By Moses Michael-Phiri
BLANTYRE
Malawi has generated $357 million from tobacco sales this year – slightly more than last year – amid growers' complaints about poor prices.
"The market is closed. A total of 188 million kilograms of tobacco has been sold, bringing in about $357 million," Bruce Munthali, chief executive of the Tobacco Control Commission (TCC), Malawi's tobacco governing body, told Anadolu Agency.
Malawi's tobacco market usually runs from March to October, according to demand and supply.
Most of the tobacco in Malawi is sold through the auction system where buyers bid for tobacco grown by registered growers - individuals or farms - and the highest bidder gets the leaf.
"We had more tobacco this year than last year," said Munthali.
"In fact, we were a bit worried that all the leaf would not be sold by this month [September], but we managed to get all tobacco earmarked for auction to be sold," he told AA.
The TCC chief said the marketing season officially wrapped up on September 12.
In 2013, Malawi sold 165 million kilograms of tobacco, raking in about $355 million in earnings – an improvement on the $177 million it made in 2012.
The national economy is heavily dependent on tobacco, which accounts for nearly 60 percent of its foreign earnings.
The crop directly employs over 20,000 workers, while nearly 2 million additional people are involved – directly or indirectly – in the growing and production phases.
-Poor prices-
This year, the selling season was characterized by poor prices due to overproduction.
Most Malawian tobacco growers said they were not happy with prices during the marketing season.
Charles Kawaye, a grower from central Malawi's Kasungu district, said most of his crop had fetched less than $1 – and in some cases only $0.80 – per kilo.
Farm Produce Association President Gollen Banda agreed that prices were low this year.
"For contract tobacco farming, the pricing was very poor this year," he said.
Banda went on to voice dissatisfaction with how contract tobacco farming was being handled.
"Some tobacco buyers also returned the tobacco leaf to the growers, which forced some growers to sell the contract tobacco on the auction market," he explained.
Some buyers agree with the growers on the price of tobacco in advance and might help the farmers with equipment to produce the specified amount of tobacco. This type of tobacco is not sold on the auction floor.
But TCC, the tobacco governing body, said prices were higher this year when compared to the last marketing season.
Checks by AA showed that grades of tobacco that had sold for $1.10 last year were selling this year for $1.80.
Industry analysts say farmers should blame the floating local currency, as increases in the value of the Malawi kwacha meant take-home earnings were lower this year.
The Malawian kwacha currently trades at 380 to the dollar, compared to 462 in July of last year.
Chikavu Nyirenda, financial market analyst and CEO at Alliance Capital, said the kwacha tended to appreciate during tobacco season, thus affecting the earnings of growers who sell their crops in dollars.
Malawian tobacco, meanwhile, also faces stiff opposition from anti-smoking lobbyists.
Global anti-smoking campaigns have caused markets for tobacco to dwindle, leading to poor tobacco prices in countries like Malawi.
To mitigate the poor prices, Malawi has been seeking investors in cigarette manufacturing or new buyers for its tobacco products.
Munthali, the TCC chief, cited a visit last week by a 16-member Egyptian delegation currently visiting the country to explore investment opportunities in the local tobacco sector.
"This delegation held discussions with the private sector, as well as government officials and other sector stakeholders," he told AA.
"I am told they will also meet with officials from the Malawi Investment and Trade Center and city councils to look at issues of land," he added.
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