected price. Speculative enterprises with less certain price structures involve greater risk no matter how large a variation is needed to erode all profits. As all investors do, farmers must consider ways of spreading their risk between crops that return a high profit and those that provide a stable income. Page 11 Costs and profitability of tobacco compared to other crops in Zimbabwe MIl. FLUE-CURED AND BURLEY TOBACCO 52. Zimbabwe is the largest producer of tobacco leaf in Africa and the world's fourth largest producer of flue-cured tobacco overall after China, Brazil and the USA in that order. It is possible to classify the tobacco industry in Zimbabwe into three components including (i) tobacco growing; (ii) tobacco manufacture; and (iii) tobacco distribution, including merchandising and retailing. The major focus of activity in the tobacco industry, however, is on the growing, curing and subsequent handling and distribution of tobacco leaf. The country does not have a large tobacco manufacturing industry and only produces enough cigarettes to supply domestic demand and provide a relatively small volume for export. An unusual characteristic of Zimbabwe, therefore, is that 98% of all tobacco production is exported. 53. Against this background, tobacco obviously plays a major role in the national economy. The crop normally accounts for more than 50% of agricultural exports, 30% of total exports and nearly 10% of GDP. All tobacco grown in Zimbabwe is sold on the auction floors in Harare as unprocessed leaf. In terms of revenue to farmers, total annual sales since 1990 have ranged form USD 270 to USD 593 million. An important advantage of this system and one reason many farmers like to grow tobacco is that they are paid in foreign exchange on the day the crop is sold. This money can be held in a foreign currency account for up to 60 days and is often used to procure essential imports needed to sustain farm production. Tobacco sold through the auctions then undergoes further processing by merchant companies to remove stems and tips from the leaf before being shipped abroad. This adds 30% to 50% to the crop's final export value. In 1998, the total value of tobacco exports was roughly USD 582 million. 54. Three main types of tobacco are grown in Zimbabwe including flue-cured, burley and oriental tobacco. Of these varieties, flue-cured is (by far) the most important and accounts for around 97% of the total volume. Northern and central areas of Natural Region II mostly produce a Virginia type of tobacco, whereas farmers in the east grow a thicker, slower developing type used for blended cigarettes. Burley tobacco is farmed mainly in the northeast and in the Eastern Highlands and is predominately a smallholder crop. These areas have better rainfall and longer periods of high relative humidity needed for curing. Oriental tobacco accounts for less than 1% of total output by mass and is grown mainly in Masvingo Province. Details of flue -cured and burley production by farm sector for the past two years are given are given in Table 2. A full analysis of flue-cured tobacco showing number of commercial growers, area planted and average price received in each of Zimbabwe's 15 main tobacco-growing districts is presented in Appendix 2.7 7This analysis corresponds with the map in Appendix I showing the location of each flue-cured growing district. Page 12 Costs and profitability of tobacco compared to other crops in Zimbabwe Table 2: Record of Tobacco Production by Sector (1999-2000). 1999 . 1 2000 _ No of Total Total mass No of Total Total mass growers hectares (kg '000) growers hectares (kg '000) Flue-Cured Tobacco LSC 1 791 77 875 188 056 1 766 76 110 230 299 SSC 441 1 010 920 461 1 164 1 290 Communal 1 571 1 756 1 011 2 557 2 959 1 951 Resettlement 3 365 3 928 2 038 3 734 4 566 3 282 Co-ops 26 193 119 19 158 125 Total 7 194 84 762 192 144 8 537 84 957 236 947 Burley Tobacco LSC 74 1 820 2 856 72 1 094 2 584 SSC 365 332 150 449 398 201 Communal 6 222 2 484 2 302 6 674 2 670 3 037 Resettlement 2 234 2 056 1 392 2 888 2 775 2 313 Co-ops 8 32 31 8 24 28 Total 8 903 6 724 6 731 10 091 6 961 8 163 Source: TIMB data. 55. Employment: Tobacco accounts for an estimated 250 000 jobs including direct and indirect workers in growing, manufacturing and retailing, about 5% of Zimbabwe's total labour force.8 Many other jobs also stem from tobacco's forward and backward linkages to other parts of the economy including input supply, transportation, coal mining, hospitality during the auction season and other consumer services. Remittances sent by tobacco workers to family members on communal farms can also help improve smallholde r production of major crops like cotton and maize. The analysis shows that both of these traditional crops are much more profitable when smallholder farmers can afford the inputs needed for production at medium and high input levels and it is important that LSC tobacco can help finance some of these costs indirectly. 56. Tobacco is also an important source of government revenue through a levy system in which growers and buyers both pay fixed percent on the value of crop sales. This system generates several millions of USD annually as summarised in Table 3. To encourage production, the tax rates have been reduced each year since 1999 as shown. At the new 2001 tax rate and a typical LSC yield of 2 500 kg per hectare, flue-cured tobacco generates an estimated ZWD 7 260 (USD 132) in government revenue per hectare. Table 3: Government Tobacco Levy. Auction Year Tax Rate Total Revenue USD Total Revenue ZWD 1996 5% + 5% 43 553 989 429 486 819 1997 5% + 5% 43 236 859 492 759 409 1998 5% + 5% 37 248 464 750 248 172 1999 5% + 5% 33 455 822 1 272 750 774 2000 2.5% + 2.5% 18 400 000 862 500 000 2001 (forecast) 1.5% + 1.5% 11 000 000 605 000 000 Source: ZTA data. 2001 forecast based on own budget analysis (average yield 2 500kg/ha) and total area planited as reported by ZTA. 8 Industry estimate of tobacco related jobs and World Bank (1998) African Development Indicators 1998/99 for estimate of total labour force (5.18 million "economically active" workers in 1996 using ILO definition). A rnisleading figure often cited in Zimbabwe is that the crop accounts 25% of total employment. This is perhaps true if measured as a share of formal employment and tobacco is certainly a major source of economic activity in terms of household remittances and demand for consumer services. A useful area for further research would be to look at the question of tobacco related employment in more detail. Page 13 Costs and profitability of tobacco compared to other crops in Zimbabwe 57. In the high-potential agricultural areas being considered here, most commercial farmn strategies (for both LSC and SSC farmers) begin with, and revolve around tobacco. Other crops are mainly grown in rotation with tobacco, either to generate cash to sustain tobacco production or as food for on-farm consumption. Tobacco is one of the most profitable enterprises in commercial agriculture and the primary reason many commercial farms exist. Although other cash crops including cotton and even maize are more important for vast majority of communal and resettlement farmers, burley and flue-cured tobacco offer a unique opportunity for exceptionally high producer profits and is grown by around 16 000 of smallholder farmers as shown in Table 2. 58. Tobacco is a 12 to 16 month crop with sowing in the nursery starting in early-June and final marketing ending in October the following year. LSC farmers typically grow two distinct tobacco crops each year including an early, irrigated crop planted in the field at the beginning of September and a second, dryland (rain fed) crop planted in late - October. The primar7 reason for this is to maximise the use of limited barn space over a longer curing period. Typical plot sizes for flue-cured tobacco range from as few as 20 hectares to more than 80. Smallholder farmers exclusively produce dryland tobacco and mostly cultivate very small plots of no more than 0.5 to 2 hectares at most. 59. An important characteristic of tobacco is that this is a relatively drought tolerant crop that also grows well on sandy soils. Although tobacco is produced in some of the best farm areas of Zimbabwe, it occupies a particular environmental niche in these locations and is generally able to out-perform other crops that demand more intensive irrigation and better soils. Most LSC farmers practice a five -year rotation where tobacco is followed for two years by Rhodes grass or some other combination of crops including wheat, soybeans, maize and groundnuts and then left fallow with grazing for livestock. Smallholder farmers typically follow a tobacco-maize rotation with small plots of groundnuts and other crops grown mainly for home consumption. A. Flue -cured Tobacco 60. Large-scale commercial farmers. Per hectare financial indicators for LSC flue - cured tobacco are summarised in Table 4. Compared with all other enterprises analysed, these results are extremely favourable and show that tobacco offers excellent potential for high producer profits and employment creation. As shown in the complete datt set in Part Two, only roses, paprika and some coffee scenarios offer a potential for greater net profits. Export vegetables are normally triple (or even quadruple) cropped each season and so also offer a potential for similar earnings on a per hectare hisis as tobacco, but are normally grown over a smaller area because of intensive management requirements. 61. As one of the most profitable crops analysed, an important advantage of tobacco that this income can be used to help finance new agricultural enterprises. More than 80% of all rose exports, for example, are grown on LSC tobacco farms and were first introduced using tobacco income. Similarly, 55% of the total area now under coffee is on tobacco farms including 5 500 hectares planted within the past three years. 9A typical LSC farm growing 60ha of tobacco will require 35 or more conventional 8-tier flue-barns, which are used continuously throughout the curing season. Page 14 Costs and profitability of tobacco compared to other crops in Zimbabwe Table 4: Financial Indicators for LSC Flue-Cured Tobacco. Dr land Tobacco llrritated Tobacco - |_____. ________ Low Medium | Low Medium High- Yield (kg/ha) 2 200 2 500 2 800 2 800 3 100 3 500 Production Costs Cashbeforesale 113454 120002 126311 135718 140504 145886 Total variable costs 130 663 140 036 148 979 157 697 165 431 174 317 Total production costs 142 849 152 222 161 165 174 388 182 122 191 008 Labour Hired labour (days/ha) 382 415 437 462 482 497 Wage bill (ZWD/ha) 30 128 31 976 33 208 35 308 36 428 37 268 Wages as % var costs 23% 23% 22% 22% 22% 21% Farmer Profit Grossprofit 73 827 101964 126681 104103 136 354 172183 Net profit 61 641 89 778 114 495 87 412 119 663 155 492 Rates of Return Return to var. costs 0.57 0.73 0.85 0.66 0.82 0.99 Return to total costs 0.43 0.59 0.71 0.50 0.66 0.81 Sensitivity Indicators Chg in yield to gp = 0 -44% -51% -55% -48% -55% -60% Chg in yield to np = 0 -37% -45% -50% -41% -58% -54% | Chg in price to np = 0 -32% -39% -44% -35% -42% -47% 62. Importantly, the data in Table 4 also show that LSC tobacco is very expensive to grow. Tobacco not only demands a heavy application of fertilisers, but also makes intensive use of pesticides, herbicides and other special inputs and so demands greater cash expenditure before harvest than almost every other enterprise analysed. Although the share of costs that need to be financed with seasonal credit vary from farm to farm, this clearly represents a large challenge for Zimbabwe's banking system. Traditionally, LSC farmers have been able to use land as collateral to cover their bank overdraft but, as a result of current resettlement policy, farmers are now being denied this opportunity and many have been forced to scale back their operations. Other crops have also been affected by this situation, but tobacco has been especially hard hit because of very high up-front costs. 63. In terms of employment creation, the data show that LSC tobacco is one of the most labour intensive crops analysed. Although other enterprises including roses, paprika, coffee and export vegetables are also very labour intensive, tobacco is grown on a much larger scale and the calculations here suggest that the flue -cured tobacco is likely to account for 34 million days total of employment with and a wage bill of around ZWD 2.6 billion (USD 47.1 million). 10 In addition to about one full-time worker per hectare, tobacco demands an additional 70 to 160 days of casual labour per hectare for specific tasks (equivalent to one full time job for every 2.1 to 4.5 hectares under production). Irrigated tobacco requires more labour than dryland tobacco because of additional yield and time spent moving sprinkler heads and pipes. 64. Finally, it is worth noting that the sensitivity indicators for LSC tobacco are all very robust and show that a relatively large drop in price or yield is required before the crop returns a financial loss. This finding is especially important given the mounting pressure on tobacco from health groups, new trade protocols and changing consumer tastes 10 Based on total area planted on LSC farrns in 2000 (Table 3) and of calculation average wage bill and days worked for all production levels (Table 4). Page 15 Costs and profitability of tobacco compared to other crops in Zimbabwe and suggests that Zimbabwe is well positioned to continue as one of the world's leading tobacco exporters under progressively difficult market conditions. Although LSC farmers are likely to feel some pressure to diversify in order to protect themselves from the risk of diminishing tobacco markets, therefore, tobacco still has many useful roles to play in the development of Zimbabwe and is likely to remain an important part of most farm systems for many years to come. 65. Smallholder farmers. Summary data for communal, resettlement and SSC flue- cured tobacco are given in Table 5. Overall, these data tell a similar story as for LSC farmers and show that tobacco offers smallholder growers excellent potential for very high producer profits but is also expensive to grow. Some merchant companies (tobacco buyers) now offer input support to selected SSC and other smallholder farmers on an outgrower basis whereby the cost of fertiliser, pesticides and other inputs given on loan are deducted through the auction using a stop-order on the farmer's final payment. Opportunities to participate in these programs, however, are still limited and reserved for the best, most trustworthy smallholder growers. The high costs of production for flue - cured tobacco, therefore, are a disincentive to most cash-poor smallholders in tobacco areas and an important factor limiting the area cultivated and choice of management technology. Table 5: Financial Indicators for Smallholder Flue-Cured Tobacco. Communal and Resettlement Small-Scale Commercial (SSC) -_____. ____. ___ Low- Medium H igh Low- Medium -High Yield (kg/ha) 650 800 1 050 1100 1 500 1 800 Production Costs Cash before sale 18 640 24 264 30 576 38 727 52 180 62 774 Total variable costs 24 078 31 008 39 647 47 880 66 027 78 442 Total production costs 28 024 35 034 43 593 52 701 78 442 83 272 Labour Total labour (days/ha) 260 320 365 375 445 480 Hired labour (days/ha) 110 170 215 225 295 330 Wage bill (ZWD/ha) 4 400 6 800 8 600 9 000 11 800 13 200 Ret/day family labour 185.06 235.68 332.44 318.07 483.52 612.25 Farmer Profit Grossprofit 27 760 35 352 49 866 47 710 72 528 91 838 Net profit 23 814 31 406 45 920 42 880 67 698 87 008 Rates of Return Return to var. costs 1.15 1.14 1.26 1.00 1.10 1.17 Return to total costs 0.85 0.90 1.05 0.81 0.95 1.04 Sensitivity Indicators Chg in yield to gp - 0 -66% -65% -68% -60% -63% -64% Chg in yield to np = 0 -56% -58% -62% -45% -58% -61% Chg in price to np - 0 -48% -50% -54% -47% -51% -54% 66. Compared with LSC tobacco, one notable difference is that the financial rates of return for smallholder farmers are generally more favourable. From the farmer's point of view, these very good rates of return help justify the large expenditure on variable inputs and show that growers who are able to afford these costs are likely to be well rewarded. With respect to labour, the data show that flue-cured tobacco is likely to require at least some hired labour at each management level. Although precise requirements depend on the availability of family workers, this can be an important constraint and must be considered in deciding how much area to plant. Page 16 Costs and profitability of tobacco compared to other crops in Zimnbabwe B. Burley Tobacco 67. In addition to flue -curedtobacco, six levels of smallholder management for burley tobacco have also been considered. As shown in Table 2, smallholder farmers account for 90% of all burley growers by number and 60% of total production. Nearly two times as many communal and resettlement farmners grow burley tobacco compared with flue -cured tobacco. One important advantage of burley tobacco is that this is an air-cured crop and so does not demand a large investment in expensive barns or firewood and coal for curing. I i On the other hand, burley tobacco needs relatively high humidity for curing and so is not suited to production in all areas. The financial indicators for smallholder burley tobacco are summarised in Table 6. Table 6: Financial Indicators for Burley Tobacco. Communal and Resettlement Small-Scale Commercial (SSC) Low Medium High Low Medium High Yield (kg/ha) 700 1 000 1300 1100 1300 1 500 Production Costs Cash before sale 13 147 20 378 26 222 21 048 26 636 41 097 Total variable costs 17 517 27 375 35 071 28 565 35 839 51 880 Total production costs 19 964 29 822 37 518 31 381 38 665 54 696 Labour Total labour (days/ha) 225 315 350 330 360 390 Hired labour (days/ha) 75 165 200 180 210 240 Wage bill (ZWD/ha) 3 000 6 600 8 000 7 200 8 400 9 600 Ret/day family labour 85.80 165.83 215.36 168.153 228.21 215.13 Farmer Profit Grossprofit 12 871 24 875 32 304 25 280 34 321 32 270 Net profit 10 424 22 428 29 875 Z 464 31 415 29 454 Rates of Return Return to var. costs 0.73 0.91 0.92 0.88 0.96 0.62 Return to total costs 0.52 0.75 0.80 0.72 0.81 0.54 Sensitivity Indicators Chg in yield to gp = 0 -50% -56% -56% -55% -57% 44% Chg in yield to np = 0 -41% -50% -52% -49% -52% 41% Chg in price to np = 0 -36% -45% -47% -44% -47% -37% 68. Compared with flue-cured tobacco, these data show that burley tobacco is less expensive to grow but also provides a lower net income. Although still relatively expensive compared with most other smallholder crops like cotton and maize, the data for cornmunal and resettlement farmers indicate that burley tobacco costs between ZWD 6 000 to 9 000 (USD 109 to 164) less per hectare than flue -cured tobacco. For SSC farmers, the estimated savings are even greater and range between ZWD 21 000 to 40 000 (USD 382 to 727). This savings can be an important incentive to smallholder farmers and, in addition to local climatic conditions, helps explain why more smallholder farmers cultivate burley rather than flue-cured tobacco. 69. Just as total costs with barley tobacco are lower, however, so too are the estimated net profits. Based on the average gross profit for all smallholder models, the data show that the returns from burley tobacco are about 50% lower compared with those for flue- 11 Burley barns are generally far simpler in construction than flue barns and can be made almost entirely from local materials including wooden poles and thatching. Flue barns require heating ducts and must be completely enclosed with a ventilation system to regulate temperature. Page 17 Costs and profitability of tobacco compared to other crops in Zimbabwe cured tobacco, equal to some ZWD 28 000 (USD 509) per hectare. Burley tobacco still offers a potential for very high profits compared with most other smallholder crops, although paprika and high input cotton both offer an opportunity for greater income and better rates of return to the expenditure on cash inputs and investment of family labour. With the right types of support, the data also show smallholder coffee could surpass burley tobacco in terms of total income. Importantly, burley tobacco and coffee are already produced in similar geographic regions (mainly around the Eastern Highlands) where growing conditions are well suited to both crops. IV. TRADITIONAL FIELD CROPS 70. This section considers the costs and returns for five traditional field crops including maize, cotton, groundnuts, soybeans and wheat that complement tobacco and play an important role in most LSC and smallholder farmn systems. Following a comparative overview of how the indicators for these crops compare with those for tobacco, the detailed results for each enterprise are discussed along with an analysis of production trends, marketing issues and other factors with a bearing on opportunities for growth and diversification. A. Overview 71. The traditional field crops considered here all cost considerably less to grow than tobacco, but (for the most part) also provide much less income. With many crops, LSC farmers even appear to earn a net loss indicating that these activities do not cover the annual depreciation cost of fixed assets. Nevertheless, these enterprises still play an important role by helping to provide the steady cash flow needed to sustain the production of tobacco and other more profitable crops. For smallholder farmers, traditional crops are not only important as a source of cash income, but are also essential part of most household food security strategies. Maize and groundnuts, for example, are grown primarily for family consumption, with only small surpluses sold for cash in most cases. 72. Large-scale commercial farmers. A summary of the total variable costs for traditional LSC field crops is given in Table 7. Of these enterprises, groundnuts, cotton and wheat are the most expensive in that order followed by maize then soybeans. Irrigated crops cost more than dryland crops due to additional labour requirements, incremental tractor operating costs, water rates and electricity charges. As a group, the total variable costs for traditional field crops are only about 12% to 39% of those for flue-cured tobacco on a per hectare basis. Table 7: Comparison of Total Variable Costs for Traditional LSC Crops. Dryland Crops Irrigated Cros Low Medium High Low Medium High Total Var. Costs (ZWD/ha) Flue-Cured Tobacco 130663 140 036 148979 157 697 165431 174317 Maize 20996 23720 27712 34143 37819 40625 Cotton 30 540 34 330 38 904 48 049 51 213 55944 Groundnuts 27 452 31 521 34 711 48 452 52 892 57 196 Soybeans 21554 23 610 25034 29087 31 143 32567 Wheat . .._ . I . . 41 370 44 879 50 992 Page 18 Costs and profitability of tobacco compared to other crops in Zimbabwe 73. The next summary table compares the labour requirements and total wage bill for traditional LSC field crops with those for flue-cured tobacco. Of the traditional field crops, cotton and groundnuts are the most labour intensive, but still demand considerably less labour than flue -cured tobacco. From the social perspective, an important advantage of these crops is that cotton and groundnuts both require casual workers to help at harvest time and so provide employment opportunities for workers beyond each farmer's permanent labour force. Maize, soybeans and wheat, on the other hand, use considerably less labour with few (if any) jobs created for casual workers. For LSC farmers, this can be an important advantage since these crops avoid the trouble and expense of hiring outside workers. Table 8: Comparison of Labour Requirements for Traditional LSC Crops. Dryland Crops |-rriated Crops Low Medium High Low Medium- High Hired Labour (days/ha) Flue-Cured Tobacco 382 415 437 462 482 497 Maize 19 23 27 30 45 50 Cotton 145 172 198 212 245 278 Groundnuts 57 68 83 90 110 135 Soybeans 12 13 14 22 23 24 Wheat .. 19 20 21 Total Wage Bill (ZWD/ha) Flue-Cured Tobacco 30 182 31 976 33 208 35 308 36 428 37 268 Maize 1 596 1 932 2 268 2 520 3780 4 200 Cotton 9380 10 873 12 367 13 113 14 980 16 847 Groundnuts 3 847 4 463 5 499 5 964 7112 8 680 Soybeans 1008 1092 l 176 1848 1 932 2 016 Wheat .. .. 1596 1680 1764 74. Finally for LSC farmers, Table 9 compares the gross and net profit from tobacco with the income that can be earned from other traditional crops. Table 9: Comparison of Farmer Profits for Traditional LSC Crops. Dlrvland Crow I_rieated Crops .. ________________ Low Medium High Low Medium High Gross Profit (ZWD/ha) Flue-Cured Tobacco 73 827 101 964 126 681 104 103 136 354 172 183 Maize (836) 2 200 3 968 417 2 501 5 455 Cotton 2 805 7 907 12 225 10551 19 089 26 096 Groundnuts 2518 6 774 11909 1498 13 708 26054 Soybeans (I 554) 2 640 7 466 913 5107 9 933 Wheat .. .. . 19130 26 621 31508 | Nel Profit (ZWD/ha) Flue-Cured Tobacco 61 641 89 778 114 495 87 412 119 663 155 492 Maize (6 677) (3 641) (I 873) (9 929) (7 845) (4 891) Cotton (3 036) 2 066 6 384 205 8 743 15 750 Groundnuts (3 323) 933 6 063 (8 848) 3 362 15 708 Soybeans (7 395) (3 201) 1 625 (9 433) (5 239) (413) Wheat _. . ._ . ._ . 8 784 16 275 21 162 These data clearly show that most traditional crops are now marginal for the LSC sector and provide very little gross income with which to finance other, more lucrative farm activities. Once long-run depreciation costs are taken into account, many of these crops return a net loss. This situation is not only a serious concern for LSC farmers, but also Page 19 Costs and profitability of tobacco compared to other crops in Zimbabwe adds to the pressure on Zimbabwe's banking sector to provide seasonal credit for crop inputs. In the case of irrigated cotton, for example, per hectare gross profits from high input management are roughly equal to 20% of the up-front cash costs for medium-input dryland tobacco. The remaining costs for tobacco must be covered by other sources of income, including traditional farm enterprises, or through seasonal credit. 75. Smallholder farmers. A comparison of total variable costs (excluding family labour) for tobacco and other traditional smallholder crops grown in N atural Region II is given in Table 10. As with the LSC sector, these data show that traditional field crops all cost much less to grow than tobacco on a per hectare basis. This is especially important to understanding the decisions smallholders make since only very few farmers have reliable access to seasonal credit or other sources of crop finance. Of the traditional field crops, cotton is generally the most expensive, but special input schemes (managed by cotton buyers) help alleviate this pressure. It should also be kept in mind that smallholder farmers mostly cultivate less than a full hectare of most crops so that the actual costs and returns from each enterprise will less than the per hectare results shown below. Table 10: Comparison of Total Variable Costs Traditional Smallholder Crops. Communal and Resettlement Small-Scale Commercial (SSC) Low Medium High Low Medium High Total Var. Costs (ZWD/ha) Flue-Cured Tobacco 24 078 31 088 39 647 47 880 66 072 78 442 Burley Tobacco 17 517 27 375 35 071 28 565 35 839 51 880 Maize 2 226 5914 8 662 7 404 10 373 16 210 Cotton 4 218 9052 15 383 Groundnuts 4 087 5 369 7 785 Soybeans 4 388 5 439 . ._._. _.. 7 584 76. Table 11 looks at the labour requirements for tobacco and other traditional smallholder crops. These data clearly show that flue -cured and burley tobacco are (by far) the most labour intensive crops analysed for smallholder farmers and also create significantly more jobs for casual workers than any other enterprise. Very high labour requirements can be a strong disincentive for individual farmners, and especially for households with a shortage of active workers. Where farmers anticipate a shortage of family labour to carry out a specific task, the choice is either to pay casual workers (who are often paid in kind rather than with cash) or to reduce the area given to that crop. Table 11: Comparison of Labour Requirements for Traditional Smallholder Crops. Communal and Resettlement SmallScale Commercial (SSC) ... . Low Medium High Low Medium High Total Labour (days/ha) Flue-Cured Tobacco 206 320 365 375 445 480 Burley Tobacco 225 315 350 330 360 390 Maize 54 72 86 80 95 125 Cotton 102 145 170 Groundnuts 75 90 120 Soybeans 50 60 70 Hired Labour (days/ha) Flue-Cured Tobacco 110 170 215 225 295 330 Burley Tobacco 75 165 200 180 210 240 Maize 0 0 0 0 0 25 Cotton 0 30 50 Groundnuts 0 0 0 Soybeans 0 0 .. .._.._0 Page 20 Costs and profitability of tobacco compared to other crops in Zimbabwe 77. Table 12 compares the gross and net profits for traditional smallholder field crops with those from tobacco. As discussed above, these data show that flue-cured and burley tobacco provide a far greater income than virtually every other option analysed. Although very high production costs for tobacco are a serious constraint for most households, these data suggest that smallholder farmers can earn more income by cultivating only a small area of tobacco than an entire hectare of most other crops. The only exeption to this is the case of cotton where it appears possible to earn more income with high input management compared with low -input burley. Table 12: Comparison of Crop Profits for Traditional Smallholder Crops. Communal and Resettlement SmallScaleCommercial SSC) .____________ . Low Medium Mgb Low Medium ig h) Gross Profit (ZWD)/ha) Flue-Cured Tobacco 27 760 35 352 49 866 47 710 72 528 91 838 Burley Tobacco 12 871 24 875 32 304 25 280 34 231 32 270 Maize 2 526 1286 2 858 2 388 4 315 6 254 Cotlon 9 649 14 720 .. .. .. 16 147 Groundnuts 5 071 8367 .. .. .. 10 530 Soybeans 3 802 6 261 .. .. .. 7626 Net Profit (ZWD/ha) Flue-Cured Tobacco 23 814 31 406 45 920 42 880 67 698 87 008 Burley Tobacco 10 424 22 428 32 920 22 464 31 415 29 454 Maize 2 059 819 2 391 1 552 3 479 5 418 Cotton 9 182 14 253 .. .. .. 15 311 Groundnuts 4 604 7 901 .. .. .. 9 694 Soybeans 3 335 5 794 .. .. .. 6 790 78. In terms of rural poverty alleviation, the data above appear to suggest that efforts to promote smallholder tobacco could be of major benefit to farmer income. High pro(luction costs and uncertain market prospects make this a difficult and risky development strategy, but the potential for tobacco to generate more profit than most other major crops is still an important advantage and something Zimbabwe should look to exploit. B. Maize 79. Maize is Zimbabwe's primary staple food and arguably more important to the national economy than even tobacco. Although only about half of the total national harvest is sold each year for cash, more area is given to this crop than any other equal to about 1.2 to 1.5 million hectares per year over the past five years. Communal and resettlement farmers typically account for about 85% of total area planted, but only produce about 60% of the national harvest. Total domestic consumption is approximately 1.8 million tons per year for all uses including direct human consumption, as an ingredient in stockfeed and other industrial uses. Zimbabwe often exports small quantities of maize to neighbouring countries, but has only been in surplus five times in the past ten years, largely due to problems with recurrent drought. 80. Large-scale commercial farmers. Total maize production by LSC farmers has decreased every year since the mid - 1990s when some 150 000 hectares were regularly planted to this crop. In the current 2000/01 season, only 75 000 hectares are thought to be Page 21 Costs and profitability of tobacco compared to other crops in Zimbabwe under maize as a grain crop. 12 Apart from the current political and economic situation, which has led to deeper than normal reductions in area planted, LSC farmers have been giving less emphasis to maize for several years and are now focusing mainly on producing enough grain for their permanent workers and to use as stockfeed if needed. Reasons for this development include problems with low producer prices, increased risk of crop theft and financial constraints caused through delayed payments by the Grain Marketing Board (GMB). These factors have had a similar impact on SSC farmers who also report they are now growing maize mainly for home consumption rather than for cash sales. 81. Financial indicators for LSC maize are summarised in Table 13. These data clearly show there is good reason for the move away from maize grown as grain for cash sales. Although most production scenarios yield a small gross profit, the net returns are strongly negative in all cases. Depending on the management level, the sensitivity indicators show that estimated crop yields would have to improve by 8% to 43% just to break even in net terms. Maize requires very little labour and rarely demands outside casual workers. Table 13: Financial Indicators for LSC Maize. ryland Maize Irrigated Maize .