The Tobacco Control Commission (TCC) says Malawi has realised over $190 million from tobacco sales this year, an improvement over the previous last year’s earnings thanks to improved prices at the auction floors. Strong government support for the tobacco industry, including subsidies, has led to tobacco’s domination of Malawi’s export market. TCC general manager Godfrey Chapola said the close of this year’s tobacco selling season on August 24 total sales for all types of tobacco hit US$194,677,798 million from 109.8 million kilogrammes of the green gold. He said the tobacco was sold at an average price of US$1.77 per kilogramme. Last year’s 155 million kilogrammes of the crop were sold at an average price of US$1.03 per kilogramme. "Price has been the major contributing factor to the high revenue realised," said Chapola. He was, however, reluctant to indicate whether TCC anticipates continued impressive prices next year. "It will is hard for me to answer that because it will depend on the production levels. Tobacco prices are determined by the market forces of demand and supply. So the more you supply to the market, the more likely the price will suffer. We should expect continued good prices if we don’t produce above 140 million kilogrammes," he said. Chapola noted that there are very strong indications that more farmers will grow the green leaf this year, tempted by the improved prices. "Currently licence renewals are at above 20 percent, which is a clear indication that we should expect more tobacco next year. But the amount of the crop the country will have will also depend on the amount of rain the country will receive," he said. Secretary for Agriculture and Food Security Patrick Kabambe said recently government would put in place necessary measures to curb overproduction. He said the TCC will have the mandate to control tobacco growing through annual tobacco growers’ licences. But Chapola said it was impossible for TCC to check overproduction. "We used to do that in the past, but we can’t do it now. There are donor conditionalities which bar us from putting such restrictions. At the moment we are allocating production quotas on request," he said. Malawi, for the first time, experienced a quiet, fruitful and uninterrupted tobacco selling season, which analysts have attributed to increased competition among tobacco buyers. Unlike last year, Malawi this year had seven buying companies scrambling for the leaf with the coming in of Premium Tama and Africa Leaf, among others. Tobacco is Malawi’s largest industry and currently accounts for about 60 percent of the nation’s export earnings. It also makes up for more than 10 percent of the country’s Gross Domestic Product (GDP). Money market analysts are optimistic the impressive revenue from this year’s tobacco will boost Malawi’s foreign exchange reserves will help to add stability to the kwacha against its major trading currencies. Strong government support for the tobacco industry, including subsidies, has led to tobacco’s domination of Malawi’s export market. The tobacco industry was intended to increase economic growth and promote development in Malawi. Unfortunately, things have not gone according to plan, as the price of tobacco on international markets continue to fall amid a global anti-smoking lobby. Poor auction prices are said to have driven out more than 40,000 large-scale tobacco farmers from the industry since 2000, according to TCC. Window on Malawi
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