Smallholder commercial agriculture in developing countries is hinged on cash crop production and in Zimbabwe tobacco is increasingly becoming an important smallholder cash crop. This study therefore, analyzed the viability of tobacco production by smallholder farmers in Zimbabwe. Cross sectional survey data was collected for the 2010 and 2011 production season from 60 smallholder households in the Mount Darwin District of Mashonaland Central Province in Zimbabwe. Data were analyzed using descriptive statistics, gross margin analysis, breakeven analysis and ordinary least square (OLS) criterion to determine the viability and determinants of income earnings from tobacco by farmers. The study revealed that, smallholder tobacco production was viable, with farmers achieving average yield of 2052 kg/ha, average price of US $2.45 per kilogram and earning, on average, about US $2352 per hectare as gross margin. Break-even analysis revealed a margin of safety of 50% with respect to both yield and prices, indicating that, small-scale tobacco production will remain lucrative even at much lower prices and yields. Regression analysis showed that, off farm employment was inversely related to revenue earnings from tobacco with coefficient (-0.058) and the relationship was significant at 5%. Price and yield were positively related to tobacco gross margins with coefficients 0.865 and 1.001 and the relationship was significant at 1%. It is therefore concluded that, tobacco production is viable and can improve incomes for smallholder farmers. To improve income earnings from tobacco, there is a need for farmers to focus on farm production for better yields and improve quality for better prices.
Key words: Break even, gross margins, income, off farm employment, yields, quality.
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