____________ .Low Medium High Low Medium - High. Yield (kg/ha) 3 500 4 500 5 500 6 000 7 000 8 000 Production Costs Cash before sale 20 875 23 564 27 522 33 936 37 577 40 349 Total variable costs 20 996 23 720 27 712 34 143 37 819 40 625 Total production costs 26 837 29 561 33 553 44 498 48 165 50 971 Labourl Hired labour (days/ha) 19 23 27 30 45 50 Wage bill (ZWD/ha) 1 596 1 932 2 268 2 520 3 780 4 200 Wages as % var costs 8% 80/% 8% 7% 100/% 10% |Farmer Profitl Gross profit (836) 2 200 3 968 417 2 501 2 455 | Net profit (6 677) (3 641) (1 873) (9 929) (7 845) (4 891) Rates of Return Return to var. costs (0.04) 0.09 0.14 0.01 0.07 0.13 Return to total costs (0.25) (0.12) (0.06) (0.22) (0.16) (0.10) Sensitivity Indicators Chg in yield to gp = 0 5% -1 1% -16% -1% -8%/0 -14% Chg in yield to np = 0 43% 18% 8% 35% 24% 13% Chg in price to np = 0 34% 14% 6% 29% 20% 11% 82. Because an increasing number of LSC farmers are producing maize mainly for on- farm consumption, a series of calculations were carried out to estimate the imputed returns for farmers who sell different shares of their total harvest. In these cases, grain saved for on-farm consumption was valued at the higher cost of purchasing maize ten months after harvest when local supplies have become scarce. These calculations are based an analysis of historic data which show that, since 1997, maize prices have increased by an average of 54% in nominal ZWD-terms from the period just after harvest until the next harvest. 12 CSO and CFU data. LSC farmers also grow seed maize, which is a more expensive but higher return activity. In 1999, there were 99500 hectares of LSC maize grown for grain in Natural Region 11 (I 560 farmers) and a further 8 500 hectares of seed maize (172 farmers). Page 22 Costs and profitability of tobacco compared to other crops in Zimbabwe Table 14: Imputed Returns for LSC Maize by Marketing Arrangement. Drvland Maiz Irrigated Maize Low Medium H Low Medium High. Crop Revenue Sell all 20 160 25 920 31680 34 560 40 320 46 080 Sell 80% 22 325 28 704 35 028 38 272 44 650 51 029 Sell 20% 28 821 37 055 45 290 49 407 57 641 65 876 Sell none 30 986 39 839 48 692 53 119 61 972 70 825 Gross Profit Sell all (836) 2 201 3 968 417 2501 5 454 Sell 80% 1 805 5 597 8 118 4 944 7 783 11 491 Sell 20% 9 728 15 784 20 569 18 528 23 630 29 602 Sell none 12 369 19 180 24 720 23 055 28 913 35 639 Net Profit Sell all (6 677) (3 640) (1 873) (9 929) (7 845) (4 892) Sell 80% (4 036) (244) 2 277 (5 402) (2 563) 1 145 Sell 20% 3 887 9 943 14 728 8 182 13 284 19 265 Sell none 6 528 13 339 18 879 12 709 18 567 25 293 83. These data clearly show that maize is much more attractive when grown for on- farm consumption and help explain why many farmers have moved away from this crop as a cash enterprise. On the other hand, the imputed savings on the cost of purchasing grain are attractive in their own right and compare well with the cash earnings from other higher-value crops. On this basis, limited maize production is still a good option for LSC farmers and is likely to remain a fundamental element of most farm systems. 84. Smallholder farmers. At the national level, most maize in Zimbabwe is grown by communal and resettlement farmers for whom this is the principal food crop. Although other food crops (including sorghum and millet) are of greater importance outside Natural Region II, virtually every smallholder farmer (including SSC farmers) cultivates maize to some extent or another to meet at least some of their subsistence needs. Compared with LSC farmers, sales to the GMB are more common and most smallholder farmers also plan to earn at least some cash income from maize each year. Smallholder farmers normally account for 55% to 70% of total sales to the GMB. 85. The financial indicators for smallholder maize are summarised in Table 15 for farmers who sell all of their output for cash. Management practices vary considerably in the smallholder sector and the low input level for communal and resettlement farmers is based on growers using recycled seed without fertiliser; all other production levels are for hybrid maize with more intensive use of fertiliser at each successive management level. 86. Compared with LSC farmers, the results for smallholder maize are generally more favourable. Although crop profits are still very low compared with other smallholder enterprises, maize does at least return a positive gross and net profit at each management level. It should be noted, however, that for all models for hybrid maize (i.e. every production scenario except low -input communal and resettlement management) the costs of production are greater than the estimated gross returns indicating that farmers must have some other source of cash income to sustain this activity. To the extent that tobacco is often grown in rotation with maize on smallholder farms, it is clearly important to include a similar high-value crop as part df the strategy for household and even national food security. Even for smallholders not growing tobacco, the crop can still help finance Page 23 Costs and profitability of tobacco compared to other crops in Zimbabwe improved maize production through remittance income sent by family members or from casual employment on LSC tobacco farms. Table 15: Financial lIndicators for Smallholder Maize. Communal and Resettlement Small-Scale Commer cial (SSC) Low Medium High Low Medium High Yield (kg/ha) 825 1 250 2 000 1 700 2 500 3 900 Production Costs Cash before sale 1 665 5 064 7 302 6 248 8 639 13 558 Total variable costs 2 226 5 914 8 662 7 404 10 373 16 210 Total production costs 2 693 6 381 9 129 8 204 11 209 17 046 Labour Total labour (days/ha) 54 72 86 80 95 125 Hired labour (days/ha) - - - - - 25 Wage bill (ZWD/ha) - - - - 1 000 Ret/day family labour 46.78 17.86 33.23 29.85 45.42 62.54 Farmer Profit Grossprofit 2 526 1 286 2 858 2 388 4 315 6 254 Net profit 2 059 819 2 391 1 552 3 479 5 418 Rates of Return Return to var. costs 1.13 0.22 0.33 0.32 0.42 0.39 Return to total costs 0.76 0.13 0.26 0.19 0.31 0.32 Sensitivity Indicators Chg in yield to gp = 0 -64% -21% -30% -29% -35% -33% Chg in yield to np = 0 -52% -14% -25% -19% -28% -29% Chg in price to np = 0 -43% -11% -21% -16% -34% -24% 87. The imputed retums for smallholder maize by marketing arrangement are summarised below. In interpreting these data, it should be kept in mind that the optimal technological choice and marketing arrangement depends (at least in part) oneach household's own consumption requirements and availability of storage space. In these terms, production at the high and medium levels is much more profitable compared with low-input maize because of the additional grain harvested. Nevertheless, because the estimated profits are positive in all cases, the data show that some cash sales can still be justified at each production level to raise money for minor household expenses. Table 16: Imputed Returns for Smallholder Maize by Marketing Arrangement Communal and Resettlement Small-Scale Commercial (SSC) Low Medium High Low Medium High- Crop Revenue Sell all 4752 7 200 11 520 9 792 14 688 22 464 Sell 80% 5 263 7 973 12 757 10 844 16 265 24 877 Sell 20% 6793 10 293 16 469 13 999 20 998 32 115 Sell none 7304 11066 17 706 15 050 22 575 34 527 Gross Profit Sell all 2527 1 287 2 858 2 388 4 315 6 254 Sell 80% 3149 2 320 4367 3 671 6 240 9 197 Sell 20% 5017 5 060 8 895 7 519 12 013 18 026 Sell none 5 639 6 003 10 404 8 802 13 937 20 969 Gross Profit per Day Family Labour Sell all 46.79 17.87 33.23 29.85 45.43 62.54 Sell 80% 58.32 30.97 50.78 45.89 65.68 91.97 Sell 20% 92.90 70.27 103.43 93.99 126.45 180.26 Sell none 104.43 83.37 120.98 110.03 146.70 209.69 Page 24 Costs and profitability of tobacco compared to other crops in Zimbabwe C. Cotton 88. Cotton is Zimbabwe's third most valuable agricultural export after tobacco and horticulture and is a key economic sector in terms of contribution to GDP, employment and export earnings. More than 200 000 smallholder households derive their livelihood directly from cotton, which is well suited to production in more marginal agricultural areas. About 80% of the lint produced each year is exported with the balance used by a small but vibrant textile industry with numerous downstream jobs. Cottonseed is used for crushing and supplies a large portion of Zimbabwe's vegetable oil and cake used in stockfeed. Over the past five years, communal and resettlement farmers have accounted for 80% to 90% of total plantings by area and typically produce 60% to 80% of Zimbabwe's total crop. The total annual export value for cotton normally ranges from USD 61 to 75 million depending on price and yield. 89. The cotton industry was deregulated in 1995 with the commercialisation of the Cotton Marketing Board (now the Cotton Company of Zimbabwe). Two other companies have since entered the industry and the resulting competition has benefited all cotton growers in the form of better market related prices, improved efficiencies and better service. Each buyer set their own prices based on world market conditions and distinguish between four grades of smallholder cotton to encourage good crop management and post-harvest handling. This system also contributes to Zimbabwe's very good reputation as a supplier of top quality lint. 90. Compared with most neighbouring countries, Zimbabwe enjoys a very good girning outturn (GOT) of about 41% lint per unit of seed cotton. This is mostly because of a highly developed seed breeding and multiplication system that ensures all farmers start with good gene stock. Because lint is the most valuable product of cotton, this allows more favourable prices to be paid to farmers than in countries with a lower GOT. Compared with Zambia for example (where the GOT is about 38%), producer prices in Zimbabwe are normally 20% higher in USD terms depending on world market conditions. About 98% of all cotton in Zimbabwe is handpicked which further contributes to the good quality and high prices on offer. 91. Per hectare yields are highly dependent on adequate pest control and, like tobacco, cotton makes intensive use of agro-chemicals and other purchased inputs. To help smallholder farmers afford these costs, each ginning company operates their own input scheme. Group lending, for example, has been used to good effect by The Cotton Company, which only extends credit through associations. Under this scheme, each association member must sign an agreement stating that the entire group will be ineligible for credit next year if just one individual de faults by selling outside the system. One of the new private companies, on the other hand, operates a voucher system in which farmers can choose to accept part of their payment in the form of a voucher exchangeable for inputs later in the year. Although this means that farmers are effectively put in the position of extending credit to the scheme operator, most growers have welcomed this system, both as a form of protection from inflation and as a way to avoid the problem of saving cash until later in the year to buy inputs. 92. Large-scale commercial farmers. The financial indicators for LSC cotton are given in Table 17. Roughly one third of total LSC production, equal to about 7 000 hectares per year, is under irrigation; a further 14 000 hectares are normally planted as a diyland crop. Irrigated production results in higher yields and more valuable cotton with a longer staple length. Page 25 Costs and profitability of tobacco compared to other crops in Zimbabwe 93. Compared with other traditional field crops, the results for LSC cotton are reasonably attractive. Of the traditional field crops, only wheat offers a potential for greater farmner profits. Although far less profitable than tobacco and other high-value crops, cotton is normally grown on large plots of 100 hectares or more and so can represent an important source of income whe n high yields are achieved. This is not necessarily true with low -input management (especially for dryland cotton) and irrigated production is more profitable in every case despite higher production costs. As a handpicked crop, cotton is very labour inte nsive and requires an estimated 100 to 233 days of casual labour per hectare (based on a picking rate of 15kg per person per day). This is slightly more than the estimated casual labour requirements for LSC tobacco. Table 17: Financial Indicators for LSC Cotton Dryland Cotton Irritated Cotton .____.____. ___ Low Medium _ Low Medium High Yield (kg/ha) 1500 1 900 2 300 2 500 3 000 3 500 Production Costs Cash before sale 30 040 33 696 38 137 47 170 51 076 54 713 Total variable costs 30 541 34 329 38 904 48 049 52 131 55 944 Total production costs 36 382 40 170 44 745 58 359 62 477 66 290 Labour Hired labour (days/ha) 145 172 198 212 245 278 Wage bill (ZWD/ha) 9 380 10 873 12 367 13 113 14 980 16 847 Wages as % var. costs 31% 32% 32% 27% 290/o 30% Farmer Profit Gross profit 2 804 7 908 12 225 10 551 18 189 26 096 Net profit (3 037) 2 064 6 384 205 7 843 15 750 Rates of Return Return to var. costs 0.09 0.23 0.31 0.22 0.35 0.47 Return to total costs (0.08) 0.05 0.14 0.00 0.13 0.24 Sensitivity Indicators Chg in yield to gp = 0 -11% -25% -31% -23% -34% -41% Chg in yield to np = 0 12% -6% -16% -0% -14% -25% Chg in price to np = 0 9% -5% -13% -0% -11% -20% 94. Smallholder Farmers. Since the mid-1990s, smallholder farmers have planted around 260 000 hectares to cotton annually, including more 250 000 hectares by communal and resettlement farmers. Most production overall is in Natural Regions III and IV although cotton is also suited to higher potential areas and does well in Natural Region II where yields are typically 50 to 100 kg per hectare greater than the national average. The financial indicators for smallholder cotton are summarised in Table 18 below. 95. Compared with all other smallholder crops, the results for cotton are quite favourable and help explain why so many growers give high priority to this enterprise. Although somewhat expensive compared with other alternatives, the input schemes described above help cover many of these costs and cotton is not normally difficult to afford. On the other hand, input support packages do not always cover the costs of producing at the more intensive management levels and farmer profits are considerably greater with high and medium input use (6 to 8 sprays) than with more typical low input management (4 sprays). To the extent that communal farmers are able to afford more intensive production as a result of remittances sent by family members working on LSC tobacco farms, a shift away from tobacco could impact the cotton sector. The sensitivity indicators for cotton are among the best compared with all other smallholder crops and Page 26 Costs and profitability of tobacco compared to other crops in Zimbabwe show that the good results for this enterprise are extremely robust. Cotton demands a large amount of labour, especially for good weed control and picking. Spraying is normally done with handheld knapsack sprayers. Table 18: Financial Indicators for Smallholder Cotton. Low Medium High (Com/Resti) (ComlRestl) (SSC) Yield (kg/ha) 700 1 200 1 500 Production Costs (ZWD/ha) Cash before sale 3 742 8 236 13 890 Total variable costs 4 218 9 052 15 383 Total production costs 4 685 9 519 16 219 Labour Total labour (days/ha) 102 145 170 Hired labour (days/ha) 30 50 Wage bill (ZWD/ha) - 1 200 2 000 Gr. Return/day family labour 94.60 128.00 134.56 Farmer Profit (ZWD/ha) Gross profit 9 649 14 720 16 147 Net profit 9 182 14 253 15 311 Rates of Return Return to variable costs 2.29 1.63 1.05 Return to total costs 1.96 1.50 0.94 Sensitivity Indicators Chg in yield to gp = 0 -74% -66% -55% Chg in yield to np = 0 -70% -64% -52% Chg in price to np = 0 -66% -60% -49% D. Groundnuts 96. Smallholder farmers produce roughly 95% of Zimbabwe's total groundnut crop, mainly on very small plots for home consumption. Groundnuts are one of the most important sources of protein in rural diets and are grown by nearly every smallholder farrner to some extent or another. Recently, total plantings by communal and resettlement farmers has varied between 100 000 to 140 000 hectares per annum. Only about 5% of these groundnuts are grown as a cash crop however and total deliveries to the GMB have been less 3 000 metric tons per year for the past three years. Smallholder groundnuts are generally not suitable for export due to problems with mixed and outdated varieties, and also because of problems with aflatoxin. To the extent that groundnuts can be promoted as a cash enterprise, the most urgent challenge is to develop a seed multiplication program to produce the varieties demanded by international buyers. 97. Most LSC farmers grow long-season flamingo nuts as a dryland crop; only about one third of total production is irrigated. These pink skin confectionery nuts have many the characteristics sought by international buyers, but are not normally grown in sufficient quantities to attract European interest. Most trade therefore is with South Africa and Australia and any LSC groundnuts not exported are normally used domestically for the manufacture of peanut butter. An important advantage of groundnuts is that the crop performs well on the same sandy soils suited to tobacco and so makes an ideal rotation crop. Nevertheless, groundnuts are normally grown on small plots on most farms with only about one third of the area used for tobacco given to this activity. The total area planted to LSC groundnuts had fallen to just 1 000 hectares in recent years compared with more than 8000 hectares annually in the early 1990s. Page 27 Costs and profitability of tobacco compared to other crops in Zimbabwe 98. Large-scale commercial farmers. The financial indicators LSC groundnuts are summaried in Table 19. Except with low input management, these data show that irrigated groundnuts are roughly twice as profitable compared with dryland management at each corresponding production level. Compared with other traditional LSC crops, on the other hand, cotton and wheat both offer higher producer profits. Although only about one third of total production is under irrigation, when high yields are achieved, the estimated gross profits from groundnuts equal about 22% of the pre -harvest cash costs for medium input dryland tobacco. In other words, the income from every 4.6 hectares of irrigated groundnuts, has the potential to finance roughly one hectare of flue-cured tobacco. In terms of labour requirements, groundnuts typically use some casual workers to help with harvesting and are more labour intensive compared with all other traditional field crops except cotton. Table 19: Financial Indicators for LSC Groundnuts. Dry land Groundn nuts Irrigated Groundnuts Low Medium Righ Low Medium High Yield, (kg unshelled/ha) 1 800 2 300 2 800 3 000 4 000 5 000 Production Costs Cash before sale 27 152 31 138 32 425 47 952 52 226 56 363 Total variable costs 27 451 31 521 34 712 48 451 52 892 57 196 Total production costs 33 292 33 292 40 553 58 797 63 328 67 542 Labour Hired labour (days/ha) 57 68 83 90 110 135 Wage bill (ZWD/ha) 3 847 4 463 5 499 5 964 7 112 8 680 Wages as % var. costs 14% 14% 16% 12% 13% 15% Farmer Profit Grossprofit 2 519 6774 11 908 1 499 13 708 26054 Net profit (3 322) 933 6 067 (8 848) 3 362 15 708 Rates of Return Return to var. costs 0.09 0.21 0.34 0.03 0.26 0.46 Return to total costs (0.10) 0.02 0.15 (0.15) 0.05 0.23 Sensitivity Indicators Chg in yield to gp = 0 -10% -21% -31% 4% -25% -38% Chg in yield to np = 0 13% -3% -16% 21% -6% -23% Chg in price to np = 0 11% -2/o -13% 18% -5% -19% 99. Smallholder farmers. The quantitative results for smallholder groundnuts are summarised in Table 20. These data show that groundnuts are relatively inexpensive for smallholders to grow, but that farmer profits are also very low. Because most households produce groundnuts mainly as a food crop, however, the imputed food security value should also be taken into account and returns would be greater than shown if the measured against the cost of buying groundnuts throughout the year. On the other hand, most farmers only cultivate a very small area of groundnuts and rarely grow the crop over an entire hectare. 100. The high input SSC model is indicative of a farmer who produces groundnuts mainly for cash sales. Importantly, these data (and those for medium input management as well) show that groundnuts can be an attractive cash enterprise with the potential to generate similar net earnings to cotton. In order for this potential to be realised, however, farmers must have access to improved seed so as to produce a uniform crop with the characteristics international buyers demand. This would not only require an investment in seed multiplication and bree ding, but also a reorientation of farmer attitudes to see groundnuts as a cash crop rather than something grown mainly for household subsistence. Page 28 Costs and profitability of tobacco compared to other crops in Zimbabwe 'Table 20: Financial Indicators for Smallholder Groundnuts. Low Medium High (Com/RestI) (ComARestl) (SSC) Yield, (kg unshelled/ha) 550 825 1 100 Production Costs (ZWD/ha) Cash before sale 3 713 4 808 6 762 Total variable costs 4 087 5 369 7 785 Total production costs 4 554 5 836 5 621 Labour Total labour (days/ha) 75 90 120 Hired labour (days/ha) - - Gr. Return/day family labour 67.61 92.98 87.75 Farmer Profit (ZWD/ha) Gross profit 5 071 8 368 10 530 Net profit 4 604 7 901 9 649 Rates of Return Return to variable costs 1.24 1.56 1.35 Return to total costs 1.01 1.35 1.12 Sensitivity Indicators Chg in yield to gp = 0 -59% -65% -62% Chg in yield to np = 0 -53% -61% -57% Chg in price to np = 0 -50% -58% -54% E. Soybeans 101. Large-scale commercial farmers produce more than 95% of Zimbabwe's total soybean crop. Since 1985, communal and resettlement farmers have produced less than 4 500 tons per year compared with an annual total of more than 100 000 tons for commercial growers; in 1999/2000 LSC farmers produced a record harvest equal to nearly 140 000 metric tons. Most soybeans are grown in the high-potential areas of Natural Region II where approximately one third of the area planted on LSC farms is under irrigation. 102. Zimbabwe is self-sufficient in soybean meal and regularly exports cake to South Africa, Zambia and other regional markets. Domestic market outlets for soybeans include use as (i) a high protein cake for stockfeed; (ii) a high energy feed for livestock; (iii) a source of protein in corn-soy blends; (iv) a meat extender; and (v) a direct human food. Large refining companies process more than 90% of Zimbabwe's soybean harvest using solvent extraction methods that yield about 18% oil. Zimbabwe is not self-sufficient in edible oil, however, and regularly imports about one third of its annual crude oil requirement for domestic refining. 13 Although price controls are not imposed on soybeans, it is sometimes difficult to obtain export permits for trade with higher-value international markets. 103. Soybeans are typically grown by most LSC farmers on very large plots in rotation with irrigated winter wheat. This rotation is an important part of many farm systems, not only in terms of the revenue generated, but also because soybeans help maintain soil fertility and offer a good way to share limited irrigation equipment. On the other hand, both soybeans and wheat grow best on heavier soils than those suited to tobacco and many farmers also prefer to cultivate these crops in different sections of their 13 The annual import requirement depends on the size of Zimbabwe's cotton crop and amount of cottonseed available for oil extraction. Page 29 Costs and profitability of tobacco compared to other crops in Zimbabwe farm depending on soil type. Most LSC farmers achieve a yield between 2.2 and 2.5 tons per hectare; smallholder yields are around 1.0 tons per hectare when fertiliser is used. 104. Large-scale commercial farmers. The financial indicators for dryland and irrigated soybeans are summarised in Table 21. Compared with all other LSC enterprises, these data show that soybeans are highly unprofitable except for the fact that they are relatively inexpensive to produce and usually grown in large quantities throughout the year. It must also be kept in mind that soybeans are normnally grown in rotation with irrigated wheat, which is highly profitable and can easily offset the net losses shown below. With high input management, the gross profits from dryland and irrigated soybeans are reasonably attractive, but still only sufficient to finance 6%/o to 8% of the pro- harvest cash costs for a single hectare of dryland flue-cured tobacco respectively. In terms of labour requirements, LSC soybeans are the least labour intensive crop analysed and rarely demand additional casual workers. Table 21: Financial Indicators for LSC Soybeans. Dr land Soybeans Irrigated Soybeans Low Medium High Low Medium High Yield (kg/ha) 1 600 2 100 2 600 2400 2 900 3 400 Production Costs Cash before sale 21 420 23 434 24 816 28 886 30 900 32 282 Total variable costs 21 554 23 610 25 034 29 087 31 143 23 567 Total production costs 27 395 29 451 30 875 39 433 41 489 42 913 Labour Hired labour (days/ha) 12 13 14 22 23 24 Wage bill (ZWDtha) 1 008 1 092 1 176 1 848 1 932 2 016 Wages as % var. costs 5% 5% 5% 6% 6% 6% Farmer Profit Gross profit (1554) 2 640 7 466 913 5 107 9 933 Net profit (7 395) (3 201) 1 625 (9 433) (5 239) (413) Rates of Return Retum to var. costs (0.07) 0.11 0.30 0.03 0.16 0.31 Retum to total costs (0.27) (0.1 1) 0.05 (0.24) (0.13) (0.01) Sensitivity Indicators Chg in yield to gp = 0 5% -11% -25% -3% -16% -26% Chg in yield to np = 0 41% 13% -6% 35% 16% 1% Chg in price to np = 0 37% 12% -5% 32% 15% 1% 105. Smallholder farmers. Although relatively few smallholder farmers grow soybeans, a quantitative analysis was carried out to assess the overall viability of this enterprise. Efforts were made a few years ago to promote soybeans as a cash crop among smallholder farmers through a seed distribution program. However, most of the harvest was retained for home consumption and there has been little work to support smallholder soybeans since. The smallholder soybeans results are summarised in Table 22. 106. These data show that soybeans are one of the least expensive crop options available to smallholder farmers. On the other hand, the estimated gross and net profits are also very low and all other enterprises (except maize sold entirely for cash) offer a potential for greater farmer income. In interpreting these results, however, it should be noted that that the daily returns to family labour are higher than for any other crop that does not require additional hired workers. The retums would be even greater if measured by the crop's imputed food security value, suggesting that soybeans may be an especially good food security choice for households with a shortage of active workers. As a cash Page 30 Costs and profitability of tobacco compared to other crops in Zimbabwe enterprise, however, smallholder farmers do not have the capacity to grow soybeans in large quantities and so are una ble to achieve the same economies of scale that help to justify LSC production. Table 22: Financial Indicators for Smaliholder Soybeans. Low Medium High l_______________________ (Com/Restl) (ComtRestl) (SSC) Yield (kg/ha) 700 1 000 1 300 Production Costs (ZWD/ha) Cash before sale 3 912 4 759 6 598 Total variable costs 4 388 5 439 7 584 Total production costs 4 855 5 906 8 420 Labour Total labour (days/ha) 50 60 70 Hired labour (days/ha) - - Gr. Return/day family labour 76.04 104.35 108.95 Farmer Profit (ZWD/ha) Gross profit 3 802 6 261 7 626 Net profit 3 335 5 794 6 790 Rates of Return Return to variable costs 0.87 1.15 1.01 Return to total costs 0.69 0.98 0.81 Sensitivity Indicators Chg in yield to gp = 0 -50% -58% -55% Chg in yield to np = 0 44% -54% -49% Chg in price to np = O 41% -49% -45% l F. Wheat 107. LSC farmers grow virtually all the wheat produced in Zimbabwe as an irrigated winter crop. Total production is normally between 225 000 and 250 000 metric tons from an area of about 50 000 hectares. Zimbabwe is a net importer of wheat, but still exports several thousand tons annually (both as grain and milled flour) to Zambia, Malawi and other regional buyers. Very little wheat is traded with South Africa, however, since farmers in that country benefit from production and export subsidies with which Zimbabwe cannot compete. In this respect, there has been some recent debate over the efficiency of growing wheat in Zimbabwe since high irrigation costs make domestic production expensive compared with other world producers. Once transportation costs are taken into account, however, it is generally acknowledged the costs of local production are lower than import parity. Zimbabwe also enjoys a competitive edge in other regional markets like Zambia where production costs are even higher. Total domestic demand is around 400 000 metric tons per year. 108. Wheat has been an important catalyst for the development irrigation in Zimbabwe and is a central part of most LSC farm systems. The crop was mainly introduced during the 1970s as part of the strategy to cope with international sanctions imposed on what was then Rhodesia. A revolving fund was established specifically to help LSC farmers invest in the irrigation equipment needed for wheat. A Ithough farmers were obliged to grow wheat as part of this scheme, they quickly started to use the new equipment for other crops as well including irrigated tobacco groundnuts, soybeans and maize. Wheat grows best on relatively heavy soils and is typically planted in rotation with rain fed soybeans. Although not ideal complements in terms of soil type, a typical rotation Page 31 Costs and profitability of tobacco compared to other crops in Zimbabwe for many LSC farmers is to follow flue-cured tobacco by irrigated winter wheat and then smaller plots of soybeans, groundnuts and maize in the next rainy season. 109. Until 1994, wheat prices were controlled and all sales had to be through the state-owned GMB. Since the introduction of economic reforms, wheat prices are now market determined although there is still some interference in the form of export permits, which are not always available. In this respect, one inherent problem with the marketing of wheat is that the entire national harvest is produced at roughly the same time and so results in very low prices. Most LSC farmers are not equipped with sufficient storage space to take advantage of seasonal price fluctuations and, whenever possible, try and produce on a forward contract from a buyer with storage capacity who typically passes on some of this price advantage to the producer. 110. Large-scale commercial farmers. The quantitative indicators for irrigated LSC wheat are summarised in Table 23. These data compare very well with those for all other traditional field crops and show that wheat is not only relatively inexpensive to produce (cotton and groundnuts both cost more) but also offers higher profits than any other crop in this category. Consequently, the rates of return for wheat are among the best compared with all other irrigated LSC enterprises and only slightly lower than those for tobacco. Even once the depreciation costs of irrigation equipment are taken into account, wheat still provides a good net profit and reasonable rate of return. As a combine harvested crop, very little labour is required and permanent workers normally handle all tasks. Table 23: Financial Indicators for LSC Wheat. _____._________Irrigated W heat Low Medium High Yield (kg/ha) 5 500 6 500 7 500 Production Costs (ZWD/ha) Cash before sale 40 965 44 400 50 439 Total variable costs 41 371 44 879 50 992 Total production costs 51 717 55 225 61 338 Labour Hired labour (days/ha) 19 20 21 Wage bill (ZWD/ha) 1 596 1 680 1 764 Wages as % var. costs 4% 4% 3% Farmer Profit (ZWD/ha) Gross profit 19129 26 261 31 508 Netprofit 8 783 16 275 21 162 Rates of Return Return to var. costs 0.46 0.59 0.62 Return to total costs 0.17 0.29 0.35 Sensitivity Indicators Chg in yield to gp = 0 -35% -41% -43% Chg in yield to np = 0 -16% -25% -29% Chg in price to np = 0 -15% -23% -26% 111. Smallholder farmers. Because of irrigation requirements, wheat is not generally suited to smallholder production. The crop could be grown as a rain fed crop during summer, but would involve a very high risk of disease and low yields of less than one ton per hectare. Furthermore, wheat requires specialised harvesting and threshing equipment that smallholders do not have. Page 32 Costs and profitability of tobacco compared to other crops in Zimbabwe V. NON-TRADITIONAL CROPS 112. This section considers the costs and returns for three non-traditional crops: coffee, paprika and marigold. 14 Horticultural exports including supermarket vegetables and roses are considered separately in the next section. 113. As a group, the crops covered here all have the potential to grow well in tobacco areas and are indicative of some of the diversification opportunities amailable in Zimbabwe. The costs of production for these crops are generally higher than for most traditional field crops, but lower than for tobacco and horticultural exports. In most cases, tobacco still provides more income on a per hectare basis, but the returns from non- traditional crops are attractive in their own right and (under the right conditions) could perhaps even substitute for tobacco as the foundation of a highly profitable farm system. Specific production and marketing issues for each crop are discussed below. 