At Malawi's tobacco auction, there are universal smiles in the wings. Near-record prices are being paid for this summer's crop. At $1.80 a kg, it's more than double last year's prices.
The buyers aren't smiling, though. They blame a scarcity of supply and government intervention for the high prices. Even though they feel they are paying too much, they have to buy anyway. The demand from soon-to-be rich countries, such as China and India, is too great to abstain from purchasing.
They will be passing on this bad news to tobacco giants such as Altria (makers of Marlboro), BAT (Lucky Strike) and Gallahers (Benson & Hedges), who will have to pay more to turn these shabby-looking leaves into expensive cigars and branded cigarettes.
And they have a willing and waiting market in East Asia. One in every four smokers in the world lives in China alone - dwarfing most Western countries. And there's room for expansion for the big multinationals. Only 1.2 billion of the 700 billion cigarettes that were sold by BAT last year went to China. It is also a more receptive market. Unlike Europe and much of North America, there are no bans on tobacco advertising in China, let alone on smoking in public places - more or less the norm in the EU now.
Whether or not Big Tobacco succeeds in making major inroads into East Asia or South Asia matters a lot in Malawi.
For farmers such as Ponsiano Kaomba, his very livelihood depends on it. He worries that health fears surrounding tobacco may damage his earnings. "I read about health problems in Europe and wonder what it will mean for the people here (at the auction)," he says, "but so far it has not affected us too badly."
Most of the 27,000 Malawian tobacco farms (down from 45,000 five years ago) reap meagre rewards compared with their Western counterparts. But the government of President Bingu wa Mutharika is trying to play its part, by raising the minimum price at which tobacco can be sold at auctions.
"The president was very disappointed by the prices achieved last year," says Dr. Evans Chipale, who runs Auction Holdings, the body designed to sell Malawi's main source of foreign income. "He introduced higher prices for farmers and guaranteed that they would all be paid within 24 hours of the sale."
But the vagaries of the world market will have a far great impact than any government action. And it doesn't bode well for poor African tobacco farmers.
Even China is moving towards curbing cigarette advertising and discouraging its consumption. That will almost certainly trickle down to places such as the auction house in Lilongwe.
The farmers may have been smiling at record prices today, but for how long?
BBC
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