114. Beyond the crops covered here, many other niche products also offer diversification potential for smallholder and LSC farmers including mushrooms, flower seeds, game ranching, medicinal plants and spices. These enterprises are all being pursued on a limited basis in Zimbabwe and can provide an important source of farm income and improved cash flow. Compared with tobacco, however, the market outlets for these products are more limited and each farmer must find the right mix of enterprises that works best for them. A good area for further analysis would be to calculate production budgets and farm models based on these and other diversification options. 115. Citrus crops including oranges, grapefruit and lemons, for example, are an especia lly important diversification option with more than 88 000 hectares of permanent orchards planted on LSC farms as of 1999. Unfortunately, reliable data on the costs of production for these crops were not available and it would be misleading to comment on their costs and profitability. Anecdotal evidence, however, suggests that the returns may not be very high and one farmer with a fifty-hectare orchard complained of serious marketing problems and large net losses. One of the problems this grower identified with citrus is that these crops are perishable and so cannot be stored for a long time (like coffee) to take advantage of seasonal price variations. On the other hand, this grower also pointed out that citrus can be sold for foreign exchange (like tobacco) and so can be justified as part of the farm system even at a net loss. Citrus trees take about three to four years to produce their first fly crop and only reach full maturity after ten years. 116. Game ranching on LSC farms is another popular diversifiation activity. In tobacco areas, wildlife ranching began in the mid- 1970s mainly as a hobby on unused land not suited for intensive cropping. Since then, the wildlife sector has developed into a fully integrated part of many farm systems with production for (i) hunting and photographic safaris; (ii) game meat; and (iii) sale of live animals to other ranches or private tourist parks. Although wildlife could never substitute for intensive cropping in high potential areas, game management has become an important source of supplemental income and can easily generate an income of several thousand USD annually. Establishment costs include game fencing, animal stock, watering points plus road construction and guest cottages for safari visitors. As an industry that caters primarily to overseas tourists, the wildlife sector has been especially hard hit by recent instability in Zimbabwe. 14 Coffee has been grown for many years in Zimbabwe, but is a relatively new crop for LSC farmers in the main tobacco growing areas. Marigold is grown mainly for food colour and is also used in stockfeed. Page 33 Costs and profitability of tobacco compared to other crops in Zimbabwe A. Overview 117. Large-scale commercial farmers. A summary of key production costs for the three non-traditional LSC crops covered here is given in Table 24. Compared with tobacco, each non-traditional crop costs about the same or less than tobacco except for long-season (high input) paprika. Marigold costs about the same as many traditional field crops whereas coffee and paprika are among the most expensive enterprises analysed because of high irrigation requirements and intensive use of fertilisers and agrochemicals. These 3 crops all demand less labour than tobacco, but still have a high overall wage bill and generate anywhere from 50 to 250 days casual employment per hectare plus additional jobs in downstream processing. Because coffee and paprika are grown to fairly uniform standards only two management levels have been analysed for these crops; marigold is relatively new to Zimbabwe and just one management level is considered in this case. Table 24: Comparison of Main Production Costs for Non-Traditional LSC Crops. Dryland Crops Irrigated Crors Low Medium High Low Medium High Total Var. Costs (ZWD/ha) Flue-Cured Tobacco 130 663 140 036 148 979 157 697 165 431 174 317 Coffee 122494 134151 Paprika 124 126 172459 Marigold ._._._._. . _ ._._._. 56 934 Hired Labour (days/ha) Flue-Cured Tobacco 382 415 437 462 482 497 Coffee .. . 321 375 Paprika 270 310 M arigold ._._._._. ._._._._. 136 Total Wage Bill (ZWD/ha) Flue-Cured Tobacco 30 128 31 976 33 208 35 308 36 428 37 268 Coffee . 21 713 24 915 Paprika 20 720 23 800 Marigold ._ ._ . . ....__.. 10 024 118. Table 25 compares estimated gross and net profits for non-traditional LSC crops. Three fob prices for green bean coffee are considered, because current coffee prices are very low by historic standards at around USD 1 360 per metric ton fob Mutare. Market analysts expect that coffee prices will improve in the near future and, until recently, a price of around USD 2 000 per metric ton was not uncommon. Table 25: Comparison of Farmer Profits for Non-Traditional LSC Crops. Dryland Crops Irrigated Crops Low Medium High Low Medium. High Gross Profit (ZWD/ha) l - Flue-Cured Tobacco 73827 101 964 126681 104013 136 354 172 183 Coffee -USD I 360/mt 27 106 52 849 Coffee -USD I 500/mt 42 506 72 099 Coffee -USD 2000/mt 97 506 140849 Paprika 101 474 278741 Marigold . 24 688 Net Profit (ZWD/ha) Flue-Cured Tobacco 61641 89778 114495 87412 119 663 155492 Coffee -USD I 360/mt (I 191) 24552 Coffee -USD I 500/mt 14 209 43 802 Coffee -USD 2000/mt 69209 112552 Paprika 84 783 262 050 Marigold |__ | | . . 14±340 Page 34 Costs and profitability of tobacco compared to otier crops in Zimbabwe 119. Importantly, the results above clearly show that gross and net profits from other crops can rival and even surpass tobacco on LSC farms. Although the returns from coffee are rather low with current prices, farmer profits improve significantly at values closer to the long-term average. The returns from paprika are also very attractive, especially when grown as a long-season crop with high input management. Although limited world demand means that paprika prices are highly sensitive to production increases, inclusion of this crop as part of a mixed farmn system has the potential to reduce growers' dependence on tobacco. Estimated profits for marigold are considerably lower than for coffee and paprika, but still rival the income that can be eamed from most traditional crops including wheat, cotton, groundnuts and maize consumed on-farm. 120. Smallholder farmers. Due to various barriers including high production costs, lack of extension support, uncertain returns and special infrastructure requirements, smallholder farmers have fewer opportunities to grow and market non-traditional cash crops than LSC farmers. Previous efforts to promote coffee and paprika among smallholder growers have been uneven at best and certainly not on a scale needed to attract broad segments of the tobacco growing population away from this crop. Smallholder coffee is perhaps the best developed, but production has been based entirely in the Eastem Highlands and there has been no work to develop the type of communal irrigation and pulping facilities needed to support farmers in flue-cured tobacco areas. Even as an alternative to burley tobacco grown in the Eastern Highlands, much work is still needed to develop appropriate management skills and infrastructure. As yet, marigold has not been promoted to any great extent as a smallholder crop but is likely to do well on communal lands since it is not fastidious to soil type or moisture. 121. Key production costs for non-traditional smallholder crops are summarised in Table 26. Coffee and paprika both cost less to produce than flue-cured and burley tobacco at each management level. Although paprika looks expensive in its own right, and certainly costs more than coffee, total variable costs are still only about 57% of those for flue-cured tobacco at each corresponding management level. Paprika and coffee are also less labour intensive than tobacco and so may be easier to manage for households with a shortage of active workers. On the other hand, these enterprises still require more labour than other traditional smallholder crops including cotton and the need for most households to hire workers if cultivating a large area may discourage some producers. Table 26: Comparison of Main Production Costs for Non -Traditional Smaliholder Crops. Communal and Resettlement Small-Sca le Commercial (SSC) __________________ !Low Medium High Low Medium High Total Var. Costs (ZWD/ha) Flue-Cured Tobacco 24 078 31 088 39 647 47 880 66 072 78 442 Burley Tobacco 17 517 27 375 35 071 28 565 35 839 51 880 Coffee 2 070 11 757 .. .. .. 29 720 Paprika 13 861 18 222 . . .. .. 43 141 Total Labour (days/ha) Flue-Cured Tobacco 206 320 365 375 445 480 Burley Tobacco 225 315 350 330 360 390 Coffee 135 210 .. . . .. 310 Paprika 220 260 .. .. .. 300 Hired Labour (days/ha) Flie-Cured Tobacco 110 170 215 225 295 330 Burley Tobacco 75 165 200 180 210 240 Coffee 25 60 .. . . .. 160 Paprika 70 110 .. . . .. 150 Page 35 Costs and profitability of tobacco compared to other crops in Zimbabwe 122. Table 27 compares estimated net profits for non-traditional smallholder crops. As with the results for LSC farmers, these data clearly show that other crops offer a potential for comparable and sometimes higher profits than tobacco. Since these crops also cost less to produce than tobacco, paprika and coffee appear to be excellent alternatives for smallholder growers. As noted, successful development of these crops depends on many things including major investment in support services and infrastructure. Table 27: Comparison of Farmer Profits for Non-Traditional Smallholder Crops. Communal and Resettlement SmallScale Commercial (SSC) ._____________ .Low Medium Hig Low Medium High Gross Profit (ZWD/ha) Flue-Cured Tobacco 27 760 35 352 49 866 47 710 72 528 91 838 Burley Tobacco 12 871 24 875 32 304 25 280 34 231 32 270 Coffee -USD I 360/mt 9150 21 903 .. 30120 Coffee -IUSD I 500/mt 10 305 25 368 36 280 Coffee -USD 2000/mt 14430 37 743 . 58280 Paprika 32 539 39 778 . . .. . . 73 859 Net Profit (ZWD/ha) Flue-Cured Tobacco 23 814 31 406 45 920 42 880 67 698 87 008 Burley Tobacco 10 424 22 428 32 920 22 464 31 415 29 454 Coffee-USD I 360/mt 8 055 20 808 28 656 Coffee -USD I 500/mt 9 210 24 273 34 816 Coffee -USD 2 000/mt 13 445 36 648 56 816 Paprika 32 072 39 3 11 . .. . 69 029 B. Coffee 123. Coffee was first introduced in the 1960s on LSC farns in Natural Region I near Chipinge in the Eastern Highlands. Until the mid- 1990s, very little coffee was grown outside this area and the Eastern Highlands still account for more 70% of all exports. This situation is now set for great change in that LSC farmers in tobacco growing areas of Natural Region II have been planting large areas to coffee in an effort to diversify their income base. Of the total 9 900 hectares now under coffee in Zimbabwe, some 5 500 hectares are immature 1-2 year old trees grown on tobacco farms. When these plantations come into full production over the next 3 years, total annual exports are expected to increase from around 7 000 metric tons of green coffee at present to over 20 000 metric tons. Current export values are in the range of USD 8.1 million; once the trees already planted are fully mature, this could easily increase to over USD 43.5 million, equal to about 7.5% of the gross foreign income from tobacco. 15 Zimbabwe grows high quality Arabica coffee that normally attracts a 10% to 20% premium in the world market. 124. Coffee is now one of the fastest growing agricultural sectors in Zimbabwe and is being financed mainly by individual LSC farmers with income from tobacco. As a tree-crop, coffee takes around three years to mature until the first major harvest and few banks are willing to lend for this type of long-term project, especially in the current economic climate. 16 In addition to the trees themselves, other establishment costs include 15CGA estimates based on total yield expectation of 21 740/mt by 2004 for trees already planted and a price of USD 2 000/mt fob Mutare. Assuming prices remain at the current low of USD 1 360/mt, total export value is still set to increase to USD 29.6 million. 16Because of the current land situation, commercial banks are generally not willing to finance long-term investments on most LSC farms. This depends on how each farm has been listed for acquisition, but almost constant changes to these lists only adds to the confusion and serves to discourage new investment. Page 36 Costs and profitability of tobacco compared to other crops in Zimbabwe pulping machines, fermentation tanks, drying racks and, ideally, drip line irrigation. These costs can easily add to more than ZWD 10.6 million (USD 193 000) for a 60 hectare project until the trees are fully mature. 17 125. Goverrnent does not control the coffee industry and individual LSC farmers are free to market their crop directly in US dollars. Coffee prices are based on the New York Futures Market and most growers are able to fix prices up to 12 months in advance. An important advantage of this system is that sales against a forward contract can be used to obtain credit and help smooth individual cash flow requirements. Currently, however, New York coffee markets are suffering from a large oversupply and are at their lowest point for 25 years equal to an average fob export price of only USD) 1 360 per metric ton from the Mutare Coffee Mill. Analysts predict the situation will improve over the next 12 months and export prices around USD 2 000 per ton fob Mutare are more indicative of the long-run average. Therefore the quantitative analysis is carried out using three price scenarios: the current low price (USD 1 360/mt), a long-run average price (USD 2 000/mt) and a middle price (USD 1 500/mt). 126. Large-scale commercial farmers. Quantitative results from the analysis of LSC coffee grown in Natural Region II are summarised in Table 28 for a mature, four year old 18 crop. Table 28: Financial Indicators for LSC Coffee. Irrigated Coffee Medium High Yield (kg green bean/ha) 2 000 2 500 Production Costs (ZWD/ha) Cash before sale 121 397 132 784 Total variable costs 122 494 134 151 Total production costs 150 791 162 448 Labour Hired labour (days/ha) 321 375 Wage bill (ZWD/ha) 21 713 24 915 Wages as % var. costs 18% 190/% Gross Profit (ZWD/ha) USD I 360/mt 27 106 52 849 USD I 500/mt 42 506 72 099 USD 2 000/mt 97 506 140 849 Net Profit (ZWD/ha) USD I 360/mt (I 191) 24 552 USD I 500/mt 14 209 43 802 USD 2 000/mt 69 209 112 552 Return to variable costs USD I 360/mt 0.22 0.39 USD I 500/mt 0.35 0.54 USD 2 000/mt 0.80 1.05 Sensitivity Indicators (USD 1 360/mt) Chg in yield to gp = 0 -20% -31% Chg in yield to np = 0 1% -15% Chg in price to np = 0 1% -13% 17 Plantation establishment costs have been annualised and are included as an investment item along with irrigation and other special equipment in the calculation of net profit. See Appendix 3 for details. 18 Coffee trees on LSC farms are normally replaced or rationed after 78 years and most farmers aim to stager their planting to achieve a steady yield from the entire area given to this crop. Page 37 Costs and profitability of tobacco compared to other crops in Zimbabwe Because coffee is grown to a more or less uniform standard, only two management levels are considered for this enterprise. In this case, the medium input level is based on a conservative yield of 2.0 metric tons per hectare used for most farm budgeting exercises in Zimbabwe. Compared with large commercial farmers in southern Zambia, however, where growing conditions are more or less similar, this is a fairly low yield and it is not unrealistic to expect at least 2.5 tons per hectare for a mature crop with good management. The high input level is based on this expectation. 127. Key results from the quantitative analysis have already been compared with the data for flue-cured tobacco in the overview section above. Without repeating this discussion, it is useful to note that farmer profits improve by proportionately more with higher crop prices than the price increase itself. Furthermore, even though crop profits are very low with current prices (especially with average management), coffee still returns a gross profit and therefore contributes to the viability of a mixed LSC farm system. In other words, even under very difficult market conditions, coffee is still an attractive enterprise with great potential for increased profits as prices improve. In terms of the two management levels, the data suggest there is further potential for even higher profits through better management and increased yields. It may not always be possible to achieve 2.5 tons per hectare because of local agro-c limatic conditions, but the potential for significantly greater profits no doubt means that some farmers already target this level. 128. Smallholder farmers. There are around 2 000 registered smallholder coffee growers in Zimbabwe located exclusively in the Eastern Highlands. Most growers are organised into co-operatives that manage the pulping and milling of smallholder coffee and oversee international marketing, which is handled on commission by the Mutare Coffee Mill. Smallholder farmers currently produce about 30 metric tons of green bean coffee annually equal to about 1.5% of the national total from an area of just over 100 hectares. Although smallholder coffee has not been promoted in the northern flue-cured areas, the quantitative analysis helps to assess the overall viability of this enterprise. As described, the major challenge with promoting smallholder coffee in these locations would be that pulping and processing facilities have to be developed. Simple irrigation facilities, including water furrovs and treadle pumps, may also be needed for high yields depending on local conditions. Smallholder coffee, therefore, is more likely to substitute for burley tobacco grown in eastern Zimbabwe where there is better (but still limited) access to existing pulping and processing equipment. 129. The quantitative results for smallholder coffee are summarised in Table 29 below. These models assume farmers have access to pulping and processing facilities and no account has been taken of the cost for Zimbabwe to deve lop these services. Although more through analysis is needed to assess the viability of introducing coffee to a new location, the results here suggest this may be a very attractive proposition. Most encouragingly, the results are especially favourable with low input management where coffee costs less than almost every other enterprise analysed and provides relatively high profits similar to cotton. 19 On this basis, the rates of return are outstanding and indicate that coffee can be a very good low risk investment for smallholder farmers. With more intensive management and/or improved world prices, the returns from coffee rival tobacco. Although somewhat labour intensive because of the time spent picking, crop 19 At this level, farmers do little more than harvest the cherries when ripe. The only cash costs are pulping fees, hired labour and maintenance of farm buildings and equipment (incurred by all crops). Page 38 Costs and profitability of tobacco compared to other crops in Zimbabwe profits improve significantly with more intensive management and the returns to family labour at these higher levels are similar to the very good daily returns from tobacco. Table 29: Financial Indicators for Smallholder Coffee. Low Medium High :_________________________ . (Com/Resti) (ComlRestl) (SSC) Yield (kg/ha) 150 450 800 Production Costs (ZWD/ha) Cash before sale 1 734 10 749 27 928 Total variable costs 2 070 11 757 29 720 Total production costs 3 165 12 852 31 184 Labour Total labour (days/ha) 135 210 310 Hired labour (days/ha) 25 60 160 Gr. Return/day family labour USD 1 360/mt 83.18 146.02 200.08 USD I 500/mt 93.68 169.12 241.87 USD 2 000/mt 131.18 251.62 388.53 Gross Profit (ZWD/ha) USD I 360/mt 9 150 21903 30 120 USD I 500/mt 10 305 25 368 36 280 USD 2 000/mt 14 430 37 743 58 280 Net Profit (ZWD/ha) USD I 360/mt 8 055 20 808 28 656 USD I 500/mt 9 210 24 273 34 816 USD 2 000/mt 13 335 36 648 56 816 Return to variable costs USD I 360/mt 4.42 1.86 1.01 USD I 500/mt 4.98 2.16 1.22 USD 2 000/mt 6.97 3.21 1.96 Sensitivity Indicators (USD I 360/mt) Chg in yield to gp = 0 -86% -68% -53% Chg in yield to np = 0 -75% -65% -51% Chg in price to np = 0 -72% -62% -48% C. Paprika 130. Paprika was first introduced to Zimbabwe in the early 1990s by private investors who sought to promote the crop mainly among large-scale commercial farmers. One advantage of paprika is that the soil types and skills required are very similar to those needed for tobacco so that farmers are already well positioned for success. Compared with tobacco, however, world markets for paprika are relatively small with a total demand of only about 120 000 metric tons per year. Production in Zimbabwe has ranged from 8 500 to 15 000 metric tons annually and, in the years when production peaked, this had a noticeable impact on world prices which discouraged many LSC farmners from continuing to grow the crop. Until recently, paprika buyers typically offered LSC farmers production contracts with a guaranteed minimum price fixed in USD at the start of the season. Deteriorating economic conditions, however, mean this is no longer feasible for most export companies. 131. About 70% of world paprika is used as a condiment in powder form with the balance sent for hexane extraction to derive a colour lipid for industrial food processing. Until now all paprika grown in Zimbabwe has been dried, de -seeded and exported in baled form (similar to tobacco) for processing outside the country. This Page 39 Costs and profitability of tobacco compared to other crops in Zimbabwe situation is about to change, however, in that ane local firmn has nearly completed a new solvent extraction plant with the capacity to process 1 000 to 1 500 metric tons of paprika annually. Once operational, this facility will help add value locally and save on high overland transportation costs for bulk paprika. 132. Although there has been much private investment in Zimbabwe to promote paprika among LSC farners (including crop research and breeding programs), relatively little attention has been given to smallholder growers for the past 2-3 years. Neighbouring countries including Zambia and Malawi have enjoyed some measure of success with smallholder paprika, but buyers in Zimbabwe prefer to work with LSC farmers who are a more reliable source of supply and able to produce higher quality crop that is easier to market intemationally. Buyers in Zimbabwe also consider that paprika is a risky enterprise for smallholder farners because of problems with crop disease and potential for yield loss from localised flooding and other conditions these growers cannot control. 133. Large-scale commercial farmers. The results for LSC paprika are summarised in Table 30. For this analysis, two management levels are considered including a late-season, low-cost crop planted with the rains and a long-season crop aiming for very high yields. Both production models require supplemental irrigation. As discussed in the overview section above, these results compare very favourably with those for flue-cured tobacco. Although limited world demand means that paprika could never substitute entirely for tobacco, the crop clearly has the potential to provide high farmner profits and so can play important role in a mixed farm system. In terms of employment creation, paprika demands an estimated 70 to 80 days of casual labour per hectare and is among the most labour intensive crops analysed. The rates of return and sensitivity indicators for both short- and long-season paprika are excellent and show this is a robust activity that remains profitable even with a significant reduction in price. Table 30: Financial Indicators for LSC Paprika. Irrigated Paprika Medium High ::______________________ _ (short-season) (long-season) Yield (kg dry/ha) 3 000 6 000 Production Costs (ZWD/ha) Cash before sale 124 126 172 459 Total variable costs 124 126 172 459 Total production costs 140817 189 150 Labour Hired labour (days/ha) 270 310 Wage bill (ZWD/ha) 20 730 23 800 Wages as % var. costs 17% 14% Farmer Profit (ZWD/ha) Gross profit 101 474 278 741 Net profit 84 738 262 050 Rates of Return Retum to var. costs 0.82 1.62 Return to total costs 0.60 1.39 Sensitivity Indicators Chg in yield to gp = 0 -49% -66% Chg in yield to np = 0 -41% -62% Chg in price to np = 0 -38% -58% Page 40 Costs and profitability of tobacco compared to other crops in Zimbabwe 134. Smallholder farmers. Despite limited interest by most private buyers in paprika as a smaliholder crop, some promotion and training work was carried out a few years ago in tobacco areas and there are now several thousand smallholder farmers who cultivate the crop each year. Around 75% of smallholder paprika (equal to less than 300 metric tons annually) is grown in Natural Region II on very small plots of just 0.1 to 0.2 hectares on most farms. In 1999, a total of 12 500 smallholder households planted paprika over an area of 1 600 hectares for all natural regions; there were 9 800 growers in Natural Region II cultivating a total of around 1 200 hectares. Paprika is priced according to colour and smallholders generally produce a lower-value crop than LSC farmers. Contamination with foreign matters including dirt, stones and even rat hairs because of poor on-farm storage also lead to lower crop value and restricted export opportunities. 135. Results from the quantitative analysis of smallholder paprika are summarised in Table 31. Although production and marketing risks camot be overlooked, the data for smallholder paprika compare very well with those for smallholder tobacco. Not only are the estimated profits comparable to those from burley and even flue-cured tobacco, but paprika also costs less to grow at each corresponding management level. These are attractive characteristics for smallholder farmers for whom the ability to afford purchased inputs can be a major constraint. Compared with tobacco and all other crops analysed, the data show that paprika offers outstanding rates of return to both cash and total production costs. Table 31: Financial Indicators for Smaliholder Paprika. Low Medium High ,(ComlRestl) (ComlRestl) (SSC - Yield (kg/ha) 800 1 000 1 800 Production Costs Cash before sale 12 997 17 142 41 917 Total variable costs 13 861 18 222 43 141 Total production costs 14 328 18 689 47 971 Labour Total labour (days) 220 260 300 Hired labour (days) 70 110 150 Gr. Return/day family labour 216.93 265.19 492.39 Farmer Profit Gross profit 32 539 39 778 73 859 Net profit 32 072 39311 69 029 Rates of Return Return to variable costs 2.35 2.18 1.71 Return to total costs 2.24 2.10 1.44 Sensitivity Indicators Chg in yield to gp = 0 -73% -71% -68% Chg in yield to np = 0 -71% -70% -63% Chg in price to np = 0 -69% -68% -590/o 136. Furthermore, despite the perception among many buyers that paprika is a risky crop ill-suited to smallholder production, the sensitivity data show that the very good financial results for this crop are extremely robust and suggest that smallholder farmers may be well positioned to compete in the world market even with lower prices. Assuming all of the roughly 16 000 smallholder farmers currently growing tobacco were to produce an average of 400kg of paprika, fcr example, this would result in a total yield of just 6 400 tons, equal to less than half of Zimbabwe's record crop. Although it is not unreasonable to expect this could lead to lower international prices, smallholder farmers appear well Page 41 Costs and profitability of tobacco compared to other crops in Zimbabwe positioned to cope. To the extent this provides a window of opportunity for Zimbabwe's buyers to focus on lower-value smallholder paprika, there could be good potential for a gradual shift away from tobacco. Whether or not this potential can be realised, however, still depends on the development of crop extension services and input supply arrangements. As with all other enterprises, more comprehensive modelling is needed to assess the conditions under which such an investment would make financial and economic sense. D. Marigold 137. Marigold flowers are a relatively new niche product in Zimbabwe and are grown almost exclusively by LSC farmers for their value as a colour extract. Marigold is a much lower-value commodity than either coffee or paprika, but grows well on most soil types and is forgiving to management input. As a bulky and relatively low-value commodity the returns to marigold are highly sensitive to transportation costs and most LSC farmers dry the crop in a cement -lined silage pit before delivery to Harare fcr processing. Dry flowers are converted to a compact pellet form for export or for domestic use either as an industrial food colour or ingredient in stockfeed. Research is ongoing in Zimbabwe to determine an optimal pest control strategy and fertiliser recommendations for LSC marigold. Current production is around 700mt of dry flowers annually. 138. Large-scale commercial farmers. The quantitative results for LSC marigold are summarised in Table 32. As a very new crop, only one management level is analysed based on data for a "high input" model provided by a local firm that is promoting marigold to supply its processing unit. Table 32: Financial Indicators for LSC Marigold. :______________-_____________.______ Irrigated M arigold - high input . Yield (kg/ha)- dry 1 400 Yield (kg/ha)- wet 14 000 Production Costs (ZWD/ha) Cash before sale 56 934 Total variable costs 56 934 Total production costs 67 280 Labour Hired labour (days/ha) 136 Wage bill (ZWD/ha) 10 024 Wages as % var. costs 18% Farmer Profit (ZWD/ha) Gross profit 24 686 Net profit 14 340 Rates of Return Return to var. costs 0.43 Return to total costs 0.21 Sensitivity Indicators Chg in yield to gp = 0 -34% Chg in yield to np = 0 -20% Chg in price to np = 0 -18% 139. Overall, these results are similar to many of the traditional field crops discussed in Section IV. Although marigold could never be expected to substitute for tobacco or other high-value crops as the foundation of a commercial farm system, the estimated costs and returns are similar to cotton, groundnuts and wheat. Marigold could play a useful role in helping to finance other farm activities and clearly could be part of the Page 42 Costs and profitability of tobacco compared to other crops in Zimbabwe process of agricultural diversification. Marigold is more labour intensive than many other traditional crops with about 40% of the total labour input consisting of casual workers used during harvest. 140. Smallholder farmers. As noted, marigold grows well on most soil types and is relatively forgiving to farner management. These characteristics suggest that marigold flowers could do well as a smallholder crop, but as yet there has been almost no effort to promote this enterprise in communal and resettlement areas. Because of the favourable results for LSC farmers, however, a very promising area for future research would be to look at this and other niche products in more detail. Although marigold and other commodities that are in limited demand could never substitute for tobacco and other major crops, these could be a potential area where (in a stable economic environment) targeted finance could help develop new private sector partnerships. VI. HORTICULTURAL EXPORTS 141. This section looks at costs and retums for two types of horticultural exports supermarket vegetables (mangetout, baby carrots and baby com) and cut flowers (ros es). A. Overview 142. Horticulture is Zimbabwe's second most valuable agricultural export sector after tobacco and eamed over USD 124.9 million in gross foreign income in the 1999/00 season, eBual to approximately 1.5% of total GDP and 22% of the revenue generated by tobacco. An overview of sector performance by export season is given in Table 33 and shows that horticulture has grown rapidly in the past ten years with total value now five times greater than in 1990. But unstable political and macroeconomic conditions have slowed these growth rates and it is projected that total exports in the 2000/01 season could decline by 10% or more. Roses (and to a lesser extent, supennarket vegetables) require a large expenditure on imported inputs, especially during establishment, for irrigation equipment, planting materials and greenhouse construction, and the total export values listed below would be considerably less if measured in net terms. Table 33: Record of Horticultural Exports, 1989-2001. Flowers Vege ables Total pxports Volume Value Volume Value Volume Value .___________ (mt) (USD '000) mt) (USD '000) (mt (USD '000) 1989/90 2 872 13 211 2 823 8 469 5 695 21680 1990/91 3 722 17 121 4 215 12 645 7 937 29766 1991/92 4 757 21 885 4 354 13 063 9 111 34948 1992/93 5 206 23 948 3 999 11 996 9 205 35944 1993/94 5 769 26 541 5 202 15 607 10 971 42148 1994/95 9 095 41 839 8 989 26 967 18 084 68806 1995/96 11 630 53 497 10202 30 605 21832 84102 1996/97 13 832 63 628 9 792 29 377 23 624 93 005 1997/98 17 290 79 535 12730 38190 30 020 117 725 1998/99 14 799 64 600 13 649 40 947 28448 105547 1999/2000 18279 84084 13594 40783 31873 124867 2000/01 est. 18198 83 710 9085 27 255 27 283 110965 Source: Ministry of Lands and Agriculture, Statistical Bulletin 20C), Harare. 20 These figures are for supermarket vegetables and cut flowers only. Citrus crops are normally also considered as part of Zimbabwe's horticultural exports and, in 1999/2000, total exports were USD 11.1 million, bringing the total gross value for all horticultural exports to USD 136.0 million. Reliable budget data for citrus crops were not available and no comment can be made on their costs and profitability. Page 43 Costs and profitability of tobacco compared to other crops in Zimbabwe 143. More than 80% of Zimbabwe's horticultural exports are grown on LSC tobacco farms and were first developed using tobacco revenue. For most farmers, the main objective behind the introduction of roses and other horticultural exports was to lessen their dependence on tobacco. Not only can horticultural crops be extremely profitable, but like tobacco, they also earn foreign exchange and so have the potential to play a similar anchor role in a mixed farm system. Furthermore, although horticultural crops tend to be expensive because of high costs for pest and disease control, export vegetables and roses both provide a steady cash flow in their own right with weekly and even daily sales throughout the export season. From the social point of view, a further advantage of horticulture is that these crops are extremely labour intensive and create more jobs on a per hectare basis than any other farm enterprise including tobacco. These characteristics all make horticulture a very attractive sector, both for farmers and for Zimbabwe as a whole in terms of more diverse export earnings, employment creation and potential for growth linkages. 144. Despite these advantages, the production and marketing of horticultural crops is a highly specialised business that cannot be entered into lightly. At the field level, success demands unparalleled attention to quality control and strict adherence to European standards governing the use of pesticides, fertilisers and other inputs. Export crops must also be carefully graded and presented according to exact specifications. It is not unusual for more than 30% of a vegetable crop to be rejected because of quality and this risk has discouraged many LSC farmers from continuing with production. Marketing, therefore, is one of the biggest obstacles to success. Although cut flowers can still be sold independently on the Dutch auction, most other produce must be sold as part of a forward contract negotiated by a central agent or export consortium with the capacity to supply the specific volumes and varieties of produce European buyers demand. 145. High freight costs and the availability of direct flights to Europe further add to the challenge of success with horticulture and are currently among the most pressing constraints facing Zimbabwe's export sector. Over the past 12 months, direct flights from Harare to the UK, Europe and Australia have been reduced from 32 to 14 per week, resulting in a shortfall of approximately 150 tons of cargo space per week with a potential value USD 17 million over the 25-week peak export season. 21 As a result, many flower exporters have been forced to drive their produce by road to Johannesburg nearly 1 200 kilometres away simply to find cargo space. Zimbabwe also has some of the highest costs for aviation fuel in the region leading to high air freight prices which now account for as much as 40% of total production costs for both vegetables and roses. 146. For these and other reasons, more than 95% of vegetable exports and 100% of cut flowers are grown on indivilual LSC and large corporate farms, mainly within 200km of the International Airport in Harare. Smallholder farmers are only marginally involved in the export sector with fewer than 3 000 vegetable growers linked to established agents. This is in sharp contrast with the experience in Kenya where there are perhaps 60 000 to 75 000 smallholders involved in export-oriented vegetables, including production for canners and freezers. Despite more stringent marketing standards that apply today than when Kenyan horticulture first developed, there is still considerable scope for increased participation of Zimbabwean smallholders on an outgrower basis in some of the high potential farm areas near Harare. 21 HPC estimates. Page 44 Costs and profitability of tobacco compared to other crops in Zimbabwe B. Supermarket Vegetables 147. Three indicative export vegetables are considered for this analysis including mangetout (snow peas), baby carrots and baby corn. Other important export crops for LSC farmers include sugar snaps, fine beans, cherry tomatoes, courgettes and asparagus. Each vegetable crop is typically grown over an 8 to 9 week period with most LSC farmers producing three crops in rotation each season. Although some growers have tried to form local export associations with neighbouring producers, most vegetable crops are farmed on an outgrower basis for a local contractor who collects, washes, grades and packs the produce as a shelf-ready product for delivery to a UK or other European supermarket chain. Individual farmers simply cannot guarantee the variety and continuity of supply needed to negotiate export contracts with supermarket buyers and this system is a vital link to the international market. 148. To ensure a steady supply of good quality produce, most export agents also grow vegetable crops themselves, especially during the rainy season when many LSC farmers switch away from commodities that are difficult to grow. Mangetout and baby carrots, for example, are almost impossible to produce during the heavy rains, but baby corn is more forgiving and better suited to production throughout the year. In some cases, this means that export agents have even found it necessary to grow mangetout and other crops in plastic houses just to meet the conditions of regular supply demanded by European buyers. This can be justified for a few months each year, but is only feasible for a large supplier with effective economies of scale. 149. Unlike roses, one important advantage of export vegetables is that these crops do not require a major investment in green houses and other specialised equipment by LSC farmers. Although most crops do best with drip line irrigation, it is perfectly acceptable to use existing overhead spray systems already available on most farms. For export agents, on the other hand, total investment costs can be very high and include the establishment of nral depots, grading and packing sheds, heat extraction units and cold rooms. Generators as well as insulated and refrigerated trucks are also required to ensure the cool chain to Europe is never broken. 15(i. Large-scale commercial farmers. Per hectare results for each of the LSC vegetable crops covered here are summarised in Table 34. These calculations are based on delivery to a nearby depot where an agent collects the produce for final grading and export presentation. Importantly, LSC farmers are only paid for produce actually exported and yield assumptions are estimated on this basis. Unsurprisingly, this system has led to suspicions by LSC farmers that they are not always paid for all of the produce actually shipped abroad. Certainly, the grading system is not entirely transparent and this problem has caused some farmers to switch away from export vegetables in favour of other crops with more certain terms of payment. Because vegetable crops are all grown to a uniform standard, only one management level for each product is considered. 151. Taken together, the results below are encouraging and show that, under the right conditions, export vegetables can be an important source of steady income for LSC farmers. Although per hectare profits are perhaps somewhat low compared with other enterprises on a single crop basis, export vegetables are normally triple (and sometimes quadruple) cropped throughout the year and so easily rival flue -cured tobacco and other high-value enterprises in terms of total annual income. Assuming the three crops covered here were grown in rotation, for example, total annual income would be ZWD 102 503 (USD 1 864) per hectare, which is almost identical to the estimated profits for medium- Page 45 Costs and profitability of tobacco compared to other crops in Zimbabwe input dryland flue-cured tobacco. Unlike tobacco, however, one the most important advantages of export vegetables is that these crops provide a steady cash flow in their own right. Not only are export vegetables planted in three to four cycles throughout the year, but most producers also aim to stagger their plantings on a weekly basis to produce a steady harvest throughout the season. This helps minimise the need for large cash expenditure at any one time and also provides a more regular income than almost any other farm enterprise. Table 34: Finandal Indicators for LSC Export Vegetables. Irigated Vegetables Mangetout Baby Carrots Baby Corn Yield (kg export quality/ha) 4 000 3 800 950 Production Costs (ZWD/ha) Cash before sale 68 641 66 500 37 674 Total variable costs 68 641 66 500 37 674 Total production costs 78 916 76 775 47 949 Labour Hired labour (days/ha) 295 275 190 Wage bill (ZWD/ha) 20 020 18 900 13 440 Wages as % var. costs 290/o 28% 36% Farmer Profit (ZWD/ha) Grossprofit 52 539 38 000 11 964 Net profit 42 084 27 725 1 689 Rates of Return Return to var. costs 0.76 0.57 0.32 Return to total costs 0.53 0.37 0.04 Sensitivity Indicators Chg in yield to gp = 0 -43% -36% -24% Chg in yield to np = 0 -35% -27% -3% Chg in price to np = 0 -35% -27% -3% 152. In terms of employment creation, the data show that an important advantage for Zimbabwe is that export vegetables are all very labour intensive and, on a per hectare basis, easily create more jobs than tobacco. Again assuming the three crops listed above were grown in rotation, a total of 760 days labour would be required per hectare, which is considerably more than for any other enterprise except roses. Although the precise situation will vary from farm to farm, casual workers normally fill more than 50% of the total labour requirement and vegetable exports can be an important source of employment and supplemental income for local residents. It should be stressed, however, that vegetable crops and other horticultural products could never substitute entirely for tobacco, which is grown on a much larger scale. Furthermore, crops with a large labour requirement are not always attractive from the farmer's perspective because of potential management problems and incremental costs of housing and other benefits for permanent staff. 153. Smallholder farmers. Vegetable crops have long been an important part of most smallholder farm systems and are grown both for household consumption and for sale in local markets. Crops including tomatoes, cabbage, onion, kale andokra all enjoy good demand in rural and urban markets and are an important part of many Zimbabwean diets. 154. Domestic production, however, is entirely different from growing vegetables for the export market and there are currently fewer than 1 700 smallholder Page 46 Costs and profitability of tobacco compared to other crops in Zimbabwe farmers within 100km of Harare producing baby corn, mangetout, butternut squash and sweet corn on an outgrower basis for one leading export company. These farmers include (i) established SSC producers also growing tobacco; (ii) irrigation scheme participants; and (iii) individual communal farmers with limited access to other sources of cash income. Depending on the time of year, these farmers produce from 50% to 90% of all baby com and Up to 5% of the mangetout shipped by the export company. Success with smallholder export horticulture depends heavily on technology transfer and the exporter provides extension agents to give advice and ensure that each crop is being grown to the required stan(lards. A network of rural depots has been established to cdlect the produce and the outgrower company itself does crop spraying with the cost deducted from each farmer's final payment. Despite the high costs of establishing this system, there are now plans to try and expand to new areas and involve more farmers. 22 155. In order to attract smallholder growers, a more transparent payment system is used than with LSC farners in which vegetables are rough graded at the depot while farmers watch. 23 Only about 2% to 5% of produce is rejected at this stage and smallholder farmers are paid on the spot for all produce the depot accepts. Although this system means that smallholder farmers are paid less on a per unit basis than LSC growers, this method avoids potential conflict and helps to impress on farmers the importance for good quality control. Final pack-out percentages for smallholder produce are similar to those for LSC farmers at around 70% to 80% of total production for mangetout and baby corn respectively. 156.. Although sufficient information was not available to carry olt a full financial analysis of smallholder vegetable crops, partial budget information provided by the export company indicates these can be an attractive enterprise. These data are summarised in Table 35 but cannot be compared directly with the results for other enterprises since information on labour requirements, transportation costs, overhead costs and investment requirements were not available. It should also be noted that the results below are expressed for typical 300 and 600 square meter plots for mangetout and baby coni respectively, rather than in per hectare terms. Irrigation is carried out using watering cans or some other equally simple technology. Table 35: Partial Indicators for Smaliholder Export Vegetables. Total Revenue Purchased Inputs Farmer Profit Yield (ZWD/plot) (ZWD/plot) (ZWD/plot. Mangetout (300m 2) 10 kg 1 200 980 220 250 kg 2 000 980 1 020 300 kg 2 400 980 1 420 Baby corn (600m') 5 000 cobs 1 200 634 566 7 000 cobs 1 680 634 1 046 9 000 cobs 2 160 634 1 526 Note: Data are based on prices from October 2000 rather than constant January 2001 prices used in all other calculations. 22 his outgrower scheme was designed using technical assistance provided under the World Bank's Agricultural Credit and Export Promotion Project. 23 LSC farmers normally do rough grading on their own to eliminate any crop clearly unsuited for export. Page 47 Costs and profitability of tobacco compared to other crops in Zimbabwe 157. Although the numbers above cannot be compared directly with the results for other crops, the data suggest that export vegetables can be attractive for smallholder farmers with the right type of support. One important advantage of the system modelled above is that all purchased inputs, including seed, fertiliser and chemicals are all given on loan by the export company with the cost deducted at the time of delivery. From the farmer's point of view this is an ideal (and rare) opportunity since almost no cash is required to grow export vegetables. The estimated profits are perhaps rather low in absolute terms, however, and the data show it is unlikely that vegetables could ever substitute for tobacco, cotton or other more traditional crops grown on a larger scale. Nevertheless, the opportunity for a diverse and regular income from only a small area of land must not be ove rlooked and the data suggest that vegetable crops could provide a bridge away from tobacco for some smallholder growers. 158. Export agents. Because success with vegetable crops depends on the services of an export agent as part of the overall production chain, separate calculations were carried out to illustrate the costs and returns for these important sector participants. These calculations are based exclusively on the costs and returns of working with LSC farmers and no account has been made for the additional cost of input and extension services provided to smallholder farmers described above. 159. The results from this analysis are summarised in Table 36 and show that total costs of delivering shelf-ready produce to Europe can be extremely high, but that total profits are also very good. The rates of return are much lower than for most other crop enterprises, but as a different type of investment, the primary objective in this case is to achieve effective economies of scale by trading large volumes of produc e. Unfortunately, infornation on the number of workers required at this stage of the production chain was not available. Table 36: Financial Indicators for Export Agent. I ig-ated Vegetables Mangetout Baby Carrots Baby Corn Production Costs (ZWD/ha) Crop purchases (LSC farmer) 121 000 104 500 49 638 Packing materials & labour 99 000 94 050 23 513 Air freight 381 920 362 824 90 706 European handling 363 000 344 850 86 213 Agent's Profit (ZWD/ha) Gross profit 60 170 51 624 35 650 Net profit 55 739 47 193 31 219 Rates of Return Return to var. costs 0.06 0.06 0.14 Return to total costs 0.06 0.05 0.12 C. Roses 160. Floriculture has been one of the most successful areas of Zimbabwean agriculture in recent years with a wide variety of flowers including roses, asters, chrysanthemums and carnations now shipped to Europe, USA, South Africa, Australia and the Far East. Roses account for the bulk of export flowers and there are now approximately 400 hectares under production, which is second only to Kenya compared with all other African countries. Page 48 Costs and profitability of tobacco compared to other crops in Zimbabwe 161. Zimbabwe enjoys two fundamental advantages in rose production. First is inexpensive labour, which is necessary for growing, cutting, grading and packaging of blooms. Second, is the local climate which is well suited to quality rose production in the summner months coinciding with the European winter. Although it is possible to grow roses throughout the year, output is low and most growers prefer to rest their plants from April to October so as to produce a strong flush of blooms from early-November through to late-March when heating costs in Europe make greenhouse production there very expensive. Roses in Zimbabwe are all produced in polythene houses to protect the blooms from heavy rains and harsh sunlight. This method of production is capital intensive and high output is required to justify the investment. 162. Export roses are marketed through one of two channels. First, is the traditional route of selling through the Dutch auction and most flowers are still traded this way. The main advantage of this system is that individual growers are able to send their flowers for sale with few barriers to entry. On the other hand, auction fees and commissions using this system are very high and represent the second largest cost component after airfreight equal to around 16% of gross sales. In an effort to save on these costs, the second marketing channel to develop is that some rose farmers have joined together to form an export consortium with the capacity to guarantee a steady supply of flowers under direct contract with Dutch and other European buyers. Currently, there are two such consortia operating in Zimbabwe with 6 to 8 members each. Consortium mernbers must carefully plan which varieties of roses they will grow in order to attract the highest price and guarantee the steady flow of flowers buyers demand. Under these contracts, 10% to 15% of each consortium's total production must still be sold though the auction in order to establish their benchrnark price. 163. Total start-up costs for a rose project are very high and have been estimated at ZWD 23.4 million (USD 425 000) for a two hectare project including plastic houses, drip line fertigation, rose bushes, royalties, grading rooms, cold storage space and an insulated truck. Most farms aim to expand after a few years and some of this investment can be shared over four hectares without additional cost. A mature rose project rarely covers more than 4 to 6 hectares at most. Rose bushes alone can cost more than ZWD 5 million (USD 91 000) per hectare including royalties and are normally replaced after five years with new varieties. 164. Large-scale commercial farmers. The costs and profitability of LSC roses have been estimated for short, medium and long-stem flowers sold through the auction and as part of an export consortium. One of the key challenges all rose farmers face is deciding what type of bushes to plant and how best to time their production for a strong flush when prices are high. Yields and prices for specific varieties of flower vary greatly and it is again important to read these data as a continuum of possibilities rather than an exact expression of costs and returns for a particular type of flower. It must also be stressed that roses are rarely grown over more than 4 to 6 hectares for a mature project. 165. Financial indicators for roses sold by auction are summarised in Table 37. In the first place, these data clearly show that roses are in a league of their own with the potential to generate nearly as much or more income as tobacco from only a small area. Using the example of medium-stem roses, the estimated gross profit from a two hectare starter-project works out at around ZWD 6.7million (USD 122 000) which is nearly as much as the total income from a full 60 hectares of medium input dryland and irrigated tobacco of about ZWD 7.2 million (USD 131 000). A three or four hectare rose project, Page 49 Costs and profitability of tobacco compared to other crops in Zimbabwe therefore, could easily surpass tobacco in terms of the total contribution to farm income. On the other hand, the data in Table 37 also show that roses demand a very large up-front expenditure. Because flowers are shipped weekly or even daily throughout the export season, however, the opportunity for a regular income helps to cover many of these production costs. Still, at least during the expensive start-up period, farmers must have some way of covering the very high variable and investment costs and it is no accident that 80% of total rose production started on tobacco farms. 166. In terms of employment, Table 37 shows that roses are (by far) the most labour intensive crop analysed. The estimated requirement of 9 630 days is based on a standard practice of using 30 full time workers per hectare which translates to a total input of 19 260 to 57 780 days labour for a 2 to 6 hectare project respectively. By comparison, the total labour input for 60 hectares of flue-cured tobacco works out at only around 27 000 days. Importantly, most rose farmners prefer to use female labour whereas men do most work for tobacco. Often this division of labour translates into as a husband and wife pairing. From the farmer's point of view, therefore, roses and tobacco are complementary in terns of the potential for savings on the cost of staff housing. Table 37: Financial Indicators for LSC Roses Sold by Auction. Irrigated Roses - auction sales .________________________ Short Stem Medium Stem Long Stem Yield (stems/ha) 2 750000 1 750 000 I 100000 Production Costs (ZWD/ha) Cash before sale 8 483 740 8 546 850 7 752 433 Total variable costs 10 653 849 10 894 513 10 139 553 Total production costs 12 21 9 140 12 459 804 11 704 844 Marketing Fees (ZWD/ha) Air freight 4 840 000 4 876 667 4087 111 Auction fees 15 78 261 1707 391 1 736 087 Commissions 526 087 569 130 578 696 Labour H ired labour (days/ha) 9 630 9 630 9 630 Wage bill (ZWD/ha) 786 240 786 240 786 240 Wages as % var. costs 70/o 7% 7% Farmer Profit (ZWD/ha) Gross profit 2 498 325 3 333 748 4 327 838 Net profit 933 034 1 768 457 2 762 547 Rates of Return Return to var. costs 0.23 0.31 0.43 Return to total costs 0.08 0.14 0.24 Sensitivity Indicators Chg in yield to gp = 0 -43% -50% -56% Chg in yield to np = 0 -16% -26% -36% Chg in price to np = 0 -10% -15% -24% 167. Table 38 looks at the returns for roses sold by an export consortium under direct contract. Page 50 Costs and profitability of tobacco compared to other crops in Zimbabwe Table 38: Financial Indicators for LSC Roses Sold by Export Consortium. Irrigated Roses -consortium sales -._______________________ ,Short Stem Medium Stem Long Stem Yield (stems/ha) 2 750 000 1 750 000 I 100 000 Production Costs (ZWD/ha) Cash before sale 8 733 740 8 796 850 8 002 433 Total variable costs 9 115 153 9 209 470 8 421 988 Total production costs 10 680 444 10 774 761 9 987 279 Marketing Fees (ZWD/ha) Air freight 4 840 000 4 876 667 4 087 111 Auction fees 236 739 256 109 260 413 Commissions 78 913 85 370 86 804 Labour Hired labour (days/ha) 9 630 9 630 9 630 Wage bill (ZWD/ha) 786 240 786 240 786 240 Wages as % var. costs 90/0 9% 9% Farmer Profit (ZWD/ha) Grossprofit 4 037 021 5 018 791 6 045 404 Net profit 2 471 730 3 453 500 4 480 113 Rates of Return Return to var. costs 0.44 0.54 0.72 Return to total costs 0.23 0.32 0.45 Sensitivity Indicators Chg in yield to gp = 0 -32% -58% -62% Chg in yield to np = O 19O/O -40% -46% Chg in price to nR = 0 -200/o -24% -33% 168. Compared with the results for roses sold through the auction, these calculations show that farmer profits improve by an estimated 40% to 60% when marketed by an export consortium. This is entirely a result of the savings on fees and commissions farmers are charged on all sales through the auction. Direct marketing by a consortium involves certain costs to negotiate export contracts, but once established, only 10% to 15% of each consortium's flowers must be sold through the auction equal to a savings of ZWD 1.9 million (USD 35 000) in per hectare transaction charges for medium stem roses. The rates of return and sensitivity indicators for roses sold by consortium members, therefore, are all much more favourable than for individual growers who sell entirely on the auction. Given these good results, it seems likely that more growers may try and organised themselves into marketing groups in the future. The two consortia operating in Zimbabwe were self-formed and the data above suggest these were very good business decisions. VII. SUMMARY AND CONCLUSIONS 169. This paper set out to provide an improved understanding of the opportunities for agricultural growth and diversification in Zimbabwe. Towards this end, a set of 91 enterprise budgets covering tobacco and 12 other important crops grown by large -scale and smallholder farmers were developed and used to compare the likely costs and returns from different production decisions. Although this approach cannot be used to identify optimal production strategies for individual farmers, it is important to understand the trade-offs these producers face in deciding which crops to grow. From the national perspective, the analysis also helps to understand some of the implications for Zimbabwe's Page 51 Costs and profitability of tobacco compared to other crops in Zimbabwe trade balance and opportunities for employment creation that may result from a gradual shift away from tobacco. Several points stand out from this analysis with important policy implications. 170. In the first place, the analysis clearly shows that tobacco is of major importance to the national economy and must not be neglected in the formulation of effective development strategies. Despite mounting pressure from international health organisations and anti-smoking groups, world demand for tobacco is still strong and the analysis clearly demonstrates that this crop offers some of the best potential for high producer profits, excellent rates of return and protection from variations in price and yield for both LSC and smallholder farmers in suitable agro&ecological areas. Furthermore, as one of the most labour intensive and widely produced crops in Zimbabwe, tobacco accounts for more jobs than any other farm enterprise and has benefits that extend far beyond national export income and individual producer profits. To the extent that tobacco wages are sent as remittances to family members in communal areas or used by casual worker to buy crop inputs, for example, the analysis shows that tobacco can play an important role in helping to support improved management of traditional smallholder crops like cotton and maize. With a gross annual foreign exchange contribution of around USD 600 million, Zimbabwe clearly cannot afford to turn its back on tobacco and any shift away from this crop must be gradual. 171. Rather than neglect tobacco for fear of shrinking markets, therefore, these finding all show that tobacco is uniquely positioned to help fuel the very process of agricultural growth and diversification. Certainly tobacco has played a major role in the economic development of Zimbabwe so far and, despite the health risks for tobacco consumers, it would be irresponsible to suggest that Zimbabwe should curtail tobacco and not continue to make use of this potential. More than 80% of all rose exports, for example, are grown on LSC tobacco farms and were first introduced using tobacco income. Similarly, 55% of the total area now under coffee is on tobacco farms including 5 500 hectares planted within the past three years. Zimbabwe's LSC farmers are fully aware of the building pressure on tobacco markets and that favourable outlets for this crop are unlikely to last forever. Towards this end, tobacco growers have already taken steps to diversify their income base by investing in various new enterprises. This process should be supported with constructive domestic and international trade policies that help maintain tobacco and also encourage investment in new areas. 172. In this respect, the results of the analysis are encouraging and show that several farm enterprises apart from tobacco offer a similar potential for good financial returns and high levels of employment creation. Coffee, roses, paprika and export vegetables can all be grown in the same areas as tobacco with good opportunities for high producer profits and payment in foreign exchange. Several other enterprises apart from those covered here have also been introduced on tobacco farms in recent years including citrus crops, wildlife production and small-scale tourism for photographic and hunting safaris. Other niche crops like marigold, spices, mushrooms, medicinal plants and flower seeds also offer potential on a limited scale. 173. Importantly, each of these alternative crops is generally more difficult to market than tobacco with only limited international demand. This is especially true with respect to paprika and supermarket vegetables, which can be grown using much of the same equipment already available on most LSC farms, but do not offer the same potential for broad participation by all farmers as tobacco. Most of the so-called diversification Page 52 Costs and profitability of tobacco compared to other crops in Zimbabwe crops also require a large initial investment in special infrastructure and processing facilities. This is especially true for roses, which can generate more income on a per hectare basis than any other enterprise, but are extremely expensive to produce and can easily cost more than ZWD 23 million (USD 418 000) to establish for a typical two hectare project. Tree crops like coffee (and citrus) are less expensive than roses, but take several years to mature and so demand a long-term perspective from potential investors. For these and other reasons, it is unlikely that any single enterprise could ever substitute for tobacco on its own and the challenge for each farmer must be to find the right blend of enterprises that works best for them. 174. With LSC farmers, for example, it is not difficult to imagine a future in which various crops like horticulture, coffee, paprika and other similar enterprises could play a similar anchor role to tobacco in a mixed farm system. Assuming key production and marketing constraints can be overcome (partly by investing revenue currently generated by tobacco in these new enterprises), these export crops can all be highly profitable and could easily substitute for some of the foreign income and employment currently accounted for by tobacco. Like tobacco, however, these commodities are all expensive to produce and it is also probable that traditional field crops including maize, cotton, groundnuts, soybeans and wheat will still have an important role to play in terms of providing supplemental income and steady cash flow needed to sustain the overall system. Traditional crops are perhaps less important for a farm system based entirely around horticulture since these crops can generate a steady cash flow in their own right, and it is again important to stress that the optimal enterprise mix can vary greatly from farm to farm depending on each system's own individual requirements and farmer objectives. 175. For smallholder tobacco farmers, the analysis shows the opportunities for groswth and diversification away from tobacco are more limited. Paprika, coffee and export vegetables produced on an outgrower basis all offer considerable potential, but still depend on new infrastructure and support services for farmer training and input supply. Whereas LSC farmers have (at least until recently) been able and willing to finance this type of investment on their own using tobacco revenue, smallholder farmers generally do not have this capacity and will require support from both public and private sector participants to succeed with these new crops. In this respect, a return of economic and political stability to Zimbabwe is especially important as a prerequisite for broad-based growth and diversification. 176. In commenting on the diversification opportunities for smallholder farmers it must also be recognised that these growers are only marginally involved in the tobacco sector and account for less than 5% of total annual production. More specifically, of the estimated 1.21 million SSC, communal and resettlement farmers operating in Zimbabwe, only about 16 000 of these actually grow tobacco. Finding remunerative alternative to tobacco for these households is still an important challenge, but certainly not on the scale of having to work with all smallholder farmers in all locations. In a stable macroeconomic environment, for example, it is not unreasonable to expect that private investors could help develop some of the support services and infrastructure smallholder farmers need for success with other high value crops like paprika, supermarket vegetables and coffee. More than 1 700 smallholder farmers in tobacco areas are already organised around water points to produce export vegetables on an outgrower basis for one private firm and Zimbabwe should look to encourage these and other similar developments. Page 53 Costs and profitability of tobacco compared to other crops in Zimbabwe 177. In terms of the potential negative effects on smallholder farmers from a loss of tobacco revenue, therefore, the greatest impact over time is likely to be felt through reduced remittance payments from workers on large-scale commercial farms. The quantitative analysis clearly demonstrates that each of the major smallholder crops covered here including maize, cotton, groundnuts and even soybeans are much more profitable when farmers are able to afford the fertilisers and agro-chemicals needed to produce using medium and high input management than with low input use. To the extent that remittance payments facilitate improved crop management, therefare, the loss of this income could seriously impact smallholder agriculture throughout the country. Clearly, one of the main challenges for Zimbabwe is to develop reliable supply networks that ensure affordable crop inputs are available in all areas. Although many of the so-called diversification crops being introduced on LSC farms are also very labour intensive and so could provide a reliable income for some of the workers displaced by a gradual shift away from tobacco, Zimbabwe cannot afford to ignore the role this traditional cash crop in helping to support smallholder farmers. 178. Many other conclusions besides those noted above can be drawn from the detailed information presented in the narrative text and quantitative data section. Agricultural administrators, farmers, policy makers, agribusiness firms and others are all likely to interpret the data differently with an increased emphasis on their particular area of concern. Once a basic set of enterprise models have been prepared, however, it is very easy to use computer software to test the effects of alternative yield and price assumptions. At the very least, it is hoped this discussion has helped to illustrate the benefits of this approach to agriculture sector analysis. In the absence of a well defined methodology for assessing individual crop attributes, sector planning can easily become an exercise in guess work based on presuppositions about which crops and policy initiatives are best. The approach adopted here cannot point to optimal farm strategies, but can help to interpret some of the trade-offs and decisions farmers must make. Page 54 Costs and profitability of tobacco compared to other crops in Zimbabwe THE COSTS AND PROFITABILITY OF TOBACCO COMPARED TO OTHER CROPS IN ZIMBABWE PART TWO DATA SECTION Pn'e. :55 Costs and profitability of tobacco compared to other crops in Zimbabwe PRESENTATION This part of the paper presents the complete data set from the quantitative analysis. There are separate data tables for large-scale commercial and smallholder farmers in which the various enterprises are sorted by selected indicators as follows. Large-scale commercial farmers. * Alphabetical listing of results for all enterprises * Enterprises sorted by cash required before sale * Enterprises sorted by total production costs * Enterprises sorted by gross profit * Enterprises sorted by net profit * Enterprises sorted by return to cash (gross profit/total cash costs) * Enterprises sorted by return to total costs (net profit/total production costs) * Enterprises sorted by labour requirement * Enterprises sorted by return per day labour * Enterprises sorted by vulnerability to price * Irrigated and dryland enterprises sorted by total production costs * Irrigated and dryland enterprises sorted by net profit * Irrigated and dryland enterprises sorted by return to total costs * Enterprises sorted by management level and total production costs * Enterprises sorted by management level and net profit * Enterprises sorted by management level and return to total costs Smallholder farmers. * Alphabetical listing of results for all enterprises * Enterprises sorted by cash required before sale * Enterprises sorted by total production costs * Enterprises sorted by gross profit * Enterprises sorted by net profit * Enterprises sorted by return to cash (gross profit/total cash costs) * Enterprises sorted by return to total costs (net profit/total production costs) * Enterprises sorted by return to total labour requirement * Enterprises sorted by return per day family labour * Enterprises sorted by return per day total labour * Enterprises sorted by vulnerability to price * Enterprises sorted by management level and total production costs * Enterprises sorted by management level and gross profit * Enterprises sorted by management level and return to total costs * Enterprises sorted by management level and return per day family labour * Enterprises sorted by sub-sector and total production costs * Enterprises sorted by sub-sector and gross profit * Enterprises sorted by sub-sector and return to total costs * Enterprises sorted by sub-sector and return per day family labour Page 56 LARGE SCALE COMMERCIAL SECTOR: Alphabetical listing of results for all enterprises. Return to cash canto measured as gros profit/total caSh CmSts; retom to total costs measured us net profit/ttal producono costs (ouct. family Labour). For roses, pilad is per 1.Ooo sternsand managemenyt varies acoDrding to marketing arranigement (1 00% auction saloos,vs blended salestfor consortitjm by auction arcd dinedt contract). Production Costs (ZWD/tha) Farmer Income (ZWD/ha) Labour Sonsltlvfty Indicators Gross Gush Gash Annual Total Gross pro/it Not profit Return to Return Hired Gr. profIt per % strnge in % change hin % change in moti Yield Ravenue required deductoos Total coosh investmen.t prorductin (gr. revenue - (yr. renenue - cash to total labour Wage bill day yield to gross yield to not price to sot Activity Irrigation Level (kg/ha) (ZWD/tha) before sale aftw sial costs cost costs cash costs) total coost) costs costs (days) )ZWLtha) (ZWDina) profit = 0 profit = 0 Profit = 0 Goffee (USD 1.360not) dnp hoe mod 2,000 '149,600 121,397 1,097 122.4914 29,297 150,791 27,106 (1,1st) 0.22 (5.01) 321 21,713 64.44 -20% 1% 1% Goftee (USD 1iS00net) drip line meod 2.010,0 16b,000 121,397 1,091 122,494 29,297 150,791 42,506 14,309 0.35 0.09 32t 21.713 132.42 -28% .9% .9% Go/toe (USD 2.000nmt( drip line Mod 2.000 220.000 121,397 1,091 122.494 26,297 150,791 97,506 69,209 0.80 0.46 321 21,713 303.76 -49% -34% -31% Go/tee (USD `1,360mt) drip lirse highi 2,500 187,000 132.784 1.367 134,151 29,297 162.448 52.649 2ri,552 0.39 0.15 375 2ri,915 140.93 -31% -15% -13% Co/tfee(USt) 1.500mt( dnp line high 2,500 2D6.250 132,784 1,367 134.151 28,297 162,448 72,099 43,802 0.54 0.27 375 24,915 192 26 -38% -23% -21% Goffee (USE) 2.00orst) drIlp line high 2.500 275,000 132.764 1,367 134,151 29,297 162.448 140,949 112,552 1.05 0.69 375 24,915 375.60 -55% -4.4% -41% Gotton no low 1,500 33,345 30.040 500 30,640 5,641 36.381 2.905 (3,036) 0.09 (0.00) 145 9,380 1934 -11% 12% 9% Gotton as moet 1,900 42.237 33,696 s6ri 34.330 5,841 40,171 7.907 2,066 0.23 0.00 172 10,673 45.97 -25% -6% -5% Go/toDn nio high 2.3D0 51,129 38,137 767 38.904 5,641 44,745 12,225 6.384 0.31 0.14 196 12.367 61.74 -31% -16% -13% Gotton one/head low 2.500 58.600 47,170 679 48,049 10.346 58.395 10,551 205 0.22 0.00 212 13,113 49.77 -23% 0% 0% Go/toDn onerhead mod 3.000 70,320 50,176 1,000 51.231 10,346 61,577 19,069 6,743 0.37 0.14 245 14,980 77.91 -34% -14% -11% Go/ton onerhead high 3,500 62,040 54,713 1,23t 55,944 10,546 66,290 26,096 1 5,750 0.47 0.24 276 16,947 93.87 -41% -25% -20% Exportnveg- baby carrots drip Line high 3.800 104.500 66,500 - 66,500 10,275 76,T75 36.000 27,725 0.57 0.36 275 16.,900 136.16 -36% -27% -27% Exupout nog- baby core drip line high 950 49,638 37,674 - 37.674 10,275 47.949 11,964 1,669 0.32 0.04 190 13,440 62.97 -24% .3% .3% Exoport nog -mange tout drip line high 4.000 121.000 68,641 - 686,41 10,275 76,916 52,359 42,064 0.76 0.53 295 20,020 17T7.49 -43% -35% -35% Grourodnuts so low 1,600 29,970 27.152 300 27.452 5,841 33,293 2.518 (3.323) 0.09 (0.10) 57 3,647 44.18 -10% 13% 11% Gouncdnuts as med 2,300 38.295 31,136 393 31,521 5,841 37,362 6,774 933 0,21 0.02 68 4,463 99.62 -21% -3% -2% Gmendnuts as high 2.800 46.620 34.245 466 34,711 5,614i 40,552 1 1,909 6,068 0.34 0.15 83 5.499 143.46 -31% -16% -13% Grounodnuts one/head low 3.000 49,950 47,952 509 48.452 10,346 58.798 1,498 (8.848) 0.03 (0.15) 90 5.964 16.64 -4% 21% 16% Greoudnotot overhead med 4,000 66.600 52,226 666 52,692 10,346 63,238 13,708 3,362 0.26 0.05 110 7,112 124.62 -25% -6% -5% Grourndnuts one/head high 5,000 83.250 56,363 833 57.196 10.346 67,542 26.054 15.708 0.46 0.23 135 86,60 192.99 -38% -23% -19% Maize as low 3,500 20.160 20,675 121 20,996 5,841 26.637 (636) (6,677( (0.04) (0.25) 19 1.596 (44.00) 5% 43% 34% Maize as med 4,500 25,920 23.564 156 23,720 5.641 29,561 2.200 (3,641) 0.09 (0.12) 23 1,932 95.65 -11% 16% 14% Maize as high 5,500 31,680 27,522 1/tO 27,712 5,641 33,553 3.968 (1,873) 0.14 (0.06) 27 2,268 146.96 -16% 6% 6% Maize overhead loW 6,000 34,560 33,936 207 34,143 i0,346 44,489 417 (9.929) 0.01 (0.22) 30 2,520 13.90 -1% 35% 29% Maize onenhead mod 7.000 40.320 37,577 242 37.819 10.346 46,165 2,501 (7.845) 0.07 (0.16) 45 3,780 55.56 -6% 24% 20% Maize one/hoead high 6.000 46,060 40,349 276 40,625 10,346 50,971 5,455 (4,891) 0.13 (0.10) 50 4.200 109.10 -14% 13% 11% Marigold one/head high 14,000 61,620 56,934 - 56,934 10.346 67,260 24,666 14,340 0.43 0.21 136 10,024 181.51 -34% -20% -18% Paprika one/heed s/hort 3,000 225,600 124,126 - 124.126 16.691 140,817 101,474 64,763 0.82 0.60 270 20.720 375.83 -49% -41% -38% t..Jf ~~~~~Paprika one/head teng 6.ODO 451.200 172,459 - 172,459 16,691 189.150 276,741 262,050 1.62 1.39 310 23,800 899.16 -66% -62% -56% Roses (Iong stem) drip line auction 1.100 14,467,391 7.752.433 2,387,120 10.139.553 1,565,291 11,704,844 4.327,838 2,762,547 0.43 0.24 9,360 766,240 4623.8 -56% -36% -24% Roses; (lon stem) . drip Oine blend 1,100 14,467,391 6,002,433 419.554 8,421.987 1.566,.291 9,967.278 6,045,404 4,480,113 0.72 0.40 9.360 7860,240 645.88 -62% -46% -33% Roses (medium stemn) drip line auction 1,750 14,228.261 8.546.850 2.347,663 10,894.513 1,565,291 12,459,804 3,333,746 1,768,457 0.31 0. 14 9,360 786,240 356.17 -50% -26% -15% Roses (medium stem) dirip line blendi 1.750 14,226,261 8.796.850 412.620 9.2019,470 1,565,291 10,T74.761 5,016,791 3,453,500 0.54 0.32 9.360 7860,240 536.20 -50% -40% -24% Roses (short stem) dnp line auctlon 2,750 13,152,174 6,483,740 2.170,109 10,653,649 1.565.291 12,219,140 2,496,325 933,034 0.23 0.05 9,360 7860,240 260.92 -43% -16% -10% Roses (shiorl stem) drip line blend 2,750 13,152,174 6,733,740 38t,413 9,115,153 1,565,291 10,680,444 4,037,021 2,471,730 0.44 0.23 9,390 766,240 431.31 -32% -19% -20% Sopbeans no low 1,600 20.000 21.420 134 21,554 5,641 27.395 (1.554( (7,395) (0.07) (0.27) 12 1,006 (129.50) 9% 41% 37% Soybeans as med 2,100 26,250 23,434 176 23.610 5.841 29,401 2,640 (3,201) 0.11 (0.1) 13 1,092 203.09 -11% 13% 12% Soyboeas as highr 2,600 32,500 24,616 218 25,034 5,641 30.875 7,466 1,625 0.30 0.09 14 1,176 533.29 -25% -6% -5% Soybeans overhead loW 2,400 30.000 28.886 201 29,067 10,346 39,433 913 (9,433) 0.03 (0.24) 22 1,8.48 4`150 -3% 35% 32% Soybeans overhead med 2.9D0 36,250 30,900 243 3i.143 10.346 41,489 5.107 (5.239) 0.16 (0.13) 23 1,932 222.04 -16% 16% 15% Soybeanks ovo/head high 3.400 42,500 32.282 285 32,567 10,346 42.913 9,933 (413) 0.31 (0.01) 24 2,016 413,88 -26% 1% 1% Tobacco, flue-cord so low 2,200 204,490 113,454 r7,209 I130,663 12,186 142,849 73,827 61,641 0,57 0.43 382 30,126 193.26 -44% -37% .32% Tobacco./flue-ured as med 2.500 242,000 120,002 20,034 140,036 12,186 152,222 101.964 69,778 0.73 0.59 415 31,976 245.70 -51% -45% .39% Tobacco/tfue-cured 00o high 2,800 275,660 126,311 22.666 148,979 12.186 161,165 126,681 114,495 0.60 0,71 437 33.206 289.89 -55% -50% -44% Tobacco, flu-cared one/lhead Low 2,800 261,800 135.718 21.979 157,697 16,691 174,386 104,103 67,412 0.68 0.50 462 35,306 225.33 -A9% -41% -35% Tobacco, flue-cored one/headi med 3,100 301.785 140,504 24,927 165,431 16,691 162,122 136,354 119,663 0.82 0.66 463 36,426 262.69 -55% -48% -42% Tobacco, flee-cored one/head high 3.500 346,500 145,886 28,431 174,317 16,691 191.008 172,193 155.492 0.98 0.61 497 37,266 346.44 -60% -5416 -47% Wheat one/head lose 5,500 60,500 40,965 405 41,370 10,346 51,716 19,130 6,764 0.46 0.17 19 1,596 1,006.84 -35% -16% -5 Wheat one/head med 6,500 71,500 44,400 479 44,679 10.346 55,225 26,621 16,275 0.59 0.29 20 1,660 1,331.~05 -41% -25% -23% Wheat mnertlead high 7.500 62,5060 049 53 5092 1,4 61,339 31,508 21,163 0.62 0.35 21 1,764 1,500.36 -43% -29% -26% LSC Farmers: Alphabetical listing of all enterprises. LARGE SCALE COMMERCIAL SECTOR: Enterprises sorted by cash required before sale. Return to cash costs mneasured as gross profit/tofal cash costs; return to total costs measured as net pmofdltotal prodluction costs (exnd. family labour). For roses, yield is per iCOS0 stems and management varies according to marketfing arrangement (1 10% auction sales vs. blended sales for consortium by auction and direct contract). Production Costs (ZWDIha) Farmer Income fZWDSlha) Labour SensitivIty Indicators Gross Cash Cash Annual Total Gmoss profit Nat prfit )gr. Return to Return Hired Gr. profit per % change in % change in % chanige in Mgt. Yield Revenue required deductions innestment productio )gr. renenue - revenue - cash to total labour Wage bill day yield to gross yield to net price to net ActIvity, Irrigation Level (kglha) (ZWDIha) before vale alter sale cost costs cash costs) total cost) costs costs (days) )Z.WDtha) (ZWDtha) profit 0 profit = 0 profit = 0 Roses (medium stem) drip line blond 1,750 14,228,261 8,796,850 412.620 1,565,201 103774,761 5,018,791 3,453,500 0.54 0 32 9.360 786.240 036.20 -58% -40% -24% Rosies(short stemn) drip line blend 2,750 13,152,174 6.733,740 381,413 1,565,201 10,680,444 4.037,021 2,471,730 0-44 0 23 9,360 766,240 431.31 -32% -19% -20% Roses (medium stem) dinpline auction 1,750 14,226.261 6,546,850 2,347,663 1,565,201 12,450,804 3,333,748 1,758,457 0.31 0.14 9,360 786.240 356.17 -50% -26% -15% Roses (shodt stem) drip line auctiorr 2.750 13.152,174 8,483.740 2,170,100 1,565,281 12,210,140 2,486,325 g33,034 0 23 0.06 8,300 786,240 266.02 -43% -16% -10% Roses (long stem) drip line blend 1,100 14,467,391 8,002,433 410.554 1.565.281 9,967,276 6,045,404 4,480,113 0.72 0.45 9,360 766,240 045.818 -62% -46% -33% Roses(long stem) dnptline auction 1,100 14,467,301 7,752,433 2,387.120 1,565,291 11,704.844 4,327,838 2,762,547 0 43 0.24 9.360 7866.240 462.38 -56% -36% -24% Paprika overhenad long 6,000 451.200 172,459 - 10,601 189.150 278,741 262,050 1.62 1.39 310 23.800 690.16 -66% -62% -58% Tobacco, flee-cured overhead high 3.500 346,500 145,886 28,431 16,601 191,008 172,183 155,402 0.90 0.81 487 37.268 346.44 -80% -54% -47% Tobacco. Onue-cared overhead mied 3.100 301,785 140.504 24,927 16,601 182,122 136,354 119.663 0682 0.66 482 36,428 262.69 -55% -48% -42% Tobacco, flee-cured overhead loss 2,800 261.800 135,718 21,970 16,691 174,388 104,103 07,412 0.66 0.56 482 35,308 225.33 -48% -41% -35% Coffee (USD 2.000mt) drip tine high 2,500 275,000 132,7854 1.367 28.297 162.448 140,840 112,552 1I05 0.69 375 24,915 375.60 -55% -44% -41% Coffee (USD 1i5O0mt) driy line high 2,500 206,250 132,784 1,367 26,297 162,448 72,000 43,662 0.54 0.27 375 24,915 192.26 -38% -23% -21% Coffee (USD 1,360mt) drip line high 2.500 187,000 132,784 1,367 28,297 162 446 52.849 24,552 0.39 0.15 375 24,915 140.93 -31% -15% -13% Tobacco, Onue-cured no Sigh 2,800 275,660 120,311 22,666 12,166 161,165 126,681 114,495 0.85 0.71 437 33,208 289.80 -55% -50% -44% Paprika overhead stiofl 3.000 225,600 124,126 - 16,691 140,617 101,474 84,783 0.82 0.66 270 20,720 375.83 -40% 41% -38% Coffee (USD 2,000mt) drip line med 2.000 220,000 121,307 1,007 28,297 150,791 97.506 89,2090 0.80 046 321 21,713 303.76 -48% -34% -31 % Coffee (USD 1i5O0ni) drip tine med 2,000 165,000 121,307 1,007 26,297 150,791 42,500 14,200 0 35 0.09 321 21,713 132.42 -28% -9% -9% Coffee )USD 1,360mt) drip tine med 2,000 149.600 121,397 1,007 28,297 150,791 27,106 (1,191) 0.22 (0.01) 321 21,713 84.44 -20% 1 % 1% Tobacco. flue-cured no mied 2,500 242,000 120,002 20.034 12,166 152,222 101,984 89,778 0.3 0.59 415 31.076 245,70 -51% -45% -39% Tobacco, flue-cured no low 2,200 204,400 113,454 17.209 12,186 142,849 73,827 61,641 0.57 0.43 362 30,128 193.26 -44% -37% -32% Exportveg- marnge tout dripline high 4,000 121,500 68,641 - 10,275 78,916 52,359 42,084 0.76 0.53 295 20,020 177,49 -43% -35% -35% Expocnveg-hbaby carrots dripline high 3,800 104,500 66,500 - 10,275 76,775 38.000 27,725 0 57 0.30 275 16.000 136. 18 -36% -27% -27% Mangold overhead high 14.000 81.620 56,934 - 10,346 67,266 24.686 14,340 fl,43 0 21 '136 10,024 181.51 -34% -20% -16% Gmurndnuts overhead high 5,000 63,250 56,363 633 10.346 67,542 26,054 15.708 0 46 0.23 135 8,680 182.90 -36% -23% -19% Cotton overhead high 3,500 62,040 84 713 1,231 10,348 66,200 26,006 15,750 0.47 0.24 276 16,847 93.87 -41% -25% -20% Groundnuts overhead rood 4,000 66,600 52,226 666 10,346 63.238 13.708 3,362 0.26 0.05 110 7,112 124~62 -25% -6% -5% ('D ~~Wheat overhead high 7,500 62,500 50,439 553 10,346 61.336 31,508 21,162 0 62 0.385 21 1,784 1,500 38 43% -29% -26% U-JO Cotton overhead mied 3.000 70,320 50,176 1,055 10,346 61,577 10,089 0,743 0 37 0.14 245 14,906 77,91 -34% -14% -11% OCt Groundnuts overhead lee 3.000 49,950 47,052 500 10,346 58,798 1,498 (8.648) 0.03 (0.15) 80 5,964 16.84 -4% 21% 18% Cotton overhead low 2.500 58,600 47,170 879 10,346 58.395 10,551 205 0 22 0.00 212 13,113 49 77 -23% 0% 0% Wheat overhead mied 6.500 71,500 44,400 470 10,346 55.225 26.621 18,275 0.59 0.29 20 '1,680 1,331.05 -41% -25% -23% Wheat overhead low 5,500 66,500 40,965 405 10,346 51,716 10,130 6.784 0.46 0.17 19 1.596 1,006.84 -35% -16% -15% Maize overhead high 8.000 46,080 40,340 276 10,346 50,071 5.455 (4.891) 0.13 (0.1I0) 50 4,200 190.10 -14% 13% 11% Cotton no high 2,300 51,129 38,137 767 5,841 44,745 12,225 6,384 0.31 0.14 198 12,367 61.74 -31% -16% -13% Enporttng - babycoorn dripline high 050 49.638 37,674 - 10.275 47,949 11,9854 1 669 0.32 0.04 190 13,440 62.07 -24% -3% -3% Maize oeerhead med 7,000 40,320 37,577 242 10,346 48.185 2,501 (7,845) 0.07 (0.16) 45 3,780 55.58 -8% 24% 20% Groundnuts no high 2.800 46,620 34,245 466 5,841 40,552 11,900 6,068 0.34 0.15 83 5,490 143.48 -3`1% -16% -13% Maize overhead em 6,000 34,560 33,936 207 10,346 44,489 417 (9,920) 0.01 (0.22) 30 2.520 13.90 -1% 35% 29% Cotton no nmed 1,0900 42,237 33.696 634 5,841 40,171 7,907 2,066 0 23 0.06 172 10,873 45.97 -25% -6% -5% Soybeans overhead high 3,400 42,500 32,282 265 10.346 42,913 9,933 (413) 0 31 (0.01) 24 2,016 413,86 -26% 1% 1% Groundnuts no mned 2,300 36,295 31,136 383 5,841 37,362 6,774 933 0.21 0.02 68 4,463 90.62 -21% -3% -2% Soybeans overhead med 2,900 36.250 30.900 243 10.346 41,489 5,107 (5,239) 0.18 (0 13) 23 1.932 222.04 -16% 16% 15% Cotton no tom 1,500 33,345 30,040 500 5,841 36,361 2,805 (3,036) 0.09 (0.08) 145 9,380 10.34 -11% 12% 9% Soybeans overhead tom 2,400 30.000 28,886 201 10,346 39,433 913 (9,433) 0.03 (0.24) 22 1.848 41.50 -3% 35% 32% Maize no high 5,500 31.680 27.522 100 5,841 33,553 3,968 (1.873) 0 14 (0.96) 27 2,268 146.96 -16% 6% 6% Groundnsuts no tow 1,800 29,070 27,152 300 5,841 33,293 2,518 (3,323) 0.09 (0. 10) 57 3,847 44.18 -10% 13% 11% Soybeans no high 2,600 32,500 24,616 218 5,841 36,875 7,466 1,625 0.30 0.05 14 1,176 533 29 -25% -6% -5% Maize no med 4,500 25,920 23.564 156 5,841 29,561 2,200 (3,841) 0.09 (0.12) 23 1,932 95.65 -11% 18% 14% Soybeans no med 2,100 26,250 23,434 176 5,841 29,451 2.640 (3,201) 0.11 (0 11) 13 1,092 203.08 -11% 13% 12% Soybeans no low 1,600 20,000 21,420 134 5,841 27,395 (1.554) (7.395) (0.07) (0.27) 12 1,'008 (129.50) 9% 41% 37% Maize no lee 3.500 20.160 20 875 121 5,841 26,837 (836) (6,677) (O054) (0.25) 19 1,596 (44.00) 5% 43% 34% LSC Farmers: Enterprises sorted by cash required before sale. LARGE SCALE COMMERCIAL SECTOR: Enterprises sorted by total production costs. Return to cash costs measured as grass profit/total cash costs: return to total costs measured as net profit/total prodaciori costs (eaci. family Labour). For roses, yield is per 1.000 stemrs and management varies acomrding to mfarlesng arrangerment )tOO% auchon sales vs. blended saes for consorfium by auction and direct contract). Production Coasu (ZWD/ha) Farmer Income (ZWD/ha) . .Labour Sensitivity Indicators Gross Cash Cash Annual Total Gross profit Net profit (gr. Retain to Return Hired Or. profit per % change in % change is % chanige in Mgt. Yield Revenue required deductions invest/rnet production (gr. revenue - revenue - cash to total labour Wage bill day piela to gross yield to net price to riet Activity Irrigation Level (kg/ha) (ZWD/tha) before sale altar sale cost costs cash costs) total cost) costs costs (days) )ZWD/hna) (ZWD/hia) profit = 0 profit = 0 profit =0 Roses (medium stem) drip line caucho 1,750 14.228,261 8l,546,f850 2.347,663 1.565,291 12,459,904 3.333.748 1,768,457 0131 0.14 9,360 786.240 356.17 -50% -26% -15% Roses (abort stem) dnip fine auction 2.750 13,152,174 9.483,740 2,170,109 1,565,291 12,219,140 2.499,325 933,034 0 23 0.09 9,360 786.240 266.92 -43% -16% -10% Roses (Iong stem) dripfine auction 1.100 14,467,391 7.752,433 2,387,120 1.565,291 11,704,944 4,327,938 2,762,547 0.43 0.24 9,360 786,240 462.38 -56% -36% -24% Roses (medium stem) drip line blend 1.750 14,228,261 9.796.850 412,620 1,565,291 tO,774,76l1 5,01 8,791 3,453,500 0.54 0.32 9,360 786,240 536.20 -58% -40% -24% Roses (short stom) driri line blend 2,750 13,182,174 9.733.740 381.413 1,565,2ti1 10,680,444 4,037,021 2.471.730 0.44 0.23 9.360 786,240 431.31 -32% -19% -20% Roses (long atem) drip fine blen 1,'100 14,467,391 9,002,433 419,554 1,565,291 9.987,279 6,045,404 4,480.113 0.72 0.45 9.360 786.240 645.88 -62% -46% -33% Tobacco, flue-cored overhead high 3.500 346,500 145,896 28,431 16,691 191,008 172,193 155,492 0.99 0 81 497 37,268 346.44 -80% -54% -47% Paprika overhead long 6,000 451,200 172,459 - 16,691 199.150 278,741 262,050 1.62 1.39 310 23.800 899.16 -66% -62% -58% Tobacco, flue-cured overhead mfed 3,1100 301.795 140,504 24,927 16,691 192,122 136,354 119.663 0.92 0.66 492 36.428 292.99 -55% -4.8% -42% Tobacco, flue-cuired overhead low 2.800 261,900 135,718 21,979 16,691 174,369 104,103 87,412 0.66 0.50 462 35.308 225.33 -48% -41% -35% Coffee (USD 2,WOmtr) drip lin/e high 2,500 275,000 132,794 1,367 29,297 162,449 140.849 112,552 1.05 0.69 375 24,915 375.60 -55% -44% -41% Coffee (USD 1500r49) drip line high 2.500 206,250 132,794 1,367 29,297 162,448 72.099 43.802 0.54 0.27 375 24.915 192.28 -38% -23% -21% Coffee (USD 1360n4t) drip line sigh 2,500 187,000 132,794 1,367 28,297 162,446 52,949 24,552 0.39 0.15 375 24.915 140.93 -31% -15% -13% Tobacco, flue-cored no sigh 2.800 275,660 126,311 22.668 12,186 161,1865 126.681 114,495 0.85 0.71 437 33.208 289.99 -55% -50% -4.4% Tobacco, flue-cured rio mied 2.500 242,000 120,002 20,034 12,186 152,222 101.994 99,778 0.73 0.59 415 31.976 245.70 -51% -45% -39% Coffee (USD 2,000nt) dript/ine mied 2,000 220,000 121,397 1,007 29,297 156,791 97,500 69,209 0.80 0.46 321 21,713 303.76 -48% -34% -31% Coffee (USD 1,500n1t) dr/p line med 2,000 165,000 121,397 1,097 29,297 150,791 42,506 14.209 0.35 0.09 321 21,713 132.42 -29% -9% -9% Coffee (USD 136049r) drip line mied 2,000 149,600 121,397 1,097 29,297 180,791 27,106 (1,191) 0.22 (0.01) 321 21,713 94.44 -20% 1 % 1% Tobaow, flue-cured no low 2,200 204,490 113,454 17.209 12,186 142,949 73,927 61,941 0.57 0.43 382 30.128 193.26 -44% -37% -32% Papnka overhead sfrort 3,000 225,600 124,126 - 16,691 140,917 101,474 94,7e3 0.92 0.66 270 20,720 375.93 -49% -41% -38% Exportlveg -mange tout drip lire sigh 4.000 121,000 68,941 - 10,275 78,916 52.359 42.084 0.76 0.53 205 20,020 177.49 -43% -35% -35% Export veg -baby carrota driptline high 3,800 104,500 66,5D0 10,275 76,775 38,000 27,725 0.57 0.36 275 198,900 138.18 -36% -27% -27% Groundnuts overhed sigh 5,000 93,250 86,363 833 10,346 67,542 26,054 15,709 0.46 0.23 135 8,686 192.99 -38% -23% -19% -0 ~~Marigold overhead high 14,000 91,620 56.934 - 10,346 67,280 24,686 14.340 0.43 0 21 136 10,024 181.51 -34% -20% -19% :0 ~~~Cotton overhead high 3.500 82,040 54,713 1,231 10,346 66,290 26,096 15,750 0.47 0.24 279 16,847 93.97 -41% -25% -20% Groundnuts overhead mfed 4.000 66,600 52,226 666 10,346 63,238 13,706 3,362 0.26 0.05 110 7,112 124.62 -25% -6% -5% Cotton overhead mied 3,000 70,320 50,176 1,055 10,346 61,577 19,089 8,743 0.37 0.14 245 14.980 77.91 -34% -'14% -11% Si ~~~~~~Wheat overhead high 7,500 82,500 50,439 553 10,346 61,338 31,508 21,162 0.62 0.35 21 1.764 1,500.36 -43% -29% -26% .0 ~~~~~~Groundnuts overhead lowe 3,000 49,950 47,952 500 10,346 56,756 1,498 (88498) 0.03 (0.15) 00 5,964 16.94 -4% 21% 19% Cotton overhead low 2,500 58,600 47,170 879 10,346 58,395 10,551 205 0.22 0.00 212 13.113 49 77 -23% 0% 0% Wheat overhead mad 6,500 71,500 44.400 479 10,346 55.225 26,621 '16,275 0.59 0.29 20 1.6810 1,331.05 -41% -25% -23% Wheat eve/head low 5,500 66,560 40,965 405 10,346 51,716 19,136 8,794 0.46 0.17 19 1,556 1,006.94 -35% -16% -15% Maize oyverhead sigh 6,000 46,080 40,349 276 10,346 50,971 5,455 (4,891) 0.13 (0.10) 50 4,200 109.10 -14% 13% 11% Maize overhead med 7,000 40,320 37.577 242 10,346 48,165 2,501 (7,945) 0.07 (0.16) 45 3,780 55.09 -9% 24% 20% Exportveg - baby corn drip line high 950 49,639 37,674 - 10,275 47,949 11,994 1,689 0.32 0.04 190 13,440 62.97 -24% -3% -3% Cotton non high 2.300 51.129 38,137 767 5,841 44,745 12,225 6,394 0.31 0.14 198 12,367 61.74 -31% -16% -13% Maize overhead low 6,000 34,560 33,936 207 10,346 44,489 417 (9,929) 0.01 (0.22) 30 2,520 13.90 -1% 35% 29% Soybeans oyverhead high 3,400 42,500 32,292 285 10,346 42,913 9,933 (413) 0.31 (001i) 24 2,016 413.88 -26% 1% 1% Soybeans overhead med 2,900 36,250 30,900 243 10,346 41,489 5,107 (5.239) 0.16 (0.13) 23 1,932 222.04 -16% 16% 15% Grundnutss no high 2,800 46,620 34.245 466 5,941 40,552 11.909 6.066 0.34 0.15 83 5.499 143.49 -31% -16% -3 Cotton ron med 1,900 42,237 33,696 634 5.941 40,171 7.907 2,066 0.23 0.05 172 10.673 45.97 -25% -6% -5% Soybeans overhead low 2.400 30,000 298986 201 10,346 39,433 913 (9,433) 0.03 (0.24) 22 1.848 41.50 -3% 35% 32% Groundnuts no mied 2,300 38.295 3`1,138 383 5,941 37,362 6,774 933 0.21 0.02 68 4,463 99.62 -21% -3% -2% Cotton no low 1.500 33,345 30,040 500 5,9141 36,381 2,605 (3,036) 0.09 ( 009) 145 9,3a0 19.34 -11% 12% 9% Maize no sigh 5.500 3`1,680 27,522 190 5,941 33,553 3.968 (1,673) 0.14 (0.00) 27 2,268 146.96 -16% 6% 6% Groundnuts aso low 1,8o 29,970 27.152 300 5,841 33,293 2.518 (3.323) 0.09 (0.10) 57 3,847 44.19 -10% 13% 11% Soybearos no high 2.600 32,500 24.816 218 5,941 30,975 7,466 1,625 0.30 0.95 14 1.176 533.29 -25% -6% -5% Maize no med 4,500 25,920 23,564 156 5,941 29,561 2.200 (3,941) 0.09 (0.12) 23 1,932 95.65 -11% 18% 14% Soybeans no med 2,100 26.250 23,434 176 5,941 29,451 2,940 (3,201) 0.11 (0 11) 13 1,092 203.06 -11% 13% 12% Soybeans no la. 1,600 20,000 21,420 134 5,941 27.395 (1,554) (7.395) (0.07) (0.27) 12 1.008 (129.50) 9% 41% 37% Maize no low 3,500 20,160 20.875 121 5.841 26,837 (838) (6,677) (0.04) (0.25) 19 1,5516 (44.00) 5% -43% 34% LSC Farmers: Enterprises sorted by total production costs. LARGE SCALE COMMERCIAL SECTOR: Enterprises sorted by gross profit. Return to cash costs measured as gross profit/total cash costs: return to total costs measured as net profit/total production costs (eucl. family labour). For roses, yield is per toed0 uterns and mianagement oanes according to matrketing arrangement (100% auction sales vs blended sates for consortium by auction aond direct contract) Production Costs )ZWDtha) Farmer Income (ZWDltha) Labour Sensitivilty fIndficators Gross Cash Cash Annual Total Gross profit Net profit )gr. Return to Return fHired Gr. profit per % changemi % change in % change in Mgtl. Yield Renenue required deductions innestmoent production (gr revenue - revenue - cash to total labour Wage bill day yield to gross yield to net price to net AcCIlvty Irrigation Lenel (hg/ha) (ZWDIha) betore sate after sale cost costs rasp costs) total cost) costs costs (days) )ZWDltha) (ZWD3/ha) profit = 0 profit = 0 profit = 0 Roses)(long stem) dripline blend 1,100 1d,d67,391 8,002,433 419,554 1,565,291 9,987,278 6,O4S,404 4 480,113 0.72 0.45 9.360 786,240 645 88 -62% -46% -33% Roses (medium stern) drip lirne blend t,750 14.228.261 8,796,850 412,620 1,565,291 10,77d,761 5,0t8,791 3,453,500 0.54 0.32 9,360 786,240 53620 -58% -40% -24% Roses (long stem) drip line auchon 1.100 14,467,391 7,752,433 2,387,120 1,565,291 11.704,844 4,327,836 2.762.547 0,43 0.24 9.360 786.240 462.38 -56% -36% -24% Roses (chugt stem) drip line blend 2,750 13.152,174 8.733.7d0 381,413 1,565,291 10,680,444 4,037,021 2,471,730 0.44 0.23 9,360 786,240 431.31 -32% -19% -20% Roses (medium stem) drip line aucfion 1,750 1d,228,261 8,546,850 2,347,663 1,565,291 12,459.604 3,333,748 1,769 457 0 31 0.14 9,360 786,240 35617 -50% -26% -15% Roses (short stem) drip line auction 2,750 13,152,17d 8,483,740 2,170,109 1,565,291 12,219,140 2,498,325 933,034 0 23 0.08 9,360 786,240 266 92 -43% -16% -10% Paprika overhead long 6.000 451.200 172,459 - 16,691 189,150 278,741 262,050 1 62 1.39 310 23,800 899.16 -66% -62% -58% Tobacco, flue-cored overhead tugh 3,500 346.500 145,866 29,431 16,691 191,008 172,'183 155,492 0 99 0.81 497 37,266 3,46.44 -60% -54% -47% Coffee (USD 2.O00mt) drip line high 2,500 275,000 132,784 1,367 28,297 162,448 140,649 112,552 1.05 0.69 375 24,915 375.60 -55% -44% Al1% Tobacco, flue-cured overhead nied 3,100 361,785 140,504 24,927 16,691 182,122 136,354 119,663 0 82 0.66 482 36,428 282 89 -55% -A8% -42% Tobacco, flue-cored no high 2,800 275,660 126.311 22,668 12.1166 161,165 126,681 114,495 0 85 0.71 437 33,256 289.89 -55% -50% -44% Tobacco, flue-cured overhead tur 2,800 261.500 135,718 21,979 16,691 174,388 104,103 97,412 0.66 0.50 462 30,306 225.33 -48% -4`1% -35% Tobacco, flue-cured no mred 2,500 242.000 120,002 20,034 12,186 152,222 101,984 89.778 0.73 0.59 415 31,976 245.70 -51% -45% -39% Paprika use/head short 3.000 225,600 124,126 - 18,691 140,817 101,474 84,783 0.82 0.66 270 20,720 375.83 -49% -41% -38% Coffee (USD 2.00Omt) drip tine mred 2,000 220.000 121,397 1,097 28,297 150,791 97,506 69t,209 0 80 0.46 321 21,713 303.76 -48% -34% -31% Tobacco, flue-cored nso tow 2,200 204,490 113,454 17,209 12,186 142,849 73,827 61,041 0 57 0 43 362 30,128 193.26 -44% -37% -32% Coffee (USD 150068) drip line high 2,500 2G6.250 132,784 1,367 28,297 162,448 72,099 43,662 0.54 0,27 375 24,9`15 192.26 -38% -23% -21% Coffee (USD 1,360mt) drip tine high 2.500 187,000 132,784 1,367 28,297 162,448 52,849 24,552 0 39 0.15 375 24.915 140 93 -31% -15% -13% Export veg - mange toot drip line high 4,000 121,000 68,641 - 10,275 78,918 52,359 42,084 0.78 0.53 295 20,020 177.49 -43% -35% -35% Coffee (USD 1.50068) drip line med 2,000 165.000 121,397 1,097 28,297 150,791 42,500 14,209 0.35 0.09 321 21,713 132.42 -28% -9% -9% Export veg - baby carrots drip tine high 3,800 104.500 66,500 - 10,275 76,775 38,000 27,725 0.57 0.36 275 18.900 `138.18 -36% -27% -27% Wheat overhead hugS 7.500 92,500 50,439 553 10,346 61,336 31,508 21,162 0 62 0.35 21 1,784 1,500.38 -43% -29% -26% Coffee (USD 1,36O0ot) drip line med 2.000 149,660 121,397 1,097 28,297 150,791 27,100 (1,191) 0.22 (0.01) 321 21,713 84 44 -20% 1% 1% Wheat overhead nmed 6,500 71,500 44,400 479 10,346 55.225 26,621 16,275 0.59 0 29 20 1,660 1,321.~05 -41% -25% -23% Cottos overhead high 3,500 82,040 64,713 1,231 10,346 66.290 26,096 15.750 0.47 0.24 278 16,847 93.87 -41% -25% -20% (IQ ~~~~~~Groundnuts overhead high 5,000 83,250 56,263 833 10,346 67,542 20,054 15,708 0.46 0.22 135 8.680 192.99 -38% -23% -19% Marigold overhead high 14,000 81,620 56,934 - 10,346 67,250 24,686 14,340 0.43 0.21 136 10,024 161 51 -34% -20% -18% O'i ~~~~~Wheat overhead tow 5,500 60,500 40,965 405 10,348 51,716 19,136 8,784 0.46 0.17 19 1,596 1,006.84 -35% -16% -15% O ~~~~~~Coffon overhead mied 3,000 70,320 50,176 1,055 10,346 61.577 19,089 8,742 0.37 0.14 245 14,956 77 91 -34% -14% -11% Groundnuts overhead mied 4,000 66,660 52,226 666 10,346 63,236 13,708 3,362 0.26 0.05 110 7,112Q 124.62 -25% -6% -5% Cotos no hIgh 2,200 51,129 38.137 767 5,841 44,745 12,225 6.384 0.31 0,14 198 12,367 61.74 -31% -16% -13% Export veg - baby cots drip line high 950 49,638 37,674 - 10,275 47,949 11,964 1,669 0.22 0.04 190 13,440 62.97 -24% -3% -3% Groundnuts no high 2.800 46.620 34,245 466 5,841 40,552 11,909 6,068 0.34 0 15 83 5,499 143.48 -31% -16% -13% Cotton overhead low 2,500 58.600 47,170 679 10,346 58,395 10.551 205 0.2 0.00 212 13,113 49.77 -23% 0% 0% Soybeans overhead high 3,400 42,500 32,282 285 10,346 42.913 9,923 (413) 0.31 (0.01) 24 2.016 412.88 -26% 1% 1% Coton no med 1,900 42,237 33.666 634 5,641 40,171 7,907 2,968 0.23 0.5 172 10,873 45.97 -25% -6% -5% Soybeans no high 2,600 32,500 24.816 218 5,841 36,875 7,466 1,625 0.36 0.05 14 1,176 533.29 -25% -6% -5% Groundnuts no med 2,300 36,280 31,138 363 3,841 37,362 6,774 933 0.21 0.02 68 4,463 09.02 -21% -3% -2% Maize overhead nigh 8,000 46,080 40,349 276 10.346 50,971 5,455 (4.991) 0.13 (0. 10) 50 4.200 109.10 -14% 13% 11% Soybeans overhead med 2,900 36,250 30,900 243 10,346 41,489 5,107 (5,239) 0 16 (0.13) 23 1,932 222 04 -16% 16% 15% Maize no high 5,500 31,680 27,522 190 5,841 33,553 3,968 (1,873) 0.14 (0.06) 27 2.268 146.96 -16% 8% 6% Cotos so urn 1,500 33.345 30.040 500 5,841 36,381 2,805 (3,036) 0.09 (0.08) 145 9,380 19.3.4 -11% 12% 9% Soybeans non med 2,100 26,250 23.434 176 5,841 29,451 2,640 (3,201) 0,11 (0 11) 13 1,092 203.08 -11% 13% 12% Groundnuts no low 1,800 29,970 27,152 360 5,841 33.293 2,516 (3,323) 0.09 (0. 10) 57 3,847 44 18 -10% 13% 11% Maize overhead med 7.000 40,320 37,577 242 10,346 48,165 2,501 (7,845) 0 07 (0.16) 45 3,760 55.88 -8% 24% 20% Maize no med 4,500 25,920 23,584 156 5,841 29.561 2.200 (3,841) 0.09 (0.12) 23 1,932 95.65 -11% 18% 14% Groundnuts overhead low 3.000 49,950 47,952 500 10.346 58,766 1,466 (8,848) 0.03 (0.15) 90 5,964 16864 -4% 21% 18% Soybeans overhead low 2,400 36,000 28.886 201 10,346 39,433 913 (9,433) 0 03 (0.24) 22 1,848 41.50 -3% 35% 32% Maize overhead tow 6,000 34,660 33,936 207 10,346 44,489 417 (9,929) 0.01 (0.22) 30 2,520 13.56 -1% 35% 29% Maize no low 3,500 20,160 20,875 121 5,841 28,837 (636) (6,677) (0 04) (0.25) 19 1,596 (44 00) 5% 43% 34% Soybeans no low 1,600 20,000 21,420 134 5,841 27.395 (1,554) (7,395) (0 07) (0.27) 12 1.008 (129 50) 9% 41% 37% LSC Farmers: Enterprises sorted by gross profit. LARGE SCALE COMMERCIAL SECTOR: Enterprises sorted by net profit. Return to Cash costs measured as gross profIt/total cash costs; return to total costs measured as net profit/total production costs (exci. family labour). For roses, yield as per 1,000 stemrs and rianagement varies according to mtarketing arrangiement (100% auction sales vs. blended sales for coDnsortum by auction and direct contract). Production Costs (ZWD/1ha) Farmer Income )ZWD/ha) Labour Sansit/vfty Ind/ca/ors Gross Cash Cash Annual Totat- Gross pro/fi Net pro/ft (gr. Return to Return Hired Gr. profit per % change in % change in % change in Mgti. Ytied Revenue requited deductionss invesnlernl production (gr. revenue - revenue - cash to total Labour Wage bill day yield to gross yield to net prico to set ActIvIty IrrIgatIon Level (kg/a) (ZWD/ha) before sale after sale cost costs cash coosts) tn/al coDSt) costs costs (days) )ZW.D7na) (OWO//na) profit =0 sin/it = 0 pro//t = 0 Roses (long stem) drip fioe bleed 1,100 14.467,391 5/002,433 419,554 1,565,291 9,98/7,27/i //,045,404 4,4801,113 0.72 0.45 9,360 7/i/,240 645.88/ -62% -4//% -33% Roses (medium s/em) drip linke blenid 1,750 14,228i,261 8i.796./850 412.//20 1,565,291 10.774,7//i 5.01/il/it 3,453.500 0.54 0 32 9,360 786//240 53020 -58% -40% -24% Roses (long ctem) drpip/ne auction 1.100 14.467,391 7.752,433 2,387,120 1.565,291 11,704d84 4,327,838 2,762,547 0.43 0.24 9.360 7/i6,240 462.38 -56% -36% -24% Roses (short/stem) drip/bine bleed 2,750 13.152,174 6,733,740 381,413 1,565,2/il 10,680,444 4,037,021 2.471,730 0.44 0.23 9,360 7/i/,240 431.31 -32% -19% -20% Roses (medium stem) drip line aucfion 1.750 14,226,261 /i,546.8i50 2,34y,6i63 1,565,291 12,459,60/ 3,333,748 1,768,457 0.31 0.14 9,360 78i6,240 356.17 -50% -2//% -15% Roses (short stem) dfip Onie auction 2,750 13,152,174 t,4//3,740 2,170,109 1.565.291 12,219,140 2,498i,325 933,034 0.23 0.08 9,360 7/i6,240 266 92 -43% -1//% -10% Paprika overheadl tong 6,000 451,250 172,459 - 1 6,691 189,156 276,741 262,000 1.62 1.29 310 23.90 0990.10 -66% -62% -58% Tobacm. flue-cored over/seed high 3,500 346,500 145,8i86 28.431 16,691 191.00/i 172.183 155,492 0.99 0.81 497 37,268/ 346.44 -60% -54% -47% Tobacco, flue-cored overhead med 3,150 301,765 140,504i 24,927 16,691 1/i2,122 136,354 119.663 0.62 0.66 482 36.42/i 2612.69 -55% -48% -42% Tobacco, flue-cured no big/n 2,600 275,660 126,311 22,668 12,186 161,165 126,681 114,495 0./iS 0.71 437 33.20/i 28i9.89 -55% -50% -44% Coffee (USD 2,000Omt) drip/linn high 2,500 275,000 132,764 1,367 28i,29T 162,448 /40,849 112,552 1.05 0./i9 375 24.915 375.60 -55% -44% -41% Tobacco, flue-cored ron rried 2,500 242,000 120,002 20,034 12, 1616 152.222 101,964 89,77/i 0.73 0.59 4`15 31.97/i 245.70 -51% -45% -39% Tobacco, flue-cored overhead low 2,600 261,800 135.71/i 21,979 16,691 174,388 104,103 87.412 0.66 0.50 462 35,30/i 225.33 -48% -41% -35% Paprika overhead short 3,000 225,600 124,126 - 16.691 '140/817 101,474 84,763 0.62 0.60 270 20.720 375.83 -49% -41% -38% Coffee (USD 2,000Omt) drip/mie mied 2.000 220.000 121,397 1,097 28/,297 150,791 97,506 69,209 0.60 0.46 321 21,713 303.76 -46% -34% -31% Tobacco, flue-cutod as low 2.200 204,490 113,454 17,209 12,166 142,649 73.827 61.641 0.57 0.43 362 36,12/i 193.26 -44% -37% -32% Coffee (USC 1,500Omt) ddip line high 2,500 206,250 132,764 1,367 26,297 162,44/i 72,099 43,602 0.54 0.27 375 24,915 192.2/i -38% -23% -21% Export veg - manige tout drip line high 4.000 121,000 68,641 - 10,275 78.916 52.359 42,084 0.76 0.53 295 20,020 177.49 -43% -35% -35% Export seg - baby carrots drip li/fe high 3,600 164,500 66,500 - 10.275 76.775 36,000 27,725 0.57 0.36 275 16,900 136.16 -36% -27% -27% Coffee (USC 1.360rnt) drip li/fe high 2,500 167,000 132.784 1.367 26,297 162.448 52.849 24,552 0.39 0.15 375 24,915 140.93 -31% -15% -13% Wh/eat overhead high 7.500 82.500 50,439 553 10,34/i 61,336 31,50/i 21.162 0.62 0.35 21 1,764 1,500.38 -43% -29% -26% Wheat overhead sned 6,500 7`1,500 44,400 479 10,346 55,225 26.621 16,275 0 59 0.29 20 1,680 1,331.05 -41% -25% -23% Cotton overhead high 3,500 82.040 54,713 1,231 10,346 66.290 26.096 15,756 0.47 0.24 278 16,887 55.87 -41% -25% -20% .0 ~~~~~~Grundnuts overhead high 5,000 83.250 56.363 833 10.346 67,542 26,054 15,708 0.46 0.23 135 6.680 192.99 -38% -23% -19% Marigold overhead high 14,000 61.620 56.934 - 10.346 67,260 24,686 14.340 0 43 0.21 136 10,024 161.51 -34% -20% -'16% (PG ~~~~~~Coffee (USC i,500rrt) drip line med 2,000 1165,000 121,397 1,097 28,297 150,791 42,506 14.209 0.35 0.09 321 2`1,713 132.42 -26% -9% -9% O ~~~~~~Wheat overhead low 5,500 66,500 40.665 405 10,346 51,716 19.130 8,788 046 0.17 19 1,556 1,006.614 -35% -16% -15% Cotton overhead mied 3,000 70,320 50,176 1.095 '10.346 61,577 19,589 6,743 0.37 0.14 245 14,950 77.91 -34% -'14% -11% Cotto no high 2.300 51,129 38.137 767 5,841 44,745 12.225 6,384 0.31 0.14 19/i 12,367 6`1.74 -31% -16% -13% Groundnuts aso high 2,600 46,620 34,245 466 5.641 40.552 11,I909 6.068 0.34 0.15 /i3 5,499 143.48 -31% -16% -13% Groundnuts overhed mied 4,000 66,600 52,226 666 10.346 63,236 13.708 3.362 0.6 0.05 110 7,112 124.62 -25% -6% -5% Cotton no toed 1,900 42,237 33,600 634 5,641 40.171 7,907 2.066 0.23 0.05 172 10,873 45.97 -25% -6% -5% Export negi - baby corn drip li/fe high 950 49,636 37.674 - 10,275 47,949 11.964 1.689 0.32 0.04 190 13,440 62.97 -24% -3% -3% Soybeans ron high 2.600 32,500 24,6`16 218 5,641 36.675 7,466 1,625 0.30 0.66 14 1,176 533.29 -25% -6% -5% Groundnut.s ron ned 2.300 38.295 31,136 363 5,641 37,362 6.774 933 0.21 O0.2 68 4,462 99.62 -21% -3% -2% Cotton overhead tow 2,500 58.600 47,170 679 10,34/i 58.395 10.551 205 0.22 0.00 212 13,113 49.77 -23% 0% 0% Soybeans overhead high 3,400 42,500 32.282 285 10.34/i 42.913 9,933 (413) 0.31 (0.01) 24 2,016 413.68 -26% 1% 1% Coffee (USC 1.360int) drip//fne road 2,000 149.600 121.397 1.097 26,297 150,791 27.100 (1.191) 0.22 (0.01) 321 21,713 64.44 -20%1 1% 1% Maize no high 5,500 31,680 27,522 190 5,881 33.553 3,968 (1.673) 0.14 (0.56) 27 2.268 146.96 -16% 6% 6% Cotton no /DW 1.500 33.345 30,040 500 5.841 36,361 2.860 (3.036) 0.09 (0.08) 145 9,380 19.34 -11% 12% 9% Soybeans no med 2,100 26,250 23,434 176 5,641 29,451 2.640 (3.201) 0.11 (0.1I1) 13 1.092 203.06 -11% 13% 12% Groundnuts as low 1,800 29,970 27,152 300 5,641 33.293 2,51/i (3.323) 0.09 (0.10) 57 36847 44.16 -19% 13% 11% Maize as med 4,500 25.920 23,564 158 5.641 29,561 2,200 (3.641) 0.09 (0.12) 23 1.932 95./is -11% 16% 14% Maize overhead high 8,000 46,680 40,34/i 276 10.346 50.971 5,455 (4.691) 0.13 (0.10) 50 4,200 199.10 -14% 13% 11% Soybeans overhead nmed 2.900 36.250 30.900 243 10.346 41,489 5,107 (5.239) 0.16 (0.13) 23 1,932 222.04 -16% 16% 15% Maize no low 3,500 20,160 20,8i75 121 5,641 26,637 (636) (6.677) (0.04) (0.25) 19 1,596 (44.00) 5% 43% 34% Soybeans as low 1,600 20,000 21,420 134 5,641 27,395 (1.554) (7,395) (0.07) (0.7) 12 1,006 (129.50) 9% 41% 37% Maize overhead mied 7,000 40,320 37,577 242 10.346 48.165 2,501 (7,845) 0.07 (0.1/i) 45 3.760 55.58 -8% 24% 20% Groundnuts overhead Ioe 3.000 49,950 47,952 500 `10.34/i 58,7/i/ 1,466 (6,488/) 0.03 (0.15) 90 5.964 `16.64 -4% 21% 16% Soybeans overhead low 2,400 36,000 28i.886 201 10.346 39.433 913 (9.433) 0.03 (0.24) 22 1.848 41.50 -3% 35% 32% Maize overhead low 6,000 34,560 33,936 207 1 0,34/i _44,469 417 (9,929) 0.01 (0.22) 30 2,520 13690 -1% 35% 29% LSC Farmers: Enterprises sorted by net profit. LARGE SCALE COMMERCIAL SECTOR: Enterprises sorted by return to cash (gross profit/total cash costs). Return to cash costs measured as gross profitltotal cash costs; return to total costs measured as net profititotal production costs (nexc. tamily labour). For roses. yield is per 1.000 stems asd management varies acoDrdling to markreting arrangement (100% auction sales vs. blended sales tar oonsorlhum by auction and direct contract). Production Costs (ZWD/ha) Farmer Income (ZWDltha) Labour Sensitivity tndtcoators Gross Case Cash Aznsual Total Gross profit Net profit (gr. Return to Return Hired Gr. profit per % changein % change is % change in Mgt. Yield Revenue required deductions investment production (gr. revenue - revenue - cash to total labour Wage bill day yield to gross yield to netl price to net Activity Irrigation Level (kglha) (ZWOIha) before sale after sale cost costs cash costs) Itotl cost) costs costs (days) )ZWD/ha) (ZWD/ha) pesoit = 0 profit 0 profit = 0 Papnka overhead tonig 8,000 451.200 172.459 1 6,691 189,150 278,741 262.050 1.62 1.39 310 23.800 899.16 -66% -62% -58% Coffee (USO 2,000mt) drip line high 2.500 275,000 132,784 1,367 28.297 182,448 140.849 112.552 tOS5 0.69 375 24,915 375.80 -55% -44% -41% Tobacco, flue-caured overhead high 3,500 346,500 145.886 28.d31 16.691 191.008 172.183 155,492 0~99 0 81 497 37.268 346 44 -8.0% -54% -47% Tobacco, flne-cared no tigh 2,800 275.660 126,311 22,668 12 186 161t165 126.681 114.495 0 85 0.71 437 33,208 289f89 -55% -50% -44% Tobacco, fine-cored overhead mied 3.100 301.785 140,504 24,927 16.691 182.122 136,354 119,663 0.82 0 66 d482 36.428 282.89 -55% -418% -42% Paprika overhead short 3.000 225.600 124.126 - 16,691 140,817 10t,474 84.78i3 0.82 0.60 270 20.720 375.83 -49% -41% -38% Coffee (USD 2.OO0mt) drip line med 2.000 230,000 121,397 1,097 28,297 190.791 97,506 69.209 0.80 0.46 321 21.713 303.76 -48% -34% -31% Export vng - miange tout dnp line high 4.000 121,000 68.641 - 10.275 78.916 52,359 42,084 0.76 0.53 295 20.020 177.49 -43% -35% -35% Tobacco, flue-caired no mred 2,500 242.000 120,002 20,034 12,186 152.222 101.984 88,778 0 73 0.59 415 31,976 245 70 -51% -A5% -39% Roses (long stem) dnp line blend 1,100 14,467,391 8,002,433 419,554 1.565.291 9.987,278 6,045,404 4.480.113 0.72 0.45 9.36.0 786.240 645.88 -62% -46% -33% Tobacco, flne-cured overhead lore 2,800 26.1.800 135,718 21,879 16.691 174,388 '104,103 87,412 0.66 0.50 462 35,308 225.33 -48% -41% -35% Wheat overhead high 7.500 82,500 50.439 553 10,346 61.339 31,508 21,162 0.62 0.35 31 1.764 1,500.38 -43% -29% -26% Wheat overhead med 6,500 71.000 44.400 479 10.346 55,225 26,621 16,275 0.09 0 29 20 1.650 1,331.05 -41% -25% -23% Export veg -baby carrots drip line high 3.800 104,500 66,500 - 10,275 76.775 38.000 27,725 0 57 0.36 275 18,900 138.18 -36% -27% -27% Tobacc, flue-cored no lore 2.200 204,490 113,454 17.209 12,150 142.849 73,827 61,6541 0.57 0 43 38.2 30,128 193.26 -44% -37% -32% Roses (medium stem) dnp line blend 1,750 14,228,261 8.796,850 412,620 1.565,291 10,774,761 5.018.791 3,453.500 0.54 0.32 9.380 786,240 936.20 -58% -40% -24% Coffee (USD 1,500mt) drip line high 2.500 206,250 '132.784 1,367 28.297 162.448 72,099 43,802 0.54 0.27 375 24.915 192.26 -38% -23% -21% Cotons overhead high 3,500 82.040 54,713 1.231 10.346 66,200 26.096 15,750 0.47 0 24 278 16.847 93.87 -41% -25% -20% Wheat overhead low 5.500 50,500 40,969 405 10,346 51,716 19,130 8,784 0 46 0.17 19 1,500 1.006,84 -35% -18% -15% Groundinuts overhead high 5,000 83,250 56,363 833 10,346 67,542 26,084 15,708 0.46 0 23 135 8.680 192.99 -38% -23% -19% Roses (short stem) drip line blend 2.750 13,152,174 8.733.740 361,413 1.505,291 10,680,444 4,037.021 2,471.730 0.44 0.23 9,360 786,240 431.31 -32% -19% -20% Marigoldi overhead high 14.OOC 81,620 56,934 - 10,346 67.280 24,886 14.340 0.43 0.21 136 10,024 181.51 -34% -20% -18% Roses (long stem) drip tine auction 1,100 14,467.391 7.752,433 2,387,120 1,565.291 11.704,844 4.327,838 2.762,547 0.43 0.24 9,360 750,240 462.36 -56% -36% -24% Coffee (USD 1,360met) drip line high 2.5030 187.000 132.784 1.367 28,297 162.448 52.8549 24.552 0.39 0.15 375 24.915 140.93 -31% -15% -13% Cotton overhead reed 3.000 70,320 50.176 1,055 10.346 61,517 19.089 8.743 0.37 0.14 245 14.950 77.91 -34% -14% -11% (I~~~~~~ ~Coffee (USD 1.500m4) drip line mred 2,000 165.000 121.397 1.097 28.297 150.791 42.506 14.209 0.35 0.09 321 21.713 132.42 -28% -9% -9% Groundnuts no high 2,800 46.620 34,245 466 5.841 40.552 11,9109 6,068 0.34 0 15 83 5.499 143.48 -31% -16% -13% ON ~~~Exportlng -baby com drip line high 950 49.638 37.674 - 10,275 47.949 11.964 1.689 0.32 0.04 190 13.440 62.97 -24% -3% -3% Cotton no high 2.3030 51.129 38.137 767 5.841 44.745 12.225 6,384 0.31 0.14 198 12.367 61.74 -31% -16% -13% Roses)mnedium stem) dripline aunction 1.750 14.228.261 6.546.850 2.347.663 1,565,291 12,459,804 3.333,748 1.768,457 0.31 0.14 9.360 788.240 350.17 -50% -26% -15% Soybeans overhead high 3.400 42.500 32.282 285 10.346 42.913 9.933 (413) 0.31 (0.01) 24 2,016 413.8.8 -26% 1% 1% Soybe-ans no high 2,600 32.500 24.816 218 5.841 30.875 7.466 1.625 0.30 0.05 14 1.176 533.29 -25% -6% -5% Groundinuts overhead reed 4.000 66.800 52.226 666 10,346 63.238 13.708 3.362 0.26 0.05 110 7.112 124.62 -25% -6% -5% Roses (short stem) drip line auchon 2.750 13.152.174 8.483.740 2.170.109 1.565,291 12,219.140 2.498.325 933.034 0.23 0.68 9.360 786.240 266.92 -43% -16% -10% Cotton no mted 1.900 42.237 33.696 634 5.841 40.171 7.907 2,088 0.23 0.05 172 10.873 45.97 -25% -8% -5% Coffee (USD) 1.380m4) rap line mred 2.000 149.500 121.397 1.097 28.297 150.791 27,108 (1.191) 0 22 (9 01) 321 21,713 84.44 -20% 1% 1% Cotona overhead lor 2.500 50.600 47.170 879 10.346 58.395 10.051 205 0.22 0.00 212 13.113 49.77 -23% 0% 0% Gronednuts nio med 2.300 38.295 31.138 383 5.8141 37,362 6.774 933 0,21 0.02 68 4.463 99.62 -21% -3% -2% Soybeans overhead mied 2.900 36.250 30,900 243 10,346 41.489 5.107 (5.239) 0.16 (0.13) 23 1.932 222.04 -16% 16% 15% Maize no high 5,500 31.880 27.522 190 5.841 33.553 3,988 (1.873) 0.14 (0.06) 27 2.268 146.96 -16% 8% 6% Maize overhead high 6,000 46.080 40.349 276 10.346 50.971 5.455 (4.891) 0.13 (0 10) 50 4.200 199.10 -14% 13% 11% Soybe-ans no med 2.100 26.250 23.434 176 5.841 29.451 2.840 (3.201) 0.11 (0.1I1) 13 1,092 203.08 -11% 13% 12% Maize eno med 4,500 25.920 23,564 156 5.841 29.561 2.200 (3,641) 0.09 (0 12) 23 1.932 95 65 -11% 18% 14% Cotton no low 1.500 33.345 30.040 500 5.841 36.381 2.805 (3,036) 0,09 (0.08) 145 9.380 19.34 -11% 12% 9% Groundinuts no Iou 1.800 29.970 27.152 380 5.841 33.293 2 518 (3,323) 0.09 (0.10) 57 3,847 44.18 -10% 13% 11% Maize overhead ned 7,000 40.320 37.577 242 10.346 48 165 2.501 (7.645) 0 07 (0.16) 45 3,780 55.58 -8% 24% 20% Soybeans overhead low 2.400 30.000 28.886 201 10,346 39.433 913 (9.433) 0.03 (0.24) 22 1.848 41,50 -3% 35% 32% Groundinuts overhead Ion 3,000 49.950 47.952 500 10.346 58.798 1.498 (8,848) 0.03 (0.15) 90 5.964 16.64 -4% 21% 18% Maize overhead low 6,000 34.560 33,936 207 10,346 44.489 417 (9.929) 0.01 (0.22) 30 2.520 13 90 -1% 35% 29% Maize no lose 3.5D0 20,160 20.875 121 5.841 26.837 (836) (6.877) (0.04) (0.25) 19 1.596 (44.00) 5% 43% 34% Soybeans no low 1,600 20,000 21.420 134 5.841 27.395 (1.554) (7.395) (0.07) (027) 12 1,008 (129 50) 9% 41% 37% LSC Farmers: Enterprises sorted by return to cash. LARGE SCALE COMMERCIAL SECTOR: Enterprises sorted by return to total costs (net profit/total production costs). Retsm to cash costs measured as gross proftttftotal cash coDsts, return to total costs measured as set profit/total production costs (exd. family labour). For roses, pield is per 1,000 stems sod management varies according to marketing arrangement (100% aucton sales vs. blended sales for consortium by auction and direct contract) Production CeaseB (ZWDI ha) Farmner Income (ZWD3fha) Labour SensitIvIty Indicators Gross Cash Cash Annual Total Gross profit Net profit (gr. Return to Return Hired Gr. protit per % change in % change is % change in Mgt. Yield Revenue required deductions investmnent prodsctzon )gr. revenue - revenue - cash to total labour WVage tHu day yield is gross pinto to set p/fce to niet ActIvIty Irrigation Level (ksg/ha) (ZWDfha) before sate after sale cost costs cash coDsts) total cost) costs costs (days) (ZWDftha) (ZWDItha) profit = 0 profit = 0 profit = 0 Paprika overhead long 6,000 451.200 172,459 - 16,691 189.150 278,741 262,050 1.62 1.39 310 23,800 899.16 -66% -62% -58% Tobacco, flue-cored overhead high 3,500 346,500 145.886 26,431 16,691 191,008 172,183 155,492 0.99 0.8`1 497 37,268 346.44 -60% -54% -47% Tobacco, flue-cored non high 2,800 275,660 126,311 22,668 12,186 161,165 126,681 114,495 0.85 0.71 437 33.208 289.89 -55% -50% -44% Coffee (USC 2.000it) drip line high 2.500 275,000 132,784 1,367 28,297 162,448 140,849 112,552 1.05 0.69 375 24,915 375.60 -55% -44% -41% Tobacco, flun-coured overhead mied 3.100 301,785 140.504 24,927 16,691 182.122 136,354 119,663 0.82 0.66 482 36,428 2812.89 -55% -48% .42% Paprika oserhead short 3.000 225.600 124,126 - 16,691 140,817 101,474 84.783 0802 0.60 270 20.7120 375.83 -49% -41% -38% Tobacco, flue-cured no rned 2.500 242,000 120,002 20,034 12,166 152,222 101,984 89.778 0.73 0.59 415 31,976 245.70 -51% -45% -39% Export seg - mange touit drip line high 4,000 121.000 68,841 - 10.275 78,916 52,359 42,084 0.76 0.53 295 20,020 177.49 .43% -35% -35% Tobacco, flue-cored overhead low 2,800 261.800 135,718 21 .979 16,691 174,388 104,103 87,412 0.66 0.50 462 35,308 225.33 -48% -41% -35% Coffee (USD 2.00Ornl) drip line mad 2,000 220,000 121,397 '1,007 28,297 150,791 97,500 69,208 0.80 0.46 321 21,713 303.76 -48% -34% -3`1% Roses (lonig stem) drip line blend 1,100 14,467,391 8,002,433 419,554 1,0565291 9.987.278 6,045,40.4 4.480.113 0.72 0.45 9.360 786.240 64.66 -62% -46% -33% Tobacco, flue-cored no tow 2,200 204,490 113,454 17,209 12.166 142,849 73,827 61.641 0.57 0.43 382 30.128 193.26 -44% -37% -32% Export veg -baby carrots drip line high 3.800 184,500 66.500 - 10,275 76,T75 38,000 27,725 0.57 0.36 275 18,900 138.18 -36% -27% -27% Wheat overhead high 7,500 82,500 50,439 553 10,346 61,338 31,508 21.182 0.62 0.35 21 1,784 1,500.38 .43% -29% -26% Roses (medium stem) drip tine blend 1,750 14,228,261 8,796.850 412,830 1,565,291 10,774,761 5.018,791 3.453,500 0.84 0.32 9.360 786.240 538.20 -58% -40% -24% Wheat overhead med 6,500 71,500 44,400 479 10,346 55,225 26,621 16.275 0.59 0.29 20 1,680 1,331.05 -41% -25% -23% Coffee (USC 1i500ns) drip tine high 2,500 206.250 132,784 1,387 28,297 162,448 72,099 43.8502 0.54 0.27 375 24,915 192.26 -38% -23% -21% Cotton overhead high 3.500 a2.040 54,713 1,231 10.346 66.290 26.096 15.750 0.47 0.24 278 16.847 93.87 -41% -25% -20% Roses (long stem) drip line auction 1,100 14.487.391 7,752,433 2,387,120 1,505,291 11,704,844 4,327.838 2,783,547 0.43 0.24 9.360 786,240 462.38 -56% -36% -24% Groundnuts overhead high 5.000 83.250 56.363 833 10.346 67,542 26,054 15,708 0.46 0.23 135 8.680 192.99 -38% -23% -19% Roses (short stem) drip line blenkd 2.750 13,152,174 8.733,740 381,413 1,565,291 10,680.444 4,037,021 2,471.730 0.44 0.23 9,380 7816,240 431.31 -32% -19% -20% Marigold overhead high 14,000 81.620 56,934 - 10,346 67,280 24,686 14,340 0.43 0.21 136 10,024 18`1.51 -34% -20% -18% Wheat overhead loW 5.500 60,500 40,965 405 10,346 51.716 19,130 8,784 0.46 0.17 19 1,596 1,006.84 -35% -16% -15% IV ~~~Coffee (USD 1.380mt) drip tine high 2.500 187.000 132,784 1,367 26,297 162,448 52,849 24.552 0.39 0.15 375 24.915 140.93 -31% -15% -13% Groundnuts no high 2,800 46,830 34,245 466 5.841 40.552 11.909 6,068 0.34 0.15 83 5,499 143.48 -31% -16% -13% (TO ~~~~~~~Cotton eno high 2.300 51,129 38,137 767 5,841 44,745 12,225 6.384 0.31 0.14 198 12,367 61.74 -31% -16% -13% CD ~~~Conosn overhead rued 3,000 70,320 50,176 1.055 10,348 61,577 19,089 8.743 0.37 0.14 245 14,980 77.91 -34% -14% -11% Ch ~~~Roses (medium stem) drip isne suction 1,750 14,228.261 8,546,850 2,347,683 1,565,291 12,459,804 3,333,748 1.768.457 0.31 0.14 9,380 786,240 356.17 -50% -26% -15% Coffee (USC 1.50ormt) drip mie mied 2,000 165.000 121,397 1,087 28,297 150,791 42,500 14,208 0.35 0.09 321 21,713 132.42 -28% -9% -9% Roses (short stem) drip tine auction 2,750 13,152,174 8,483,740 2,t70,109 `1,565.291 12,219,140 2,498.325 933.034 0.23 0.08 9,360 766,240 260.92 -43% -16% -10% Groundnuts overhead mied 4,000 60,600 52,226 086 10,346 83,238 13,708 3,362 0 26 0.05 110 7,112 124832 -25% -6% -5% Soybeans no high 2,600 32.500 24,818 218 5,841 38,875 7,408 1.835 0.30 0.05 14 1,176 533.29 -25% -6% -5% Cotton ron med 1,900 42,237 33.696 634 5,841 40.171 7,907 2,066 0.23 0.05 172 10,673 45.97 -25% -6% -5% Exportevng - baby corn drip tine high 950 49,638 37,674 - 10,275 47,949 11,984 1.689 0.32 0.04 190 13.440 62.97 -24% -3% -3% Groundnuts no rmed 2,300 38,295 31,138 383 5,841 37.362 6,774 933 0.1 0.92 66 4A463 99 62 -21% -3% -2% Confon overhead low 2.500 58.600 47,170 879 10,346 58.395 10,551 205 0.22 0.00 212 13,113 49.77 -23% 0% 0% Coffee (USD 1,360Omt) drip line med 2,000 149.600 121.397 1.097 28,297 150,791 27,108 (1,191) 0.22 (0.01) 321 21,713 84.44 -20% 1% 1% Soybeans overhead high 3,400 42,500 32,262 285 10,346 42,913 9,933 (413) 0.31 (0.01) 24 2,016 413668 -26% 1% 1% Maize no high 5,5D0 31,680 27,522 190 5,841 33,553 3.968 (1.873) 0.14 (0.06) 27 2,265 146.96 -16% 8% 61% Conton no low 1,500 33.345 30,040 500 5,841 36,381 2,805 (3.036) 0.09 (0.08) 145 9,380 19.34 -11% 12% 9% Maize overhead high 8.000 46,080 40,349 276 10,346 50,971 SASS5 (4.891) 0.13 (0. 10) 50 4.200 109.10 -14% 13% 11% Gomundnuts non low 1,800 29.970 27,152 300 5,841 33,293 2,518 (3,323) 0 09 (0. 10) 57 3,847 44.18 -10% 13% 11% Soyybeans no med 2,100 26,250 23,434 178 5,841 29,451 2.840 (3,201) 0.11 (0.11 ) 13 1,092 203 08 -11% 13% 12% Maize no med 4,500 25.920 23,584 156 5,841 29,561 2,200 (3,641) 0.09 (0.12) 23 1,932 95.65 -11% 16% 14% Soybeanis overhead med 2,900 38,250 38,900 243 10,346 41,489 5,107 (5,239) 0.16 (0.13) 23 1.932 222.04 -16% 16% 15% Groundnuts overhead tow 3,000 49.950 47,952 500 10,346 56,796 1,466 (8.848) 0.03 (0. 15) 90 5,984 16.64 -4% 21% 18% Maize overhed mied 7,000 40.320 37,577 242 10,346 48,165 2,501 (7,845) 0.07 (0.16) 45 3,780 55.58 -8% 24% 20% Maize overhead low 6,000 34.560 33,936 207 10,346 44.489 417 (9,929) 0.01 (0.22) 30 2,520 13.90 -1% 35% 29% Soybeans overhead low 2,400 38,000 28.886 201 10,346 39,433 913 (9.433) 0.03 (0.24) 22 1,848 41.50 -3% 35% 32% Maize no low 3,500 20,160 20.875 121 5,841 26,837 (836) (6,677) (0.04) (0.25) '19 1,596 (44.00) 5% 43% 34% Soybeans en low 1,600 20,000 21,420 134 5,841 27,395 (1,554) (7,395) (0.07) (0 27) 12 1,006 (129.50) 9% 41% 37% LSC Farmers: Enterprises sorted by return to total costs. LARGE SCALE COMMERCIAL SECTOR: Enterprises sorted by labour requirement. Return to cash costs measured as gross profit/totat cash costs: return to total costs measured as net profittotal production casts (nodl. tamily labour). For roses, yield is per 1.000 stems and managemnent vanes according to miarketing arranigement (1 00% auction sales vs. blended sates for consortium by auction and direct contract). Productian Costs )ZWDIha) Farmer Income (ZWDdha) Labour Sensitivity Indicators Gross Cash Cash Annvuat Total Gross pmoft Net profit (gr. Return to Return Hired Gr. profit per % change in % change in % change in Mgt. Ytetd Revenue required deductions ievestment production (gr. revenue - revenue - cash to total tabour Wage bill day yield to gross yield to net pnen to net Activity Irrigation Level (kglha) (ZWDlha) before sale utter sale cost costs cash costs) total cast) costs casts (days) )ZWDIha( )ZWOIha( profit = 0 profld = 0 profit = 0 Roses (tong stem) dnp lione bltend 1,100 14,467,391 8.002.433 418.554 1,565,291 9,987,278 6,045,404 4,480,113 0 72 0.45 5,360 786,240 645.88 -62% -46% -33% Roses (medium stem) drip line blend 1,750 14,228,261 g,7g6,850 412,620 1,565,251 10,774,761 5,018,791 3,453,500 0.54 0~32 5,360 766,240 536.20 -58% -40% -24% Roses)(long stem) dap lne auchon 1,100 14,467,351 7,752.433 2,367,120 1,565.251 11,704,844 4.327,838 2,762,547 0.43 0.24 5,360 786,240 462.38 -56% -36% -24% Roses (short stem) drip line blend 2,750 13,152.174 8.733.740 381,413 1,565,261 10,680,444 4,037,021 2,471.730 0.44 0.23 5,360 786,240 431.31 -32% -19% -20% Roses (medium stem) drip tine auction 1,750 14,228,261 6,546,850 2,347,663 1,565,251 12,45g,804 3,333.748 1,7686,457 0 31 0 14 5,360 786,240 356.17 -50% -26% -15% Roses (short stem) drip linen auction 2,750 13,152,174 8,483.740 2,170,109 1,565,251 12,216,140 2,498.325 933.634 0.23 0.08 9,360 786,240 266 92 -43% -16% -0 Tobacco, flue-cared overhead high 3.500 346,500 145.886 28.431 i6,69i 191.006 172,183 155,492 o.sg 0.81 497 37,268 346.44 -60% -54% -47% Tobacco, flue-cured overhead med 3.100 301,785 140.504 24,927 16,691 182,122 136,354 119,663 0 82 0.66 482 36,428 282.89 -55% -48% -42% Tobacco, flue-cured overhead low 2,800 261,800 135,718 21,979 16,691 174,366 104,103 87,412 0.66 0.50 462 35,366 225.33 -48% -41% -3,5% Tobacco, flue-cored no high 2,800 275,660 126,311 22,668 12,166 161,165 126,661 114,495 0.85 0 71 437 33.208 289.89 -55% -50% -44% Tobacco, Olue-curud no rued 2,500 242,000 120,002 20.034 12,166 152,222 101.964 89,778 0.73 0.59 415 31,976 245.70 -51% A45% -39% Tobacco, flue-cured no tom 2.200 204,490 113,454 17,209 12,166 142.549 73,827 61,641 0.57 0.43 362 30,128 193 26 -44% -37% -32% Coffee (USD 200066d) drip tine high 2.500 275,000 132,754 1,367 28,297 162,448 140,649 112,552 1.05 0.69 375 24,915 375.66 -55% -44% -41% Coffee (USD 1,50Omt( drip line high 2,500 206,250 132,754 1,367 28,297 162,448 72,099 43.802 0.54 0.27 375 24,915 192.26 -38% -23% -21% Coffee (USD 1360n66) drip line high 2,500 187,000 132,754 1,367 28,297 162,448 52,849 24.552 0.39 0.15 375 24,915 140.93 -31% -15% -13% Coffee )USD 2.000mt( drip line rrmed 2,000 220,000 121.397 1,097 28,297 150,791 97,500 69.209 0.80 0.46 321 21,713 303 76 -48% -34% -31% Coffee (USD 1.5O0mt( drip line mied 2.000 165,000 121,397 1,097 28,297 150,791 42,506 14,209 0.35 0.09 321 21,713 132 42 -28% -9% -9% Coffee (USD 1,36Omt( drip linen med 2,000 149,600 121,397 1,097 28.297 150,791 27,106 (1,191) 0.22 (0.01) 321 21,713 64.44 -20% 1% 1% Paprhka overhead long 6.000 451,200 172,459 - 16,691 189,150 278,741 262,050 1.62 1,39 310 23,800 899.16 -66% -62% -56% Exporti ung - mange tout drip line high 4,000 121,000 68,641 - 10,275 78,916 52,359 42,064 0.76 0 53 295 20.020 177.49 -43% -35% -35% Cotton overhead high 3,500 82,040 54,713 1,231 10,346 66,290 26,096 15,750 0.47 0.24 278 16,647 93 87 -41% -25% -20% Export ong - baby carrots dny line high 3,800 104,500 66,500 - 10,275 76,775 36.000 27,725 0.57 0.36 275 16,900 136.18 -36% -27% -27% Papeka overhead short 3,000 225.600 124,126 - 16,691 140,817 101,474 84,783 0 82 0.60 270 20,720 375683 -49% -41% -38% Cotton overhead ived 3,000 70.320 50,176 1,055 10,346 61,577 19,069 8.743 0.37 0.14 245 14,980 77.91 -34% -14% -11% Cotton overhead lee 2,500 586060 47,170 879 10,346 58,395 10,551 205 0.22 0.00 212 13,113 49 77 -23% 0% 0% Cotton no high 2,300 51,129 38,137 767 5,841 44,740 12.225 6,384 0.31 0.14 198 12,367 61.74 -31% -16% -13% CD ~~~Exportvneg -babycorm drip lne high 950 49,638 37,674 - 10,275 47,949 11,964 1.669 0.32 0.04 190 13.440 62.97 -24% -3% -3% ON ~~~~~~Cotton no sned 1,900 42,237 33,696 634 5.641 40,171 7,907 2,066 0.23 0.05 172 10,673 45.9 -25% -6% -0% Cotton no tom 1,500 33,345 30,040 500 5.6541 36.381 2,805 (3.036) 0.09 (0.66) 15 9.380 19.4 -11% 12% 9% Marigold overhead high 14,000 81,620 56,934 - 10,346 67,280 24,666 14,340 0.43 0 21 136 10,024 181.51 -34% .20% -18% Groundnuts overhead high 5,000 83,250 56.363 833 10.346 67,542 26,054 15,706 0.46 0.23 135 8.680 192.99 -36% -23% -19% Gmundnuts overhead mied 4.000 66.600 52,226 666 10,346 63.238 13,708 3,362 0.26 0 05 110 7,1'12 124.62 -25% -6% -5% Groundnuts overhead tow 3.000 49,950 47,952 500 10,346 56,796 1,466 (8.848) 0.03 (0.15) 90 5,964 16.64 -4% 21% 18% Gomuodeats no high 2.600 46,620 34,245 466 5,641 40,552 1 1,909 0,068 0.34 0.15 83 5,499 143.48 -31% -16% -13% Groundnuts no med 2,300 36,295 31,136 363 5,841 37,362 6,774 933 0.21 0 02 68 4,463 99.62 -21% -3% -2% Groundnuts no loyw 1,800 29,970 27,152 300 5,841 33,293 2,518 (3,323) 0.09 (0 10) 57 3,847 44.18 -10% 13% 11% Maize overhead high 8.000 46,080 40,349 276 10.346 50,971 5,455 (4.891) 0.13 (0. 10) 50 4,200 109 10 -14% 13% 11% Maize overhead mred 7.000 40,320 37,577 242 10,346 48,160 2.501 (7,545) 0.07 (0.16) 4 5 3,780 55.56 -8% 24% 20% Maize overhead low 6,000 34.560 33.936 207 10,346 44,469 417 (9.929) 0.01 (0 22) 30 2,520 13.90 -1% 35% 29% Maize non high 5,500 31,680 27,522 190 5,641 33,553 3,968 (1.873) 0. 14 (0.06) 27 2,268 146.96 -16% 6 % 6% Soybeans overhead high 3,400 42.500 32.282 285 10,346 42,913 9,933 (diD) 0 31 (0.01) 24 2,016 413,68 -26% 1 % 1% Maize no med 4.500 25,920 23,564 156 5,641 29,561 2.200 (3,641) 0.09 (0.12) 23 1,932 95.65 -11% 18% 14% Soybeans overhead med 2.900 36,250 30,900 243 10.346 41,489 5,107 (5,239) 0.16 (0.13) 23 1,932 222 04 -16% 16% 15% Soybeans ov~erhead lee 2,400 30.000 28,666 201 10,346 39,433 913 (9,433) 0.03 (0.24) 22 1,848 41.50 -3% 35% 32% Wheat overhead high 7,500 82,500 50,439 553 10.346 61,336 31,506 21,162 0.62 0 35 21 1.764 1,500.38 -43% -29% -26% Wheat ouerhead mied 6,500 71,500 44,400 479 10.346 55,225 26,621 16,275 0.59 0 29 20 1,680 1,331.05 -41% -25% -23% Wheat overhead lee 5,500 66,500 40,965 405 10.346 51,716 19,130 8.764 0 46 0.17 19 1,596 1,006.64 -35% -16% -15% Maize no lee 3.500 20,160 20,875 121 5.641 26,837 (836) (6.677) (0.04) (0.25) 19 1,596 (44.00) 5% 43% 34% Soybeans no high 2.600 32,500 24.816 218 5.641 30,870 7,466 1,625 0.30 0.05 14 1,176 533 29 -25% -6% -0% Soybeans no med 2,100 26,250 23,434 176 5,5341 29,451 2,640 (3.2011) 0.11 (0.11) 13 1,092 203.08 -11% 13% 12% Soybeans nlo lee 1.600 20.000 21,420 134 5,641 27.395 (1,554) (7,395) (0.07) (0.27) 12 1,008 (129 50) 9% 41% 37% LSC Farmers: Enterprises sorted by labour requirement. LARGE SCALE COMMERCIAL SECTOR: Enterprises sorted by return per day labour. Return to cash costs measured as gross profit/total cash costs; return to total costs measured as net profit/total production costs (exad family labour). For roses, yield is per 1,000 stems and rnanagementt varies accordingi to marketing arrangemrent (It00% auction sales vs. blended sales for consortium by auction and direct contract). Production Ceats (ZWDI ha) Farmer Incomne (ZWDIha) Labour Senslnlvlty Indicators Gross Cash Cash Annual Total Gross profit Net profit (gr. Return to Return Hired Gr. profit per % change in % change in % chanige in Mgt. Yield Revenue required deductions inventmenet production (gr. revenue - revenue - casni to total labour Wage buli day yedtco gross yildd to oet price to net Activity trrigatlon Level (kg/a) (ZWDfha) before sale after sale cost costs cash costs) total cODSt) costs cossts )days) )ZWDlrna) (TWD/hra) prafit = 0 profd = 0 promi = 0 Wheat overhead high 7.500 82,500 50.439 553 10,340 61,338 31,508 21.162 0.62 0.35 21 1,764 1,500.38 -43% -29% -26% Wheat overhead rmed 6,500 71.500 4.4,400 478 10,346 50.225 26.621 16.275 0.59 0.20 20 1,660 1,331 05 -41% -25% -23% Wheat overhead low 5,500 60.500 40,965 405 10,346 51,716 18,130 6,784 0.46 0.17 18 1,586 1.006894 -35% -16% -15% Paprika overhead longj 8,000 451.200 172,458 - 16,081 189.150 278,741 262,050 1.~62 1.38 310 23.800 898.16 -66% -62% -50% Ro-ses (long stem) drip line blend 1.100 14.467,381 6,002,433 419.554 1,565.281 8.887.278 6.045,404 4.480,113 0.72 0.45 8,360 786.240 645.88 -62% -46% -33% Roses (medium stem) drip line blend 1,750 14,226,261 8,796.850 412,620 1,565,201 10,774,761 5,018.781 3,453,500 0.54 0.32 8,360 766,240 530 20 -55% -40% -24% Soybeans ron high 2.600 32.500 24,816 218 5,841 30.875 7,466 1.625 0.30 0.05 14 1,176 533.20 -25% -6% -5% Roses (long stem) drip/linn auction 1,100 14.467.381 7,752,433 2,387.120 '1,565,281 11,704,844 4.327,638 2,762.547 0.43 024 9.360 786,240 462.38 -56% -36% -24% Roses (short strem) drip line blend 2.750 13,152,174 8.733,740 381,413 1.565,281 10.680,444 4.037.021 2.471.730 0.44 0.23 8,360 786.240 431.31 -32% -18% -20% Soybeans overhead high 3,400 42.500 32.282 285 10,346 42,813 8.933 (413) 0.31 (0.01) 24 2,016 413.88 -26% 1% '1% Papnka overhead short 3,000 225,600 124,126 - 16,681 140,817 101,474 84,783 0.82 0.60 270 20,720 375.83 -49% -41% -38% Coffee (USD 2.OOOmt) drip line high 2,500 275,000 132.764 1.387 26,287 162,448 140,848 112.552 1.05 0.68 375 24,815 375.60 -55% -44% -41% Roses (medium strem) dnp line auction 1,750 14.228,261 8.546,650 2,347.663 1.565,281 12,458.804 3,333,748 1.768.457 0.31 0.14 8.360 786,240 356.17 -50% -26% -15% Tobacco, flue-cured oyverhead high 3,500 346,500 145.866 28,431 16,681 181,008 '172,183 155,482 0.88 0.811 487 37,268 348.44 -60% -54% -47% Coffee (USDO2,000Oml) drip line mfed 2,000 220.000 121,397 1,087 28,287 150,781 87,506 69,209 0.80 0.46 321 21,713 303.76 -48% -34% -31% Tobacco, Rlue-cored non tugh 2.800 275,660 126,311 22.668 12,1860 161,165 126,681 1'14,485 0.85 0.71 437 33,266 288.88 -88% -50% -44% Tobacco, flue-cured overhead rmed 3,100 301,785 140,504 24,827 16,691 182,122 138,354 119,663 0.82 0.66 482 36,426 282.88 -55% -48% -42% Roses (shrort stem) dep line auction 2,750 13,152,174 8,483.740 2,170,109 1.565,201 12,218,140 2,488,325 833.034 0.23 0.08 8,360 766,240 266.92 -43% -16% -10% Tobacco, flue-cored sio mied 2,500 242,000 120,002 20,034 12,1860 152,222 101,964 88,778 0.73 0.59 415 31,876 245.70 -51% -45% -38% Tobacco, flue-cored overhead low 2,800 261.800 135.718 21,978 16,691 174,388 1014,103 87,412 0.66 0.50 462 35,306 225.33 -48% -41% -35% Soybeants one/rhead mied 2.800 38,250 30,900 243 10,346 41,488 5,107 (5,238) 0.16 (0.13) 23 1,832 222.04 -16% 16% 15% Soybeanis so med 2,100 26,250 23,434 176 5,841 28,451 2,640 (3,201) 0.11 (0. 11) 13 1,092 203.08 -11% 13% 12% Tobacco, flue-cured it low 2,200 204,450 113,454 17,209 12,1860 142,648 73,827 61,641 0.57 0.43 382 30,1i26 183.26 -44% -37% -32% Groundnuts overhead high 5,000 83,250 56,363 833 10,346 67,542 26.0.54 15,700 0 46 0.23 135 6,660 182.99 -38% -23% -18% Coffee )USD 1,50Omrt) drip mie high 2,500 206.250 132,764 1,387 28,297 162,448 72,098 43,802 0.54 0.27 375 24,9`15 192.26 -38% -23% -21% Marigold overhead high 14.000 81,620 56.834 - 10,346 67,260 24,6816 14,340 0.43 0.21 136 10,024 181.51 -34% -20% -18% Export veg -manrge tout drip line high 4,000 121,000 68,641 - 10,275 76,916 52,358 42,084 0.76 0.53 295 20,020 177.48 -43% -35% -35% C\ Maize no high 5,500 31.680 27,522 190 5,841 33,553 3,868 (1,873) 0.14 (0.00) 27 2,268 146.86 -16% 8% 6% Cit ~~~~~Groundnuts no high 2,600 46,620 34.245 466 5,841 40,552 11.909 6,068 0.34 0.15 63 5,499 143.48 -31% -16% -13% Coffee )USD 1,360m1) drip line high 2,500 167,000 132.764 1,387 28,287 162.448 52,848 24,552 0.38 0.15 375 24,8`15 140.83 -31% -15% -13% Exsportlveg- baby carrots drip line high 3.600 164,500 66,500 - 10,275 76,775 38.000 27,725 0.57 0.38 275 18,800 138.18 -36% -27% -27% Coffee (UD1,500isort) drip line med 2,000 165,000 121.387 1,097 28,297 150,791 42,500 14.209 0.35 0.09 321 21,713 132.42 -28% -9% -8% Groundnuts overhead "led 4,000 66.600 52,226 666 10,346 63,238 13,708 3,362 0.26 0.00 110 7,112 124.62 -25% -6% -5% Maize overhead togs 8,08) 46.000 40,348 276 10,346 50.871 5,455 (4,891) 0.13 (0.1) 50 4,200 109.10 -14% 13% 11% Groundnuts no nied 2,300 38,205 31,138 383 5,641 37,382 6,774 833 0 21 0.02 68 4,463 98.62 -21% -3% -2% Maize no med 4,500 25.820 23,564 156 5,841 28,561 2,200 (3,841) 0.99 (0.12) 23 1,932 95.65 -11% 18% 14% Cottos overhead high 3,500 612,040 54,713 1,231 10,346 66,290 26.096 15.750 0.47 0.24 278 16,847 83.87 -41% -25% -20% C-offee (USC 1,360nrrt) dnp line med 2.000 148,600 121,387 1,097 28,297 150,791 27,100 (1,181) 0.22 (0.01) 3,21 21,713 84A44 -20% 1% 1% Cottos overhead med 3,000 70,320 50,176 1,055 10,346 61,577 19,0fl9 8,743 0.37 0.14 245 14,880 77.91 -34% -14% -11% Esporteveg -baby corm drip line hrgh 800 48.638 37,ti74 - 10,275 47,948 11.964 1,6689 0.32 0.04 190 13,440 62.97 -24% -3% -3% Cottes no high 2,300 51,129 38,137 767 5,641 44,745 12,225 6,384 0.31 0.14 198 12,367 61.74 -31% -16% -13% Maize overhead med 7,000 40,320 37,577 242 10,346 48,165 2,501 (7.8451 0.07 (0.16) 45 3,760 55.58 -6% 24% 20% Cotos overhead low 2,500 58,600 47,170 879 10,346 58,395 10,551 205 0.22 0.00 212 13,113 49.77 -23% 0% 0% Cotton no med 1,800 42,237 33,686 634 5,641 40,171 7,907 2,066 0.23 0.05 172 10,873 45 97 -25% -6% -5% Groundnuts no lore 1,800 20,970 27,152 300 5,841 33,283 2,518 (3,323) 0.08 (0. 10) 57 3,847 44.18 -10% 13% 11% Soybeans ooerhead low 2,400 30.000 26,886 201 10,346 39,433 913 (8,433) 0.03 (0.24) 22 1,848 41.50 -3% 35% 32% Cofos non low 1,500 33.3,45 30,040 500 5,8411 36,381 2,805 (3,036) 0.08 (0.08) 145 9,380 18.34 -'11% 12% 9% Groundnuts overhead lore 3.000 48,950 47,952 500 10,346 58,798 1.498 (8,848) 0.03 (0.15) 90 5.964 16.64 -4% 21% 18% Maize overhead low 6,000 34,560 33,936 207 10,346l 44,488 417 (9,828) 0.01 (0.22) 30 2,520 13.90 -1% 35% 29% Maize no low 3.500 20,160 20,875 121 5,841 26,837 (838) (6.677) (0.04) (0.25) 18 1,586 (44.00) 5% 43% 34% Soybeanis no low 1,600 20.000 21,420 134 5,841 27,395 (1,554) (7,385) 10.07) (0.27) 12 1,008 (120.50) 8% 41% 37% LSC Farmers: Enterprises sorted by return per day labour. LARGE SCALE COMMERCIAL SECTOR: Enterprises sorted by vulnerability to price (percent change in price to net profit = 0). Return to cash costs measured as gross profit/total cash costs, return to total costs measured as net profit/total production costs (end. family labour). For roses, yield is per 1,000 stems and management nanes according to marheting arrangement (100% auction sales no. blended sales for consortium by auction and direct contract) Production Costs (ZWDIha) Farmer Income (ZWDtha) . . Labour Senslflvity Indicators Gross Cash Cash Annual Total Gross profit Net pmofit (gr. Return to Return Hired Gr. profit per % change in % change in % change in Mgt. Yield Revenue required deductions investment production (gr revenue - revenue - cash to total shabor Wage bil day yield to gross Odeld to net price te net Activity Irrigation Levef (kg/ha) (ZWDIha) before sale ahter sale cost costs cacti costs) total cost) costs costs (days) )ZWDTha( (ZWD/ha) profit = 0 profft = 0 profit = 0 Paprika onerhead long 6.000 451,200 172,d59 - 16.691 1891Sf) 278,741 262,050 1.~62 1.39 310 23,800 899 16 -60% -62% -58% Tobacco, fine-cored overhead high 3,500 346.500 145,886 28,431 16,681 l19l.008 172,183 155,492 0.99 0 hi 497 37,268 346.44 -60% -54% -47% Tobacco, fine-cored no sigh 2,8050 275,660 126,311 22,666 12,186 161,165 126,681 114,498 0 85 0.71 437 33,208 289l.89 -55% -50% -44% Tobacco, fine-cured one/head med 3,100 301,780 140,504 24,927 16,691 102,122 136,354 119,663 0.82 0.66 402 36,428 282.89 -55% -48% -42% Roses (longostem) dripline tsend 1.100 14,467,391 8,002,433 419,554 1,565,291 g,g87,278 6,045,4000 4,480,113 0.72 0.45 9,360 786,240 645.88 -62% -46% -33% Toblacco, fiue-cared no mied 2,500 242,000 120.002 20,034 12.186 152,222 101.964 80,778 0.73 0.5a 415 31,978 245 70 -51% -45% -39% Coffee (USO 2.00Omt( drip line high 2,500 275.000 132,754 1,307 28,297 162.448 140,6549 112,552 1.05 0 69 375 24,915 375.60 -55% -44% -41% Paprika one/head short 3.000 225.600 124,126 - 16,691 140,817 101,474 54,783 0 82 0.66 270 20,720 375.83 -49% -41% -38% Tobacco, flue-cured one/head lor 2,800 261.800 135,718 21.979 16,691 174,388 154,103 87,412 0.66 0.50 462 35.308 225.33 -48% -41% -38% Roses (medium stem) drip line bleed 1,750 14.228,261 8,796,850 412,620 1,565,291 10,774,761 5,018,791 3,453,500 0.54 0.32 9.360 786,240 530.20 -58% -40% -24% Tobacco. flne-cared no low 2.200 204,490 113A454 17,209 12,186 142,849 73.827 61,541 0,57 0.43 302 30,128 193 26 -44% -37% -32% Roses)tlong stem) dep line auction 1,100 14.467.391 7,752,433 2,387,120 1,865,291 11,704.844 4,327,838 2.762 547 0.43 0 24 9,300 786.240 462.38 -56% -36% -24% Export veg - ffange toot drip line high 4,000 121,000 68,6541 - 10,275 78,916 52,359 42.084 0.76 0.53 295 20,020 177,49 -43% -35% -35% Coffee (USD 2,D00mrt) drip line mad 2,000 220.000 121,397 1.097 28,297 150,791 97,500 69,209 0.80 0.46 321 21,713 303.76 -48% -34% -31 % Wheat onerhead high 7,500 82.500 50,439 553 10,346 61,330 31.508 21.162 0.62 0.35 21 1,764 1,500.38 -43% -29% -26% Export neg - baby carrots drip line high 3.800 104,500 66,500 - 10,275 76,775 38,000 27,725 0.57 0.30 275 18,900) 130 18 -30% -27% -27% Roses (medium stem) drip line auction 1,750 14.228,261 85.546.850 2,347,603 1,565,291 12.459.804 3,333,748 1,768,457 0.31 0.14 9,300 786.240 350.17 -50% -26% -15% Wheat one/head med 6,500 71,500 44,400 479 10.346 55,225 26,621 18,275 0.59 0.29 20 1,680 1,331.05 -41% -25% -23% Cotton one/head high 3,500 82,040 54,713 1,231 10,346 66,200 26,000 15,750 0.47 0,24 278 16,647 93.87 -41% -25% -20% Coffee)(USD 1i500mI) drip line high 2,500 206,250 132,754 1,307 28,297 162,448 72.099 43,802 0.54 0.27 375 24.915 192.26 -38% -23% -21% Groundnuts one/head high 5,000 83,250 56.363 833 10,346 67,542 26,054 15,7018 0.46 0.23 135 8,680 192.99 -30% -23% -19% Marigold ove/head high 14,00 8t,620 56,934 - 10,346 07,280 24,686 14,340 0.43 0.21 130 10,024 181 51 -34% -20% -10% Roses)(short stem) drip line blend 2,750 13,152,174 8,733,740 301,413 1,565,291 10,680.444 4,037.021 2,471,730 0.44 0.23 9.300 786,240 431.31 -32% -19% -20% Wheat one/head lo" 5,500 60.500 40,965 405 10,346 51.716 19,130 8,754 0.46 0.17 19 1,596 1,006.64 -35% -16% -15% Groundnuts no high 2,800 46,620 34,245 466 5,641 40,552 11,009 6,068 0.34 0.15 83 5,499 143,48 -31 % -16% -13% Cotton no high 2,300 51,129 30,137 767 5,641 44,745 12,225 6,364 0.31 0.14 198 12.367 61,74 -31% -16% -13% Roses (short stem) dsp line auction 2,750 13,152,174 8,483.740 2,170,109 1.565,291 12,219,140 2,498,325 933,834 0.23 0.08 8.300 786.240 266.92 -43% 1% -10% ON Goffee)(USD 1,36008) drip line high 2,500 187,000 132,78,4 1,307 28,297 162,448 52,649 24,552 0.39 0.15 375 24,915 140 93 -31% -15% -13% Cotons one/head med 3,000 70,320 50,176 1,055 10,346 61,577 10,089 6,743 0,37 0.14 245 14,980 77.91 -34% -14% -11% Coffee (USD 1,500m6) drip line med 2,000 165,000 121,397 1,097 28,297 150.791 42,506 14,209 0.35 0.08 321 21,713 132,42 -28% -9% -9% Groundnuts onerhead mred 4,000 66,800 52,226 606 10,346 63,230 13,708 3,302 0.26 0.05 110 7,112 124.62 -25% -6% -5% Soybeans no high 2.600 32,500 24,818 218 5,641 30,875 7,466 1,825 0.30 0.05 14 1.176 533.29 -25% -6% -5% Cotons no rrrd 1,900 42,237 33.696 634 5,641 40,171 7,907 2,860 0.23 0.05 172 10,873 45.97 -25% -6% -5% Exportneg - baby com dap lne high 950 49,638 37,674 - 10,275 47,949 11,964 11,6839 0.32 0.54 190 13,440 62 97 -24% -3% -3% Groundnats no med 2,300 30,295 31,130 303 5,841 37,302 8,774 933 0,21 0.02 68 4,463 99.62 -21% -3% -2% Cotton onerhead lowe 2,500 50,800 47,170 879 10,346 68,395 10,551 205 0.22 0.00 212 13,113 49,77 -23% 0% 0% Coffee)(USD 1,3600r6) drip line mred 2,000 149,800 121,397 1,087 28,297 1 50.791 27,100 (1,191) 0.22 (0.01) 321 21,713 84.44 -20% 1% 1% Soybecans one/headi hign 3,400 42,500 32,282 285 10,348 42,913 9,933 (413) 0.31 (0.01) 24 2.016 413 88 -26% 1% 1% Maize no high 5,500 31,680 27.522 190 5.,641 33,553 3.968 (1.873) 0.14 (0.0) 27 2.268 146.96 -16% 8% 6% Cotton no low 1,500 33.345 30.040 500 5,641 30,301 2,805 (3,830) 0.09 (0.08) 145 9,380 19.34 -11% 12% 9% Maize one/head high 8,000 46,080 40,349 276 10,346 50,871 SASS5 (4,891) 0.13 (0 10) 50 4.200 108.10 -14% 13% 11% Gomundnuts no low 1,800 29,870 27,152 300 5,641 33,283 2,518 (3,323) 0.09 (0. 10) 57 3,647 44,18 -10% 13% 11% Soybearss no med 2,100 26.250 23,434 176 5,641 29,451 2,640 (3,201) 0.11 (0.11) 13 1,092 203.08 -11% 13% 12% Soybeans one/head med 2,900 30,250 30,900 243 10,346 41A489 5,107 (5,239) 0.16 (0.13) 23 1,932 222.04 -16% '16% 15% Maize no med 4,500 25,820 23.564 150 5,641 29,501 2,200 (3,641) 0 09 (0.12) 23 1,932 95.65 -11% 18% 14% Goaundnuts one/head lore 3,000 49,950 47,952 500 10.346 50,708 1,498 (8,648) 0.03 (0.15) 90 5.964 16.64 A4% 21% 18% Maize one/head med 7,000 40,320 37,577 242 10.346 48,165 2,501 (7,649) 0.07 (0.16) 45 3.780 55858 -8% 24% 20%1 Maize one/head low 6.000 34.500 33,936 207 10,346 44,489 417 (9.929) 0.01 (0 22) 30 2,520 13.90 -1% 35% 29% Soybeans ova/head tow 2,400 30,000 28,886 201 10,346 39.433 913 (9 433) 0.03 (0.24) 22 1,848 41.50 -3% 35% 32% Soybearss no l ore 1,600 20,0500 21,420 134 5,641 27,395 (1,55-4) (7.395) (0.07) (0.27) 12 1,008 (129.50) 9% 41% 37% Maize no lore 3.500 20,160 20,875 121 5,641 26,837 (830) (6,677) (0 04) (0.25) 19 1,596 (44.00) 5% 43% 34% LSC Farmers: Enterprises sorted by vulnerability to price. LARGE SCALE COMMERCIAL SECTOR: Irrigated and dryland enterprises sorted by total production costs. Return to cash costs measured as gross profit/total cash costs; return to total costs measured as siet profit/total production costs (east family labour). For roses. yield is per 1.000 stems and management varies accordirrg to marketing arrangement (100% auction sales us. blended sales for consoetium by auction and direct contract). Product/an Costs (ZWD/ba) Farmer Income (ZWDIha) Labour Sensltlvlty tndicators Gross Cash Cash Annual Total Gress profit Nat profit (gr. Return to Return Hired Gr. profit per % change in % change in % chanige in Mgtl. 'felud Revenue required deductions investment produchon (gr. revenuie - revenue - cash. to total labour Wage bill day tield to gross yield to net Price to net Activity Irrigation Level (kglha) (ZWDIha) betore sale ufter sale cost costs cash costs) total cost) costs costs (days) (ZWDilha) (ZWO/ha) Profit = 0 profid 0 profit = 0 IRRIGA TED CROPS Roses (medium stem) drip hone auctton 1,750 14,228,261 8.546.850 2,347,663 1,565,291 12,459,904 3,333,746 1,768,457 0.31 0.14 9.360 796,240 356.17 -50% -26% -15% Roses (shodt stem) drip hone auction 2,750 13,152,174 8.483,740 2,170,109 1,565,291 12,219.140 2.498.325 933,034 0.23 0.09 9,360 766,240 266.92 -43% -16% -10% Roses (long stem) drip hone auctin ithO0 14,467.391 7,702,433 2,387.120 1,565,291 11,704,844 4,327,838 2.762,547 0.43 0.24 9,360 786,240 462.38 -56% -36% -24% Roues (medium stum) drip line blend 1,750 14,228.261 8.796,850 412,620 1,565,291 10,774,761 5.018,791 3,453.500 0.54 0.32 9,360 786,240 536 20 -58% -40% -24% Roses (short stem) dnp line blend 2,750 13.152,174 8,733,740 381,413 1,505,291 10,680,444 4,037,021 2,471,730 0.44 0.23 9,360 786,240 431.31 -32%Y -19% -20% Roses (long stem) drip line blenid 1,100 14,467,391 8,002,433 419,554 1,565,291 9,987,278 6,045,404 4,460.113 0.72 0.45 9,360 786,240 845.818 -62% -46% -33% Tobacco, flue-cured overhead high 3,500 346,500 145,886 28,431 16,691 191,008 172,183 155,492 0.99 0.81 497 37.268 346.44 -60% -54% -47% Paprika overhead long 6,000 451,200 172,459 - 16,691 189,150 278,741 262,050 1.62 1.38 310 23,800 899.16 -66% -62% -58% Tobacco, flue-cured overhead med 3,100 301.785 140,506 24,927 16,691 182,122 1 36.354 118,663 0.82 0.66 482 36,428 282.89 -55% -48% -42% Tobacco, flue-cured overhead low 2,800 261,800 138,718 21,979 16,691 174,388 104,103 67,412 0.66 0.50 462 35,308 225.33 -48% -41% -35% Coffee (USC 2,000m1t) drip line h-igh 2,500 275,000 132,754 1,367 28,297 162,448 140,849 112,552 1.05 0.69 375 24,915 375.60 -55% -44% -41% Coffee (USC 1,500snt) drip line high 2,500 306,250 132,784 '1,367 28,297 162,448 72,099 43,802 0.54 0.27 375 24,915 192.26 -38% -23% -21% Coffee (USC 1,360nmt( dnp line high 2,500 187,000 132,784 1,367 28,297 162,448 52,849 24.552 0.39 0.15 375 24,915 140.93 -31% -15% -13% Coffee (USO 2.O0O0mt) drip line nred 2,000 220.000 121,397 1,097 28,297 150,791 97,506 69,209 0.80 0.46 321 21,713 303.76 -48% -34% -31% Coffee (USC 1,500rr6) drip line mied 2,000 165.000 121,397 1,097 28,297 150,791 42,506 14,209 0.35 0.09 321 21,713 133 42 -28% -9% -9% Coffee (USE) 1,360mit) drip line med 2.0D0 149,600 121,397 1,097 28,297 150,791 27,108 (1,191) 0.22 (0.01) 321 21,713 84.44 -20% 1% 1% Paprika overhead short 3.000 225,600 124,126 - 16,691 140,817 101,474 84,783 0.82 0.60 270 20,720 375.83 49% -41% -38% Export veg - miange tout drip line high 4,000 121,000 68.841 - 10,275 78.916 52,359 42,084 0.76 0.53 295 20,020 177.49 -43% -35% -35% Esport veg9- baby carrots drip line high 3.800 104,500 86.500 - 10,275 76,775 38,000 27,725 0.57 0.36 275 18,900 138.18 -36% -27% -27% Groundnuts overhead high 5.000 83.250 58,363 833 '10,346 67.542 26,054 15,708 0.46 0.23 135 8,680 192.99 -38% -23% -19% Marigold overhead high 14,000 81,620 56,934 - 10,346 67,280 24,686 14.340 0 43 0.21 136 10,024 181.51 -34% -20% -18% Cotton overhead high 3,500 62,040 54,713 1,231 10,346 66,250 26,096 15,750 0.47 0.24 278 16.847 93.87 -41% -25% -20% Gruunclnuts overhead med 4,000 66,600 52,226 666 10,346 63,238 13,709 3.362 0.26 0.05 110 7,112 124.62 -25% -6% -5% Cotton overhead mord 3,000 70,320 50,176 1,055 10,346 61.577 19,089 8,743 0.37 0.14 245 14,980 77.91 -34% -14% -11% Wheat overhead high 7,500 82.500 50,439 553 '10,346 61,338 31.508 21,162 0.6 0.38 21 1,784 1,500.38 -43% -29% -26% Groundnuts overhead low 3,000 49,950 47,952 500 10,346 58,798 1,498 (8.848) 0.03 (0.15) 90 5.964 16.84 -4% 21% 18% C" C~~~~~rotton overhead low 2.500 58,600 47,170 879 10,346 581,395 10,551 205 0.22 0.00 212 13.113 49.77 -23% 0% 0% Wheat overhead nied 6,500 71,500 44,460 479 10,346 55.225 26,621 16,275 0.59 0.29 20 1,680 1,331.05 -41% -25% -23% Wheat overhead low 5.S00 80.500 40.965 405 10,346 51,716 19,130 8,784 0A46 0.17 19 1.596 1,006.84 -35% -16% -15% Maize overhead high 8,000 46.080 40,349 276 10,346 50,971 SASS5 (4,891) 0.13 (0. 10) 50 4,200 109 10 -14% 13% 11% Maize overhead mied 7,000 40,320 37,577 242 10,346 48,165 2,501 (7.845) 0.07 (0.16) 45 3,780 55.58 -6% 24% 20% Export veg - baby corn dsp line high 960 49,638l 37,674 - 10,275 47,949 11i,964 1,669 0.32 0.04 190 13,440 62.97 -24% -3% -3% Maize overhead low 6,000 34,560 33,936 207 10,346 44.489 417 (9,929) 0.01 (0.22) 30 2,520 13.50 -1% 35% 29% Soybeans overhead high 3,400 42,500 32,2a2 285 10,346 42.913 9.933 (413) 0.31 (0.01) 24 2,0`16 413588 -26% 1% 1% Soybearns overhiead med 2,900 36,250 30,900 243 10,346 41,489 5,107 (5.239) 0 16 (0.13) 23 1,932 222.04 -16% 116% 15% Soybeans overhead low 2,400 30,000 28.886 201 10,346 39,433 913 (9,433) 0.03 (0.24) 22 1.848 41.50 -3% 35% 32% DRYLAND CROPS Tobacco, flue-cured no high 2,800 275.660 126,311 22,668 12,180 161,165 126,681 114,496 0.85 0.71 437 33,209 289.89 455% -50% -44% Tobacco, flue-cared nio med 2,500 242,000 120,002 20,034 12,188 152,222 101,904 85,778 0.73 0.59 415 31.976 245.70 -01% -45% -3a% Tobacco, flue-cared no low 2,200 204,490 113,454 17,209 12,186 142,849 . 73,827 61,641 0.57 0.43 382 30,128 193 26 -44% -37% -32% Cotton no high 2,300 51.129 38,137 767 5,841 44,745 12,225 6.384 0 31 0.14 198 12,367 61.74 -31% -16% -13% Gomundnuts no high 2,800 46,620 34.245 466 5,841 40,552 11,909 6,068 0.34 0.15 83 5,499 143.46 -31% -16% -13% Cotton so med 1.900 42,237 33,896 634 6,841 40,171 7,907 2,066 0.23 0.08 172 t0,873 45.97 -25% -6% -5% Groundlnuts no mied 2,300 38,295 31.138 383 5,841 37,362 6,774 933 0.21 0.02 68 4,463 99.62 -21% -3% -2% Cotton nio loyw 1,500 33.345 30,040 500 5,841 36,381 2.806 (3,036) 0.09 (0.09) 145 9,380 19.34 -11% 12% 9% Maize no high 5.50)0 31,580 27,522 190 5,841 33,553 3.968 (1,873) 014 (0.08) 27 2.268 146 96 -16% 8% 6% Groundouts no low 1,'800 29,970 27,152 300 5,841 33,293 2.518 (3,323) 0.09 (0.10) 57 3,847 44.18 -10% 13% 11% Soybeans no high 2,600 32.500 24,816 218 5,841 30,875 7,466 1.625 0.30 0.05 14 1,176 533.29 -25% -6% -5% Maize no smed 4,500 25,920 23.504 156 5,841 29,561 2,250 (3.841) 0.09 (0.12) 23 1,932 95.65 -11% 18% 14% Soybeants no must 2,100 26,250 23,434 176 5.841 29,451 2,840 (3,201) 0.11 (0.11) 13 1,092 203508 -11% 13% 12% Soybeans no low 1,600 20.000 21.420 134 5,841 27.396 (1.554) (7,395) (0 07) (0.27) 12 1,008 (129.50) 9% 41% 37% Maize no low 3.500 20,160 20,875 121 5,841 26,837 (836) (6,677) (0.04) (0.25) 19 1,596 (44.00) 5% 43% 34% LSC Farmers: Irrigated and dryland enterprises sorted by total production costs. LARGE SCALE COMMERCIAL SECTOR: Irrigated and dryland enterprises sorted by net profit. Return to case conto measured as gross profit/total cash costs; return to total costs measured as net profit/total production costs (nod family labour). For roses, yield in per 1,000 stems and management var/es according to marketing arrangement (100% auction sales vso. blended sales for consortium by auctin and direct contract). Production Costa (ZWD/ha( Farmer Income (ZWOfha( Labour Sensitivity Indicators Gross Cash Cash Annual Total Gross profit Net profit (gr Retum to Return Hired Gr. profit per % change in % change in % change in Mgt. Yield Revenue required deductions innestmrent prodluction (gr. renenue - renenue - cash to total labour Wage bill day yield to gross yield to net price Ionset Actvivty Irrigation Level (kg/ha) (ZWD/ha( before sale after sale cost costs cansh costs) total cost) costs costs (days) (ZWD/tha( (ZWD/ha( prnfdt = 0 profit = 0 profit = 0 IRRIGATED CROPS Roses (long stem) dnp line blend 1,100 14,467,391 9,002,433 419.554 1,565.291 9,997,278 6,045,404 4,480,113 0.72 0.49 9.360 786,240 649.88 -62% -46% -33% Roses (miedium stem) drip line blend 1,750 14,228,261 8,796,950 412,620 1.565.291 10,77d,761 5,Ol18,791 3A453.500 0.54 0.32 9,360 786,240 536.20 -98% -40% -2d% Roses (long stern) drip line auction 1.100 1d,467,391 7,752,d33 3,387,120 1,569,391 11,704,844 4,327,e38 2,7e2.547 0.43 0.24 9,360 78e,240 462.38 -56% -36% -24% Roses (shorn stem) dnp line blond 2,790 13,152,174 8,733,740 361,413 1,565,291 10,690.444 4.037.021 2,471.730 0 44 0.23 9,360 786,240 431 31 -32% -19% -20% Roses (medium stem) drip lione auction 1,750 14,228,281 8,548,850 2,347,663 1,565,291 12,459.804 3,333,748 1,76.8,457 0.31 0.14 9,360 786.240 356 17 -50% -26% -15% Roses (shunt stem) dnp line auction 2,750 13,152,174 8,483.740 2,170,109 1,565,291 12.219,140 2.498,325 933,034 0.23 0.08 9.360 796,240 266.92 -43% -18% -10% Papnka overhead long 6,000 451,200 172A459 - tee69i 189.150 278,741 382,050 1.62 1.39 310 23,800 899.16 -66% -62% -56% Tobacco, flue-cored onerhead high 3.500 346.500 145.888 28,431 16,691 191,008 172,183 195,492 0.99 0.81 497 37,268 348.44 -60%. -54% -47% Tobacco, flue-cured onerhead mied 3.100 361,789 140,504 24,927 16.691 182.122 136,354 119,663 0.82 0.66 482 38,428 282.89 -55% -48% -42% Coffee (USD 2.00Omt) drip line high 2,500 275,000 132,784 1,367 28.297 162,448 140,849 112,552 1.05 0.69 375 24,919 375.60 -55% -44% -41% Tobacco, flue-cured onerhead low 2,800 281,800 135,718 21,979 16,691 174,388 104,103 97,412 0.66 0950 462 35.308 225.33 -48% -41% -35% Papnka onerhead short 3,000 225.600 124,126 - 16,691 140,817 101,474 84,783 0.82 0.90 270 20,720 375.83 49% -41% -36% Coffee)(US02,000mt) dip line mred 2,000 220 000 121,397 1,097 29,297 150,791 97,500 69 209 0.80 0.48 321 21,713 303.78 -48% -34% -31 % Coffee (UDOt 1,500mt) dnp line high 2.500 206,250 132,784 1,367 28,297 182,448 72.099 43.902 0 54 0.27 375 24,915 192 26 -38% -23% -21 % Eaportnneg - mrge tout dnppline high 4,000 121,000 69,541 - 10.275 78.916 52.359 42,084 0.78 0.53 299 20,020 177.49 -43% -35% -35% Exportsneg -baby carrots drip line high 3,800 104,900 66.500 - 10,279 76,775 38,000 27.725 0.57 0.36 275 18,900 136.18 -36% -27% -27% Coffnee(USD 1,360mt) dnplfine high 2,5D6 187,000 132,754 1,367 29,297 162.448 52,849 24,552 0 39 0.15 375 24.9`15 140 93 -31 % -15% -13% Wheat onerhead high 7.500 82,500 50,439 553 10,346 61,336 31,508 21,162 0.62 0.35 21 1,704 1,500.38 -43% -29% -26% Wheat overhead med 6,500 71,500 44,400 479 10,346 55,225 28.621 16,275 0.59 0.29 20 1,60 1,331.05 -41% -25% -23% Cotons onerhead high 3,500 82,040 54,713 1,231 10.346 66,200 26.096 15,750 0.47 0.24 278 16,547 93.87 -41% -29% -20% GOroundnuts overhead sigh 5.000 93,250 56,363 833 10,346 67,542 26,054 19,708 0.46 0.23 135 9,660 192.99 -38% -23% -19% Marigold oserhead high 14,000 91,620 56.93.4 - 10,346 67,250 24.666 14,340 0 43 0.21 136 10,024 181 51 -34% -20% -18% Coffee (USO 1.500mt) drip line med 2,000 165.000 121.397 1,007 28,297 150,791 42,500 14.209 0 35 0.09 321 21,713 132.42 -28% -9% -9% Wheat oserfhead low 5.500 90.500 40,965 409 10,346 51,716 19,130 8,784 0OA6 0 17 19 1,500 1,006.84 -35% -16% -15% Cotton onerhead reed 3.000 70,320 50,176 1,095 10.346 81,577 19.089 6,743 0.37 0.14 245 14,966 77.91 -34% -14% -11% CD ~~Groundnuts onerhead med 4,000 66,600 52,228 666 10,346 63,236 13,708 3,362 0.26 0.05 110 7,112 124.62 -25% -6% -5% (7N ~~Exportoneg -baby com duipline high 950 49,638 37.674 - 10,275 47,949 11,904 1,689 0.32 0.04 150 13,440 62 97 -24% -3% -3% 00 Coffons onerhead loyw 2,500 56,600 47,170 979 10,346 56,395 10,591 205 0.22 0.00 212 13,113 49.77 -23% 0% 0% Soybeans onerhead high 3,400 42,500 32.282 285 10,346 42,913 9,933 (413) 0.31 (0.01) 24 2.016 413668 -26% 1% 1% Coffee (USC 1,360mW) drip line med 2,000 149,500 121,397 1,097 28,297 190,791 27,100 (1,191) 0.22 (0.0) 321 21,713 84.44 -20%/ 1% 1% Maize overhead high 8.000 46,090 40.3-49 276 10.346 50.971 5,455 (4.891) 0.13 (0. 10) 50 4,200 109.10 -14% 13% 11% Soybeans onerhead med 2,900 36.250 30,900 243 10.346 41,499 5,107 (5,239) 0.16 (0.13) 23 1.932 222.04 -16% 16% 19% Maize overhead med 7,000 40,320 37.577 242 10,346 48,165 2,501 (7.845) 0.07 (0.16) 45 3,760 55.58 -8% 24% 20%/ Groundnats onerhread low 3,000 49,950 47,992 500 10.346 56,798 1.498 (9,848) 0.03 (0.15) 90 5,984 16.64 -4% 21% 18% Soybeans onerhead low 2,400 36,000 28,966 201 10,346 39,433 913 (9.433) 0.03 (0.24) 22 1.848 41.50 -3% 35% 32% Maize overhead toni 6.000 34,500 33.936 201 10,346 44,499 4`17 (9,929) 0 01 (0.22) 30 2,930 13 90 -1% 35% 29% DRYLAND CROPS Tobacco, flue-cored no high 2,900 279,660 126,31 1 22,668 12,186 181,165 126,691 114,495 0.85 0.71 437 33.208 289.89 -95% -50% -44% Tobacco, flue-cored no mied 2.500 242,000 120.002 20,034 12,16 6 152,223 101,964 89,778 0.73 0.59 415 31.976 245.70 -91% 45% -39% Tobacco. flae-cured no low 2.200 204,490 113,454 17,209 12,186 142,849 73.827 61.841 0.57 0.43 362 30,129 193,26 -44% -37% -32% Cotton no high 2,300 51.129 38,137 767 5,8,41 44,745 12,225 6.384 0.31 0.14 199 12.367 81.74 -31 % -16% -13% GOroundnuts no high 2,900 46,620 34,249 466 9,841 40,952 11,909 6,068 0 34 0.15 83 9,499 143 49 -31 % -16% -13% Cotton nos med 1,900 42,237 33,696 634 9,841 40,171 7,907 2,066 0.23 0.05 172 10,873 45.97 -25% -6% -5% Soybeans no high 2,600 32,900 24,816 219 5.841 36,875 7,466 1,829 0.30 0.05 14 1,176 533.29 -29% -6% -5% GOroundnuts eno med 2.300 38.295 31,136 363 5,841 37,362 6,774 933 0.21 0.02 68 4.463 99.62 -21% -3% -2% Maize eno high 9,500 31,680 27,922 190 5.841 33,553 3.968 (1,873) 0.14 (O000) 27 2,266 146,96 -16% 9% 6% Cotton no low 1,500 33.345 30,540 900 5,541 36,361 2,905 (3,036) 0.09 (0.68) 145 9,380 19.34 -11% 12% 9% Soybeans no med 2.100 26.250 23,434 176 5,8541 29,451 2.640 (3,201) 0.11 (0. 1 1) 13 1,092 203.08 -11% 13% 12% Gmoundnuts no low 1.900 29,970 27.152 300 6,841 33,293 2.918 (3.323) 0.09 (0.10) 57 3,847 44.18 -10% 13% 11% Maize no med 4,500 25.920 23.564 196 5,841 29,561 2,200 (3,841) 0.09 (0.12) 23 1,932 95.65 -11% 18% 14% Maize no low 3.500 20,160 20.875 121 5.841 26,837 (836) (6.877) (0.04) (0 25) 19 1,596 (44.00) 9% 43% 34% Soybeans no low 1,600 20,000 21,420 134 5,841 27,395 (1.554) (7.395) (0.07) (0.27) 12 1,068 (129.90) 9% 41% 37% LSC Farmers: Irrigated and dryland enterprises sorted by net profit. LARGE SCALE COMMERCIAL SECTOR: Irrigated and dryland enterprises sorted by return to total costs (net profitltotal production costs). Return to cash oasts measured as gross protitiltotal cash costs: return to total costs measured as net profitltotal producbon costs (exct. family tabour). For roses, yield is per 1,000 sternis and management varies aocoording to marketrn arranigement (It00% auction sates vs. blended sales for consortium by auction and direct contract). Production Costs (ZWD/ha) Farmer Income (ZWD/ha) Labour Sensftivity indIcators Gross Casht Cash Annual Total Gross profit Net prntit (gr. Return to Return Hired Gr. profit per % chsange in % change in % change in Mgt. Yield Revenue required deductions invesstment production (gr. revenue - revenue - cash to total labour Wage bill1 day melid to gross vrield to net price to net Activity Irrigation Level (kgtha) (ZWDltha) beflore sale after sale cost costs cash costs) total cost) costs costs (days) (ZWD/tha) (ZWD/hta) profrt = 0 profit =0 profit 0 IRRIGATED CROPS Paprika overhead long 6,000 451.200 172,459 - 16.691 189.150 278.741 262.050 1.62 1.39 310 23,800 899.16 -66% -62% -58% Tobacco, flue-cored overhead high 3,500 346.500 145,886 28.431 16.691 191,008 172.183 155.492 0.99 0.81 497 37.268 346.44 -60% -54% -47% Coffee (USO 2,000mnt) drip line high 2,500 275,000 132.784 1.367 28,297 162,448 140,849 112,552 1~05 0.69 375 24,915 375.60 -55% -44% -41% Tobacco, fiu-cured overhead mfed 3,100 301.785 140,504 24.927 16,691 '182,122 136,354 119,663 0.82 0.66 482 36.428 282.89 -55% -48% -42% Paprika ovetfitad shott 3,000 215,600 124.126 - 16.691 140.817 101.474 84.783 0.82 0.60 270 20.720 375.83 -49 -.41% -"38% Export veg -marngetouLt driptfine high 4.000 121,000 68.641 - 10,275 78.916 52,359 42,084 0 76 0.53 295 20.020 177.49 -43% -35% -35% Tobacco, flue-aured ovetrhead low 2,800 261,800 135.718 21,979 16,691 174,388 104.103 87,412 0.66 0.50 462 35,308 225.33 -48% -41% -35% Coffee (USD 2,00Omnt) drip tine mttd 2,000 220.000 121,397 1.097 28.297 150,791 97,506 69,209 0.80 0.46 321 21,713 303.76 -48% -34% -31% Roses (tong stem) drip fine bierid 1.100 114.467.391 8,002.433 419,554 1,565.291 9,987,278 6,045.404 4.480,1113 0.72 0.45 9,360 786.240 545.88 -62% -46% -33% Export veg -baby carDts drip line high 3,800 106,500 68,500 - 10.275 76,775 38.000 27.725 0.57 0.36 275 18,900 138.18 -36% -27% -27% Whteat oyverhead high 7,500 812,500 50,439 553 10.346 61,336 31,508 21,162 0.62 0.35 21 1,764 1,500.38 -43% -29% -26% Roses (medium stem) drip line blend 1,750 14,228.261 8.796,850 412.620 1.565.291 10,774.761 5.018,791 3,453,500 0.54 0.32 9,360 786,240 536.20 -58% -40% -24% Wiheat overhead mfed 6.500 71.500 44.400 479 10.346 55,225 26.621 16,275 0.59 0.29 20 1,680 1,331.05 -41% -25% -23% Coffee (USD 15006sf) drip line high 2,500 206.250 132,784 1,367 28,297 162.448 72,099 43,802 0.54 0.27 375 24.915 192.26 -38% -23% -21% Cotton overhead high 3,500 82,040 54,713 1.231 10,346 66,290 26,096 15,750 0.47 0.24 278 16,547 93.87 -41% -25% -20% Roses (long stem) drip line auction 1,100 14,467,391 7,752.433 2.387.120 1.565,291 11,704,844 4.327,836 2,762.547 0.43 0.24 9,360 786,240 462.36 -56% -36% -24% Gmunidnuts overhead high 5,000 83.250 56,363 833 10,346 67,542 26,054 15.709 0.46 0.23 135 8.680 192.99 -38% -23% -19% Roses (short stern) drip tine blenid 2,750 13,152,174 8,733.740 381 .413 1,505,291 10.680.444 4,037,021 2,471,730 0.44 0.23 9,380 786,240 431.31 -32% -19% -20% Marigold overhead high 14.000 81.620 56,934 - 10,346 67,250 24,686 14,340 0.43 0.21 136 10,024 181.51 -34% -20% -18% Wheat overhead low 5,500 60,500 40,955 405 10.346 51,716 19.130 8,754 0.46 0.17 19 1,596 1,006.54 -35% -16% -15% Coffee (USD 1,360mt) drip tine high 2.500 187,000 132,754 1,367 28.297 182,448 52.849 24,552 0.39 0.15 375 24,915 140.93 -31% -15% -13% Cotton overhead mied 3.000 70.320 50.176 1.055 10,346 61,577 19,0819 8,743 0.37 0.14 245 14.980 77.91 -34% -14% -11% Roses (medium stem) drip fine auction 1,750 14,228,261 8.546,850 Z347,663 1,565.291 12,459.804 3,333,748 1.768,457 0.31 0.14 9,360 786,240 356.17 -50% -26% .15% Coffee (USD 1i5O0mI) drip tine med 2.000 165,000 121,397 1,097 28.297 150,791 42.506 14,209 0.35 0.09 321 21.713 132.42 -28% -9% -9% Roses (short stem) drip line suction 2,750 13,152.174 8,483.740 2.170,109 1,505,291 112.2`19,140 2.498,325 933.034 0.23 0.08 9,360 786,240 266.92 -43% -16% -10% CD ~~~Gmundnuts overhead mied 4.000 66,600 52.226 686 10.346 63.236 13,708 3,382 0.26 0.05 110 7,112 124.6 -25% -6% -5% Export veg -baby corn drip line high 950 49,636 37,674 - 10,275 47,949 11,964 1.689 0.32 0.04 190 13.440 62.97 -24% -3% -3% Cotton overhead low 2,500 58,600 47,170 879 10.346 58,395 10,551 205 0.22 0.00 212 1 3,113 49.77 -23% 0% 0% Coffee (USD 1,360mt) dtip line med 2.000 149.500 121.397 1.097 28,297 150.791 27,106 (1.191) 0.22 (0.01) 321 21.713 54.44 -20% 1 % I1% Soybeans overhead high 3,400 42.500 32,282 285 10.346 42.913 9.933 (413) 0.31 (0.01) 24 2.016 413.88 -26% 1% 1% Maize overtsead high 8.000 48,0810 40,349 276 10.346 50,971 5.455 (4,891) 0.13 (0. 10) 50 4.200 109.10 -14% 13% 11% Soybeans overhead med 2.900 36.250 35,900 243 10,346 41.489 5.107 (5,239) 0.16 (0.13) 23 1,932 222.04 -16% 16% 15% Gmunodnuts overhead lowe 3,000 49.950 47,952 SOO 10,346 58,798 1.498 (8.548) 0.03 (0.15) 90 5,964 16.54 -4% 21% 18% Maize overhead mied 7,000 40.320 37,577 242 10,346 48,165 2,501 (7.545) 0.07 (0.16) 45 3,780 55.58 -8% 24% 20% Maize overhead fore 6,000 34,560 33,936 207 10.346 44,480 417 (9.929) 0.01 (0.22) 30 2.520 13.50 -11% 35% 29% Soybeants overhead tow 2,400 35,000 28,8186 201 10.346 39.433 913 (9.433) 0.03 (0.24) 22 1.848 41.50 -3% 35% 32% DRYLAND CROPS Tobacco, flue-cured no high 2.800 275.660 126.311 22,668 12.186 161,165 126.681 114,495 0.85 0.71 437 33.208 289.89 -55% -50% -44% Tobacco. fiue-cured ona med 2.500 242.000 120.002 20.034 12,16a6 152.222 101.954 89.778 0.73 0.59 415 31.976 245 70 -51% -45% -39% Tobacco, flue-cured no tow 2,200 204,490 113,454 17.209 12.186 142.849 73,837 6`1.5411 0.57 0.43 362 30.128 193.26 -44% -37% -32% Groundlnuts ron high 2,800 46,620 34.245 466 5.841 40,552 1 1,909 6.068 0.34 0.15 83 5.499 143.48 -31% -16% -13% Cotton non high 2,300 51.129 36,137 767 5,541 44.745 12,225 6.384 0.31 0.14 198 12,367 61.74 -31% -16% -13% Soybeans non high 2.600 32.500 24.816 218 5.541 30.875 7.466 1.625 0.35 0.05 14 1.176 533.29 -25% -6% -5% Cotton non sed 1,900 42.237 33,696 634 5,541 40.171 7.907 2,066 0.23 0.09 172 10.873 45.97 -25% -6% -5% Gmundnuts non rted 2.300 36.295 3`1,136 363 5.541 37.362 6.774 933 0.21 0.0 68 4.463 99.62 -21% -3% -2% MaLze no high 5.500 31.680 27.522 150 5.841 33.553 3.968 (1.873) 0.14 (0.06) 27 2.268 146.96 -16% 8% 6% Cotton non low 1.500 33.345 30.040 500 5.541 36.381 2,805 (3.036) 0.09 (0.66) 145 9.380 19.34 -11% 12% 9% Gmoundlnuts no fowe 1.800 29,970 27.152 350 5.5,41 33.293 2.518 (3.323) 0.09 (0. 10) 57 3.5147 44,18 -19% 13% 11% Soybneans non med 2.100 26.250 23 434 176 5.541 29.451 2.840 (3.201) 0.11 (0 11) 13 1,092 203.08 -1`1% 13% 12% Maize no med 4,500 25.920 23.564 156 5.841 29.561 2.200 (3,541) 0.09 (0 12) 23 1,932 95.65 -11% 18% 14% Maize no low 3,500 20.160 20,875 121 5,841 26.937 (836) (6.677) (0.04) (0.25) 19 1,596 (44.00) 5% 43% 34% Soybeans non toyw 1,600 20.000 21.420 134 5,841 27.395 (1.554) (7,395) (0.07) (0.27) 12 1.008 (129.50) 9% 41% 37% LSC Farmers: Irrigated and dryland enterprises sorted by return to total costs. LARGE SCALE COMMERCIAL SECTOR: Enterprises sorted by management level and total production cost. Return to cash costs measured as gross profit/total cash costs: return to total costs measured as set profit/total production costs (end,. family labour). For roses, yield is per 1,000 stems and management satins according to marketing arrangement (10DO% auction sales no. blooded sales for consuorhum by auctin and direct costract). Production Costs (ZWDIha) . ,Farmer tncome (ZWDtha) Labour Sensitivity Indicators Gross Case Cash Annual Total Cmoss profit Net profit (gir. Return to Return Hired Gr. profit per % change in % cbange in % change is Mgt. Yield Revenue required deduchons invsetment producthon (gr. renenue - revenue - cash to total labour Wage bill day yield to gross yield to set pnce to net Activity Irrigation Level (kgha (ZWDtia before sate after sale cost costs casb costs) total cost) costs costs (days) )ZWDIha) (ZWDfhia) profd = 0 profit = 0 profit = 0 LOW MANAGEMENT Tobacco, tlue-cured overhead low 2,800 281,800 135,7`18 21,979 16e6gi 174,388 104,103 87,412 0.68 0.50 462 35,308 225 33 -48% -41% -35% Tobacco, tlue-cared no low 2,200 204,490 113,404 17,209 12,186 1142,8149 73.827 61.r041 0.57 0.43 382 30,128 193.28 -44% -37% -32% Croundnuts overhead low 3,000 49.950 d7,952 500 10.346 58.798 1,498 (8,048) 0.03 (0.15) a0 5,964 16.64 -4% 21% 18% Conesn onerhead low 2,500 58,800 47.170 87a 10,346 58.395 10Obbi 205 0.22 0.00 212 13,113 49.77 -23% 0% 0% Wheat onerhead low 5,500 60,500 40,985 405 10,348 51.718 19,130 8,784 0.48 0 17 19 1,500 1,008.814 -35% -16% -15% Maize overhead low 8,000 34,560 33,936 207 10.346 44.489 417 (9,929) 0.0 (0.22) 30 2,020 11190 -1% 35% 29% Soybeano overbead low 2,400 30.000 28,886 201 10,346 39,433 913 (g.d33) 0.03 (0.4 22 1,848 41.50 -3% 35% 32% Conesn so low 1,500 33,345 30,04 500 5,841 36,381 2,805 (3,038) 0.50 (0.08) 145 9.380 19.34 -11% 12% 9% Croundnuts no low 1,800 29.970 27,152 300 5,841 33,293 2,518 (3 323) 0.09 (0 10) 57 3,847 44.18 -10% 13% 11% Soybeans so low 1,600 20.000 21,420 134 5,841 27.395 (1,554) (7,395) (0.7 (0.27) 12 1,008 (129.50) 9% 41% 37% Maize so low 3,500 20.160 20.875 121 5,641 26,837 (838) (6,677) (0 04) (0.25) 19 1,596 (44 00) 5% 43% 34% MEDIUM MANAGEMENT Tobacco, flue-cured on~erhead med 3,100 301.785 140,504 24.927 18,891 182,122 136,354 119,663 0.82 0 66 482 36,428 282.89 -55% -48% -42% Tobacco,flue-cured so mied 2.500 242,000 120,002 20.034 12,186 152,222 101,964 89,778 0.73 0.59 415 31,978 245 70 -51% '45% -39% Coffee (USD 2,00Omt( drip line mred 2,000 220.000 121,397 1.097 28,297 150,791 97,508 69,2509 0.80 0.46 321 21,713 303.78 48% -34% -31% Coffee (USD 150044t) drip line mned 2.000 165,000 121,397 1,097 28,297 150,791 42,506 14,209 0.35 0.09 321 21,713 132.42 -28% -9% -9% Coffee (USC 1.36044t) drip line med 2,000 149,600 121,397 1,097 28.297 150,791 27,108 (1,191) 0 22 (0.01) 321 21.713 84 44 -20% 1% 1% Papnka onerhead short 3,000 225.600 124,128 - 16,691 140.817 101,474 84,783 0.82 0860 270 20,720 375.83 -49% '41% -38% Croundnuts onerhead mied 4,000 66,600 52,226 660 10,348 63,238 13,708 3.362 0.26 0 05 110 7.112 124.62 -25% -6% -5% Cettos onerhead med 3,000 70,320 50,176 1,055 10,346 61,577 19.089 8,743 0.37 0.14 245 114,9510 77.91 -34% -14% -11% Wheat onerhead mied 8,500 71,500 44,400 479 10,346 55.225 26,621 16,275 059 0.29 20 1,680 1,331.05 -41% -25% -23% Maize onerhead med 7,000 40,320 37,577 242 10,346 48,165 2,501 (7.845) 0.07 (0.6 45 3,780 55.50 -8% 24% 20% Soybeans overhread med 2,900 38.250 30.900 243 10,346 41.489 5,107 (5,239) 0.16 (0.13) 23 1.932 222.04 -16% 16% 15% Conlon no med 1,908 42,237 33.696 634 5,841 40,171 7,807 2 066 0.23 0.05 172 10,873 45.97 -25% -6% -5% CGaundnuts no med 2,300 38.295 31,138 383 5,841 37,382 6,774 933 0.21 0.02 68 4.463 99.62 -21% -3% -2% (5 ~~~~~~Maize so med 4,500 25,920 23.564 156 5,841 29,081 2,200 (3,841) 0.09 (0.2 23 1,932 95.65 -11% 18% 14% Soybeans no med 2,100 26.250 23,434 176 5,841 29,451 2.640 (3.201) 0.11 (0.11) 13 1,092 203.08 -11% 13% 12% C ~~HIGH MANAGEMENT Tobacco, flee-cored onerhead high 3.500 3.46.500 145,888 28,431 16,691 191.008 172,183 155,492 0 99 0 81 497 37.268 346 44 -60%/ -54% -47% Paprika onerhead long 6,000 451,200 172,459 - 16,691 189,150 278,741 262,050 1 82 1.39 310 23,800 899.16 -66% -62% -50% Coffee (USD 2,000mt( dnp line high 2.500 275,000 132,784 1,387 28.297 182,448 140,8419 112.552 1 05 0.69 375 24.915 375 60 -55% -44% -41% Coffee (USC 1.500Omt) drip line high 2,500 206,250 132,784 1,387 28.297 162,448 72,099 43.802 0.04 0.27 375 24,915 192.26 -38% -23% -21% Coffee (USD 1,360mt) dnp line bigh 2,500 187,000 132,784 1.387 28,297 162,448 52,849 24,552 0.39 0.15 375 24,915 140.93 -31% -15% -13% Tobacco, flue-cored so high 2,800 275.660 126,311 22,668 12,188 161.165 126,681 114.495 0.85 0 71 437 33.208 289.89 -55% -50% -44% Exportnveg -manigetout drephrie high 4,000 121,000 68.841 - 10,275 78,916 52,359 42,08 0.76 0.53 295 20,020 177.49 -43% -35% -35% Euport cog - baby carrots dnp line high 3,800 104,500 66,500 - 10,275 76,775 38000 27,725 0.57 0.38 275 18,900 138.18 -36% -27% -27% Croundnats onerhead hligh 5.000 83.250 56.363 833 10,346 67,842 28,084 15,708 0 46 0.23 135 8,880 192.99 -38% -23% -19% Marigold overhead high 14,000 81,620 56.934 - 10,346 67,280 24,686 14,340 0,43 0.21 136 10,024 181.51 -34% -20% -18% Cotton enerhead high 3,500 82.040 54,713 1,231 10.346 66,290 26,096 15 750 0 47 0.24 278 16,847 93.87 Al1% -25% -20% Wheat onerhead high 7,500 82.500 50,439 553 10.346 61,338 31,508 21,162 0.62 0 35 21 1,764 1,500.38 -43% -29% -26% Maize onerhead high 8.000 46,080 40,349 278 10,346 50,971 5,455 (4,891) 0.13 (0.1I0) 50 4.200 109.10 -14% 13% 11% hxopet veg - baby corn drip line high 950 49,638 37,674 - 10,275 47,949 11,904 11,6169 0.32 0 04 190 13.440 82.97 -24% -3% -3% Cottes no high 2.300 51,129 38,137 767 5.841 44.745 12,225 6,384 0.31 0.14 198 12,367 81,74 -31% -16% -13% Soybeans overhead high 3,400 42.500 32,282 285 10,346 42,913 9,933 (413) 0,31 (0.01) 24 2,016 413.88 -26% 1% 1% Cmundnufs so high 2,800 48,620 34.245 466 5,041 40,552 11,909 6,069 0 34 0.15 83 5,499 143-48 -31% -16% -13% Maize so high 5,500 31,660 27.522 190 5,041 33.553 3,968 (1,873) 0.14 (0.00) 27 2,266 146.96 -16% 8% 6% Soybeans no high 2,600 32.500 24,816 218 5,841 30.875 7,466 1,625 0.30 0.05 14 1,176 533.29 -25% -6% -5% EXPORT ROSES Roses (medium stern) drip line auction 1,750 14,228,261 8,546,850 2,347,663 1,565,291 12,459,804 3,333,748 1.768.457 0.31 0 14 9.360 786,240 308 17 -50% -26% -15% Roses (shedt stem) drip lice auction 2.750 13,152,174 8,483,740 2,170,109 1,505,291 12.219.140 2,498.325 933.034 0.23 0 08 9.380 788,240 266.92 -43% -16% -10% Roses)(longestem) dnp line auction 1,100 14,467,391 7.752,433 2,387.120 1,085,291 11,704,844 4,327,838 2.762,547 0.43 0.24 9.380 786,240 462.38 -56% -36% -24% Roses (medium stem) drip line blend 1.750 14,228,281 8,796,850 412,620 1,505,291 10,774,761 5,018,791 3.453,500 0.54 0.32 9.360 786,240 536.20 -08% -40% -24% Roses (short stem) dnp tine blend 2,750 13.152,174 8,733,740 381,413 1,0865,291 10,680,444 4.037,021 2,471,730 0,44 0.23 9,380 786,240 431.31 -32% -19% -20% Roses (long stern) drip line bleed 1,100 14,467,391 8,002,433 419,554 1,505,291 9,987.278 6,045,404 4.480,113 0.72 0.45 9.360 786,240 845.66 -62% 46% -33% LSC Farmers: Enterprises sorted by management level and total production costs. LARGE SCALE COMMERCIAL SECTOR: Enterprises sorted by management level and net profit. Return to cash casts mreasured as gross profititotal cash costs; return to totat coDsts measured as net pmoflUtottal production coDsts (exti. famity labour). For roses, yietd is per 1.000 stemis and managemnent varies according to marketing arrangement (100% auction sates vs. blended sales for conisortium by auction and direct contract). Production Costs (ZWD/Iha) Farmer Income (ZWD3tha) Labour Sensitivity Indicators Gross Cash Cash Anrnuat Totat Gmoss profit Net pmoft (gr. Return to Return Hired Gr. profit pe % change in % chanige in % change in Mgt. Y-ield Revenue require dedi,tions oiveontcnt production (gr. revenue - revenue - canh to total labour Wage tAtt day yield to gross yield to net prico to net Activity Ilrrgailon Level (kgtha) (ZWDtha( before sate after sate cost costs cash costs) total cost) costs costs (days) (ZWDttha) (ZWDttha) profit = 0 profit = 0 proftir 0 LOW MANAGEMENT Tobacco, flue-cored overhead tow 2,800 261,800 135,718 21,979 16,691 174,3818 '104,103 87,412 0.66 0.50 462 35,308 225.33 -48% -41% -35% Tobacco, flue-cared nio tow 2,200 204,490 113,404 17,209 12,18B6 142,849 73,827 61.641 0.57 0.43 382 30,126 193.26 -44% -37% -32% Wheat overhead low 5.500 60.500 40.965 405 10,346 51,716 19,130 8,784 0.46 0.17 lit 1.596 1,006.84 -35% -16% -15% Cotton overhead tow 2,500 58,600 47.170 879 10,346 58.395 10,551 205 0.22 0.00 212 13,t13 49.77 -23% 0% 0% cotton nD tow 1.500 33,345 30.040 500 5,8541 30.361 2.805 (3,036) 0.09 (0.06) 145 9.380 19.34 -11% 12% 9% Gmundnuts no tow 1.800 29,970 27,152 300 5,841 33.293 2.618 (3.323) 0.09 (0.10) 57 3.847 44.18 -10% 13% 11% Maize so tow 3,500 20.160 20,875 121 5.841 26,837 (836) (6.677) (0.04) (0.25) 19 1.596 (44.00) 5% 43% 34% Soybeans so tow 1.600 20,000 21,420 134 5,841 27,395 (1.554) (7,395) (0.07) (0.27) 12 1,008 (129.50) 9% 41% 37% Groundnuts overhead tow 3.000 49,950 47,952 500 10,346 58,798 1,498 (8,848) 0.03 (0.15) 90 5,964 16.64 -4% 21% 18% Soybeans overhead low 2,400 30,000 28,886 201 10.346 39,433 913 (9.433) 0.03 (0.24) 22 1,848 41.50 -3% 35% 32% Maize overhead low 6,000 34,560 33,936 207 10,346 44,489 417 (9.929) 0.01 (0.22) 30 2,530 13.90 -1% 35% 29% MEDIUM MANAGEMENT Tobacco, flue-cured overhead med 3,100 301,785 140,504 24.927 16,691 182,122 136,354 119.663 0.82 0.66 482 36,428 2812.89 -55% -4.8% -42% Tobacco. flue-cured no med 2.500 242.000 120,002 20,034 12,186 152,222 101,964 89,778 0.73 0.59 415 31,976 245.70 .41% -45% -39% Paprika overhead short 3,000 225.600 124,126 - 16.691 140,817 101,474 84,783 0.82 0.60 270 20,720 375.83 -49% -41% -36% Coffee (USD 2,OOOmt( drip tine mned 2,000 220,000 121.397 1,097 28,297 150,791 97.506 69.209 0.86 0.46 321 21,713 303.76 -48% -34% -31% Wheat overhead med 6,500 71,500 44.400 479 10,346 55.225 26,621 16,275 0.59 0.29 20 1.680 1,331.05 -41% -25% -23% Coffee (USC 1i500rrft) drip tine med 2.0D0 165,000 121,397 1,097 28,297 150,791 42,506 14,209 0.35 0.09 321 21,713 132.42 -28% -9% -9% Cotton overhead med 3.000 70,320 50,176 1,055 10,346 61,577 19,089 8,743 0.37 0.14 245 14,960 77.91 -34% -14% -11% Groundnuts overhead nmed 4,000 86,600 52.226 866 10,346 63,236 13,708 3.362 0.26 0.05 110 7,112 124.62 -25% -6% -5% Cotton nio ned 1,900 42,237 33,696 634 5.641 40,171 7,907 2,066 0.23 0.05 172 10.873 45.97 -25% -6% -5% Groundnuts nio med 2,300 38,295 31,136 363 5,841 37.362 6,774 933 0.21 0.02 68 4,463 99.62 -21% -3% -2% Coffee (USD 1,360mt) drip tine mrrd 2.000 149,600 121,397 1,097 28,297 150,791 27,106 (1.191) 0.22 (0.01) 321 21,713 84.44 -20% 1% 1% Soybeanis no mfed 2,100 26,250 23,434 176 5,841 29,451 2,640 (3,201) 0.11 (0.11) 13 1.092 203.08 -11% 13% 12% Maize no med 4,500 25.920 23,564 156 5,841 29,561 2.200 (3,641) 0.09 (0.12) 23 1,932 95.65 -11% 18% 14% CD Soybeans overhead med 2,900 36,250 30,900 243 10,346 41,489 5,107 (5,239) 0.16 (0.13) 23 1,932 222.04 -16% 16% 15% MaIze overheadENTd 7,000 40,320 37,577 242 10,346 48,165 2,501 (7,845) 0.07 (0.16) 45 3.780 55.58 -8% 24% 20% Paprika overhead tonig 6,000 451,200 172,459 - 16.691 189,150 278,741 262,050 1.62 1.39 310 23,800 896.16 -66% -62% -08% Tobacco, flue-cued overhead high 3,500 346.500 145,886 28,431 16,691 191.008 172,183 155,492 0.99 0.8 497 37,286B 346.44 -60% -54% A47% Tobacco, flue-cored so high 2,800 275,860 126,311 22,868 12,186 161,165 126,681 114,495 0.85 0.71 437 33,209 289.89 -55% -50% -44% Coitee (USC 2,000rmlt drip tine trigh 2,500 275,000 132,784 1,367 28,297 162,448 140,849 112,552 1.05 0.69 375 24,915 375.60 -55% -44% -41% Coffee (USO 1,500n5t) drip tine high 2,500 208.250 132,784 1,367 28,297 162.448 72,099 43,602 0.54 0.27 375 24,915 192.20 -38% -23% -21% Export nag - miange lori drip fise high 4,000 121,000 68,641 - 10,275 78,916 52,359 42,084 0.76 0.53 205 20,020 177.49 43% -35% -35% Export nag - baby carrots drip tine high 3,800 104.500 66,500 - 10,275 76,T75 368,000 27,725 0.57 0.36 275 18,900 136.18 -36% -27% -27% Coffee (USC 1,3600nt) drip tine high 2,500 187,000 132,764 1,367 28.297 162,448 52,849 24,552 0.39 0.15 375 24.915 140.93 -31% -15% -13% Wheat overhead high 7,500 82,500 50,439 553 10,346 61,336 31,509 21.162 0.62 0.35 21 1.764 1,500.36 -43% -29% -26% Cotton overhead high 3,500 82,040 54,713 1,231 10,346 86,290 26,096 15,750 0.47 0.24 278 16,847 93 87 -41% -25% -20% Groundnuts overhead high 9.000 83,286 96,363 833 10.346 67,842 26,084 15,708 0.46 0.23 135 8.680 192.99 -38% -23% -19% Marigold overhead high 14,000 81,620 56,934 - 10,346 67,286 24,686 14,340 0.43 0.21 136 10,024 181.51 -34% -20% -18% Cotton non high 2,300 51,129 38,137 767 5,841 44,745 12.225 6,384 6.31 0 14 198 12,367 61.74 -31% -16% -13% Groundnuts no high 2,800 46,620 34,245 466 5.841 40.552 1 1,900 6,008 0.34 0.15 83 5,499 143.48 -31% -16% -13% Exsponi rag - baby corn drip Ine high 950 49,638 37.674 - 10,275 47.949 11,964 1,689 0.32 0.04 190 13,440 82.97 -24% -3% -3% Soybeans no high 2,600 32,500 24,816 218 5,841 30,875 7,466 1,625 0.30 0.05 14 1,176 533.29 -25% -6% -5% Soybeans overhead high 3,400 42,500 32,282 285 10,346 42,913 9.933 (413) 0.31 (0.01) 24 2,016 413.88 -26% 1% 1% Maize no high 5.500 31,660 27.522 190 5,841 33,553 3,9686 (1.873) 0.14 (0.00) 27 2,286 146.96 -18% 8% 6% Maize overhead high 8,000 46,090 40.349 276 10.346 50,971 5,455 (4,891) 0 13 (0.10) 50 4,200 100.10 -14% 13% 11% EXPORT ROSES Roses (tonig stem) drip lin blood 1,100 14,467,391 8,002,433 419,554 1,565,291 9,987,278 6,045.404 4,486,113 0.72 0.45 9,360 786,240 645.86 -62% -46% -33% Roses (mnetiium stem) drip tine btend 1,750 14,228,261 8,796.850 412,620 1.565.291 10,774,761 5.018.791 3,453.500 0.54 0.32 9,360 786,240 536.20 -58% -40% -24% Roses (tong stem) drip tine auction 1.100 14,467,391 7,752,433 2,387,120 1,965,291 11,704,8144 4,327,836 2.782,547 0.43 0.24 9,360 786,240 462.36 -56% -36% -24% Roses (short stem) drip line bleed 2,750 13,152,174 8,733.740 361.413 1,565.291 10,680,444 4,037,021 2,471,730 0.44 0.23 9,360 786,240 431 31 -32% -19% -20% Roses (metium stem) drip bite auction 1,750 14,228,261 8.546l,850 2,347,863 1,5655,291 12,459,804 3,333.748 1,766,457 0 31 0.14 9,360 786,240 386.17 -50% -26% -15% Roses (short stem) drip tin auctios 2,750 13,152,174 8,483.740 2,170.109 1,565,291 12,219,140 2,498,325 933.034 0.23 0.08 9,360 786,240 286.92 -43% -16% -10% LSC Farmers: Enterprises sorted by management level and net profit. LARGE SCALE COMMERCIAL SECTOR: Enterprises sorted by management level and return to total costs (net profit/total production costs). Return to cash costs measured as gross profit/total cash costs; return to total costs measured as net profit/total product/on costs (exdl. famity labour). For roses, yietd is per 1,000 stems and mTanagement caries according to matrketing arrangement (1 00% auction sates vs. blended sates tor consortium by auction end direct contract). Prodauction Costs )ZWD/ha) Farmer Income (ZWfllha) Labour Senstlvtoty Indicators Gross Cash Canh Ancual Totat Gross profit Net profit (gr. Return to Return Hired Gr. profit per % change in % change in % chanige in Mrt. Yield Revense required deductions investment production )gr. renenue - revenue - cash to totat labour Wage bill day yield to gross pietd to net price to net Activity trrigatlon Level (kg/ha) (ZWDlIha) before sale after sale cost caste cash costs) total cost) costs costs (days) (ZWD/ha( )ZWDihra( profit = 0 profit = 0 profit = 0 LOW MANAGEMENT Tobacco, flue-cured oeerhead tom 2,800 261,800 135,718 21,979 16,691 174.388 104,103 87 4t2 0,66 0.50 462 35,308 225.33 -48% -41% -35% Tobacco, flee-cored non emw 2,200 204,480 113.454 17.209 12,186 142,849 73,827 61.641 0.57 0.d3 382 30,128 193.26 -44% -37% -32% Wheat overhead tow 5.500 60.500 40,965 405 10,346 51,716 19,130 8,784 0 46 0 17 19 1,508 1,006 84 -35% -16% -15% Cotton oserhead low 2.500 58,600 47,170 879 10,346 58.395 10,551 205 0 22 000u 212 13,113 49.77 -23% 0% 0% Cofos no lore 1,500 33.345 30.040 So0 5,841 36,381 2,805 (3,038) 0 09 (0.08) '1db 9,380 19 34 -11% 12% 9% Gmundnuts no em 1,800 29,970 27.152 300 5,841 33.293 2,5`1h (3.323) 0.09 (0.10) 57 3,847 44.1ff -10% 13% 11% Groundnuts overhead lore 3.000 49.950 47,952 500 10,346 58,798 1.498 (8.848) 0.03 (0.15) go 5,984 16.84 -4% 21% 18% Maize onerhead low 6,000 34,560 33,936 207 10,346 44,489 417 (9.929) 0.01 (0.22) 30 2,520 13.90 -11% 35% 29% Soybeans oserhreadl tom 2.400 30.000 28,898 201 10,346 39,433 913 (9,433) 0.03 (0.24) 22 1,848 41.50 -3% 35% 32% Maize non tom 3,500 20,160 20.875 121 5.841 26,837 (836( (6,677) (0.04) (0.25) 19 1.596 (44 00) 5% 43% 34% Soybeans no low 1,600 20,000 21.420 134 5,84t 27,395 (1.554) (7,395) (0 07) (0.27) 12 1I.008 (129.50) 9% 41% 37% MEDIUM MANAGEMENT Tobacco, flee-cored onerhead med 3,100 301,785 140,504 24,927 16,691 182,122 136,384 119,663 082 0.66 482 36,428 282.89 -55% -48% -42% Paprika overhread short 3,000 225,600 124.126 - 16,691 140.817 101,474 84,783 0 82 0.60 270 20,720 375.83 -49% -41% -38% Tobacco, flee-cored eno rrred 2.500 242,000 120,002 20.034 12.186 152,222 101.964 89,778 0.73 0 59 415 31,976 245.70 -51% -45% -39% Coffee (USD) 2,O000mt) dnp tine mred 2,000 220,000 121,397 1,097 28,297 150,791 97.500 69.2098 0.80 0.48 321 21.713 303.76 -48% -34% -31% Wheat onerhead med 6,500 71,500 44,400 479 10,346 55,225 26,621 16 275 0 59 0 29 20 1,680 1,331 05 -41% -25% -23% Cotton overhead mied 3.000 70.320 50,176 1,055 10,346 61,577 19,089 8,743 0.37 0.14 245 14,9980 77.91 -34% -14% -11% Ce/fee (USDI isO00rot) drip lice med 2,000 165,000 121,397 1,097 28.297 150,791 42,500 14,208 0.30 0.09 321 21,713 132.42 -2c% -9% -9% Groundnuts onerhead med 4,000 66.600 52,226 666 10,346 63,238 13.708 3,362 0.28 0.09 110 7,112 124.62 -25% -8% -5% Cotons no med 1,900 42,237 33,698 034 9,841 40,171 7.907 2.066 0.23 0.05 172 10,873 45.97 -25% -6% -5% Gmunednuts no mred 2.300 38.205 31,138 383 5,841 37.382 6,774 933 0.21 0.02 68 4,483 99.62 -21% -3% -2% Coffee (USD 1,36O0mt) drip tine med 2,000 149,600 121.397 1,097 28,297 150,791 27.106 (1,191) 0 22 (0 01) 321 21.713 84.44 -20% 1% 1% Ot ~~~Soybeans so med 2,100 26,250 23,434 178 5,841 29,451 2.640 (3,201) 0.11 (0.11) 13 1,092 203.08 -11% 13% 12% 20 ~~~Maize non med 4,500 25.920 23,584 156 5.841 29,581 2,200 (3.841) 0 09 (0.12) 23 1,932 95.65 -11% 18% 14% 0 ~~~~~~Soybeans oncertcad med 2,900 36,250 30.900 243 10,346 41,489 5,107 (5,239) 0.16 (0.13) 23 1,932 222.04 -18% 18% 15% Maize oserhead med 7.000 40,320 3757 22 1,4 815251 (,4) 00 01) 45 3,780 55.58 -8% 24% -20% Is- HIGH MANAGEMENT Papnka onerhead lonig 6,000 451.200 172A459 - 16,691 189,150 278,741 262,050 1,62 1 39 310 23,800 899.16 -66% -62% -58% Tobacco, flue-cored onerhead high 3,500 346.500 145,f896 28,431 16,691 191.008 172,183 155,492 0.99 0.81 497 37,298 346 44 -60% -54% -47% Tobacco, flee-cored no high 2,f800 275.660 128,311 22.988 12,1986 161.165 126,681 114,495 0 85 0.71 437 33,208 289.89 -55% -50% -44% Coffee (USDI 2,00O0mt) drip lice high 2.500 275,000 132,784 1,387 28,297 162,448 140,849 112,552 1.05 0 69 375 24,915 375.60 -55% -44% -41% Exporteveg - mange toot ddp tine high 4.000 121,000 68,841 - 10.275 78 .916 52,359 42.884 0.76 0.53 295 20,020 177.49 -43% -35% -35% Export seg - baby caounts drip line high 3,800 184,500 66,500 - 10,275 76,775 38,000 27,725 0.57 0.38 275 18,900 138,18 -36% -27% -27% Wheat onerhead high 7,500 82,500 50,439 553 10,346 61.338 31,508 21,162 0.62 0.35 21 1,784 1,500.38 -43% -29% -26% Coffee (USDI 1S5O0et) dnp tine high 2,500 206,250 132,784 1.367 29,297 182,448 72.099 43,802 0.84 0,27 375 24,915 192.26 -38% -23% -21% Cottos one-head sign 3.500 82.0-40 54,713 1,231 10,346 98,290 26.096 10,750 047 0.24 278 16,847 93.8l7 -41% -25% -20% Groundnuts once-chad high 5,000 83,250 56,363 833 10,348 67,542 26,054 15,708 0.46 0.23 135 ff680 192.99 -38% -23% -19% Marigold onertlead high 14.000 81.620 56.934 - 10,346 67.280 24,6986 14 340 0.43 0 21 136 10,024 181 51 -34% -20% -18% Coffee (USD 1.360Wr) drip lice high 2,500 187,000 132,784 1,387 28.297 162,448 52.849 24,552 0.39 0,15 375 24,915 140.93 -31% -15% -13% Groundnuts eno high 2.800 40,620 34.245 486 5,841 40.552 11,909 6,068 0.34 0 15 83 5,499 143.48 -31% -16% -13% Cellos no high 2,300 51,129 38,137 767 5,841 44,745 12.225 6,384 0,31 0,14 198 12,387 61.74 -31% -18% -13% Soybeans eno high 2.6050 32,500 24,816 218 5,841 30,875 7,466 1,625 0.30 0.05 14 1,176 533.29 -25% -6% -5% Expotnveg - baby corn drip line high 950 49,638 37,674 - 10,275 47,949 11,984 1,689 0.32 0.04 190 13,440 62.97 -24% -3% -3% Soybeans onerhead high 3,400 42,500 32,282 285 10,348 42,913 9,933 (413) 0.31 (0.01) 24 2,016 413988 -28% 1% 1% Maize eno high 0,500 31,880 27,522 190 5,841 33,503 3,968 (1,873) 0.14 (0.00) 27 2,298 146.96 -16% 8% 6% Maize overhead high 8,000 48,080 40,349 276 10,346 50,971 5,455 (4,881) 0.13 (0.10) 50 4,200 108.10 -14% 13% 11% EXPORT ROSES Roses (long stem) drip line bleed t,100 14,467,391 8,002.433 419.554 1,565.291 9,98l7,278 6,0.45,404 4,480.113 0.72 0,45 9.380 78l6,240 645.98 -62% -46% -33% Roses)(medium stem) driplinc blend 1,750 14,228,261 8,796,850 412.620 1,585,291 10.774,761 0,018,7911 3,453,500 0 54 0 32 9,380 788,240 538.20 -58% -40% -24% Rowse(long stem) drip line auchon 1,100 14,467,391 7,752,433 2.387,120 1,580,291 11,704,844 4,327,838 2,762,547 0.43 0.24 9,380 788,240 462.38 -56% -36% -24% Roses (shlorstcem) drip line bleed 2,750 13,152,174 8,733,740 381,413 1,585,291 10,680,444 4,037,021 2,471,730 0.44 0.23 9.360 786,240 431.31 -32% -19% -20% Roses (medium stem) dnp line auction 1,750 14,228,261 8,846,850 2,347,983 1,500,291 12A459,804 3.333,748 1,788,457 0 31 0.14 9.360 786,240 350.17 -60% -26% -15% Roses (shedt stem) drip line anusesn 2,750 13,152,174 8,483,740 2,170,109 1.505.291 12,219,140 2.498,325 933,034 0.23 0.08 9.360 786,240 298.92 -43% -16% -10% LSC Farmers: Enterprises sorted by management level and return to total costs. Costs and profitability of tobacco compared to other crops in Zimbabwe APPENDIX 1 MAP SECTION Page 73 7 I M., C...r. 278- 88 727 877 8.8 S710 997 1520 1781 288 107 Mii., . ,7 08 88 78 587 3.iz F70 77S 9 1129 780 ZIMBABWE "I _ _ ------------ N tC C J )242 [73 100 _5 |39 1S i77 Scala ! " 8E 1, Cbi....[fl) 258 a1a1 27s I ssi s5a 0 , 3 0_ ' 50 M 00k. 7j - b. -6 ' & - , ' Viclor, ,---_> _-' ~7,.- GIvr, KI oeulennl>=,s .-ssX s ... - ., J hangra s i 10 ,w, 0~ ~~~~~~~~770 t = __ Oeta >;~~~~~~~~~~~~~~~~~~~~~~~~~- < N ~~~~~~~~u t Darwi >^ Gv~~~~~~~~~~~~utou sh aahl Gokw.o hcgolu 0s o ob . OM t o Hwango ~~~~~~~~~~~~~~~~7.A7L8U~~~~~~~~~~~~ -~~~~~~~~ ~ NMBI TSA A N F 0~~~~~~~~~~~~~~~~~~~~~~~~~~~~-7 9 4 _ , > - 3 Banker/Ayrshire 0Aot.70p. c | 40 Gw-ndsz Chi78d<7 .,70* NTrs i . |500 4 HeadlanldslMacheke njto ,ws hlo ;rP Vly 5Mvurwj/Concessiof t. \,p Vale ,/ , l. 6 Bindura/Shamva M o . n,;,b MO' o 84.,,, RaoJI 7 Chegutu/Selous '_ -- \ J- \ ., i ,' BAl 8 Beatrice/Norton - <~>> ) rJ \ .;J 5.78484,5 aaGa,t ZS-babc g Marondeta/Wedia ? :'U$ M,*Ti 88s, ,R8* 10 Rusape/Nyazura/Odzi - , \ ,l' ) 11 Karoi North ~~'r'exoce, 12 Karoi South , w end ,a 13 Bromlay 14 TengdMe S,UIH iFpICAll 15 Centenary/Mt. Darwin NATUAk REGIONS 6 FARMING AR(AS 25 O X 1975 00 11&5 15a0 175 200 J( t (~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~J 'Xs~ ~ ~ ~ ~~~~~EAE FAMN REGION MTS................ MOAO tA . \,MI-IN?ENGIVf -ARING R.GION *S GWER REi TE fARIIN4e5y FREIGRGIONS . ............. , V EXlCNSIyc FARMING REGION MAT. SOUTHOV ZIMBABWE MEAN ANNUAL RAINFALL RAINFALL (.9 vvt \ 6WER u MOCAMBIQUE ZIMBABWE O SO tOO tSO 200 t1l GAI Uj UstEE a,,k, rEl Ungbd lE~~ISA?.i4 P53 H 4IJ*TSULA ZAMBIA h;Slmlyi u MOCAMBIQUE VIC ALA Iae ESElEu A \ am NTOA PARK " r r T A ITN < ) F"||^|^B"eNil ov r v CC .............. , ,.~~~~~~AN NO .NM $bWmo~ '\ IdA\Ssd tA t CD~~~~~~~IUn hrlu Kw 6ae Ien MA M_UT Costs and profitability of tobacco compared to other crops in Zimbabwe APPENDflIX 2 ]BASIC AGRICULTUR[AL DATA Page 78 Land Use by Region Land Classification by Sector - 1989 Data ('000 hectares). I 11 Hi1 IV V Total LSC 200 3 690 2 410 2 430 2 490 11 220 SSC 10 240 530 500 100 1 380 Communal 140 1 270 2 820 7340 4780 16 350 Resettlement 30 590 1 240 810 620 3 290 Parks&Forcsts 310 60 130 3649 2 190 6339 Other 10 10 160 60 260 500 Total 700 5 860 7 290 14 789 10 440 39 079 Source: Ministry of Agnculture (2000). Statistical Bulletin 200Q Harare. Area Plan,ted by Crop and Natural Region, LSC Farmers - 1999 Data (hectares). I 11 111 IV V Total Tobacco Flue-cured 56 75 611 2182 26 77 875 Burley 709 1 066 45 1 820 Oriental 25 273 5 2 305 Traditional Field Crops Maize rorgrain 1 185 99 466 17 586 3 251 135 121 623 Cotton 65 16 783 1 995 52 2 195 21090 Groundnuts 3 694 204 51 2 954 Soybeans 5 44 736 2 439 231 885 48 296 Wheat 28 40 568 3 210 151 3 483 47 440 Non-Traditional Crops Coffee - productive 4 255 1 112 60 34 41 5 502 Paprika 5 2 494 699 251 15 3 464 Horticulture Vegetables 4 2 649 816 350 248 4 067 Flower & veg. seeds 3 302 54 359 Other Crops Seed maize 8 349 309 47 45 8 750 Barley 2 1647 1494 20 3 163 Red sorghuin 2 3 934 1019 516 5 5 476 Sunflower 37 813 505 39 25 1 419 Pasture - fertilised 601 8 198 794 178 45 9816 Pasture - not fertilised 867 21 775 1 719 7 7 24 375 Source: CSO (1999). Crop Production on Large Scale Commercial Farm; Harare. Note: Vegetable crops not specified if for export. Area Planted by Crop and Natural Region, Communal Farmers - 1999 Data (hectares). I 11 111 IV v Total Tobacco Flue-cured 1 458 298 1 756 Burley 190 2 294 2 484 Oriental 12 20 32 Traditional Field Crops Whitemaize 23 051 207 074 335 341 519 740 127 170 1 212 376 Cotton 190 28 008 95 975 110 017 18 442 252 632 Groundnuts 105 15 033 28 121 49 735 14307 107301 Soybeans 915 1 974 117 3 006 Non-Tradilional Crops Paprika 1174 78 335 1 587 Other Crops Red Sorghum 309 3 649 11 034 22 116 37 108 White Sorghum 140 1 240 32 176 62026 95 582 Rapoko (millet) 15 2 725 5 238 18 949 2 207 29 134 Sunflower 2 522 2 660 8 055 1 485 14 722 Sweet potatoes 18 310 218 490 1 036 Edible dry beans 2 347 1 123 4437 1 749 9 656 Source: CSO (1999). Agriculture and Livestock Survey in Communal Land; Harare. Page 79 ZIMBABWE TOB3ACCO ASSOCIATION (MARK 8 HECTAESS BY A'VERAGE YIELD (KIG/A) BY DISTRICT % CLASS INTERVALS D I S T R I C T S ARIATION ----------------------------- ---------------------------------------------------------- TOTAL FROM % AVERAGE 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 PER OF MEAN TERMS YIELD C/I TOTAL + 100 + 95 TO + 105 5852 TO 6152 0 0.0 + 90 + 85 TO+ 95 5552 TO 5852 0 0.0 + 80 + 75 TO+ 85 5252 TO 5552 0 0.0 + 70 + 65 TO + 75 4952 TO 5252 0 0.0 + 60 + 55 TO + 65 4652 TO 4952 1 1 2 0.1 +50 + 45 TO+ 55 4352 TO 4652 3 1 1 4 1 1 11 0.7 +40 + 35 TO+ 45 4052 TO 4352 1 5 2 7 2 1 3 10 1 1 1 2 36 2.2 +30 + 25 TO+ 35 3752 TO 4052 7 9 12 10 12 11 5 5 23 3 3 6 5 5 116 6.9 + 20 + 15 TO + 25 3452 TO 3752 21 18 12 16 31 14 6 18 23 6 11 12 14 3 18 223 13.3 SD + 10 + 5 TO + 15 3152 TO 3452 30 31 23 18 42 18 20 19 24 8 17 25 14 9 21 319 19.1 CD + 0 - 5TO + 5 2852 TO 3152 22 40 23 26 25 7 12 9 21 19 16 14 14 17 18 283 16.9 00 - 10 - 15 TO - 5 2552 TO 2852 15 20 14 18 19 3 10 13 25 26 8 12 11 8 9 211 12.6 - 20 - 25 TO - 15 2252 TO 2552 9 10 17 6 14 18 11 11 19 3 6 9 6 5 144 8.6 -30 - 35 TO- 25 1952 TO 2252 4 7 7 5 4 6 18 10 11 13 4 6 3 3 3 104 6.2 -40 - 45 TO- 35 1652 TO 1952 3 5 1 5 3 2 4 7 6 11 3 3 6 1 3 63 3.8 - 50 - 55 TO - 45 1352 TO 1652 4 3 2 5 10 3 5 11 3 4 2 52 3.1 -60 - 65 TO- 55 1052 TO 1352 1 2 1 1 1 3 5 6 5 2 1 1 2 31 1.9 -70 - 75 TO- 65 752 TO 1052 1 2 2 2 3 5 5 6 1 2 29 1.7 -80 - 85 TO- 75 452 TO 752 2 3 3 2 1 3 3 2 1 2 1 23 .1.4 -90 - 95 TO- 85 152 TO 452 1 1 3 2 2 2 5 2 2 2 22 1.3 -100 -105 TO - 95 0 TO 152 1 1 1 3 0.2 OTALS 119 153 112 113 168 73 116 112 180 131 75 93 84 54 89 1672 100.0 ATIONAL MEAN (KG/HA) 3001.9 STANDARD DEVIATION 726.75 (24.2%) UMBER ABOVE AND EQUAL TO MEAN 858 (51.3%) NUMBER BELOW MEAN 814 (48.6%) 4 f S.; e_T45IASZ.6 6&-y3 t4 5 , 15f - - ZTAST015 ZIMBABWE TOBACCO ASSOCIATION STATISTICAL ANALYSIS OF GROWER PERFORMANCE 1999/00 -------------------------------------------------- DISTRIBUTION OF COMMERCIAL GROWERS > 8 HECTARES BY AVERAGE PRICE (USC/KG) BY DISTRICT,NI/U1~ ~ U^IP TH E W O R L D a A N K HUMAN DEVELOPMENT NETWORK THE WORLD BANK Aboutthis series... This series is produced by the Health, Nutrition, and Population Family (HNP) of the World Bank s Human Development Network. The papers in this series aim to provide a vehicle for publishing preliminary and unpolished results on HNP topics to encourage discussion and debate. The findings, interpretations, and conclusions expressed in this paper are entirely those of the author(s) and should not be attributed in any manner to the World Bank, to its affiliated organizations or to members of its Board of Executive Directors or the countries they represent. Citation and the use of material presented in this series should take into account this provisional character. For free copies of papers in this series please contact the individual authors whose name appears on the paper. Enquiries about the series and submissions should be made directly to the Editor in Chief Alexander S. Preker (apreker@worldbank.org) or HNP Advisory Service (healthpop@worldbank.org, tel 202 473-2256, fax 202 522-3234). For more information, see also www.worldbank.org/hnppublicabons. The Economics of Tobacco Control sub-series is produced jointly with the Tobacco Free Initiative of the World Health Organization. The findings, interpretations and conclusions expressed in this paper are entirely those of the authors and should not be attributed in any manner to the World Health Organization or to the World Bank, their affiliated organizations or members of their Executive Boards or the countries they represent. The editors for the Economics of Tobacco Control papers are: Joy de Beyer adebeyer@worldbank.org), Emmanuel Guindon (guindone@who.int) and Ayda Yurekli (ayurekli@worldbank.org). I s I 12619 A 1 26192T vdwh~W. 2M,877 um T~5* 22 'MI 2128 X 3 I 1 1 °out:1--~. 2~ol~~ ~ 9 781932 . 126198 o ____________________ rijO W6Q ft .6