Auction Holdings Limited (AHL), Malawi sole tobacco auctioneer, is hoping that tobacco industry authorities will allocate equal number of days for selling the leaf in both contract and auction system in next year’s marketing season.
AHL Limbe floors manager Moses Yoramu told tobacco growers at Nsipe extension planning area (EPA) in Ntcheu this week that if this is done, the selling duration will be reduced.
In the just ended season, it took about five months to sell more than 160 million kilogrammes (kg) of tobacco, a development that has given farmers enough time to prepare the next season
“More tobacco has been sold in a relatively short period this year. However, had it been that auction sales were allowed to be conducted on a daily basis, the season could have been even shorter, thereby bringing money into the farmers pockets very quickly,” said Yoramu.
Under the Integrated Production System (IPS) approved last year, 80 percent of the tobacco was sold through contract with the remaining 20 percent sold under the auction system which was only allocated two days.
Bruce Munthali, chief executive officer of Tobacco Control Commission (TCC), the country’s tobacco regulatory authority, said in an earlier interview the implementation of IPS in last year’s selling season was a learning process.
He said the system will be reviewed in the forthcoming season to address a number of challenges encountered in the just-ended season.
AHL has four main auction floors; Limbe, Lilongwe, Mzuzu and Chinkhoma in Kasungu and, on a need basis, operates rural markets at Kabwafu in Mzimba and Mgodi in Machinga.
Yoramu noted that AHL has capacity to operate in many areas, but some players in the industry are not patronising its facilities.
“For instance, this year we paid for the licence for Mgodi, but no buyer was willing to buy from this rural market. However from observations, prices in rural markets are usually lower compared to the main markets due to lack of competition,” he said.
The number of bales sold per day depends on buyer’s capacity but Yoramu said AHL has the capacity to sell in excess of 30 000 bales per day. It, however, sells less than this because of storage capacity.
A tobacco grower of 15 years, Christen Gwiracheyo, said the meeting came at the right time because they were given a review of last selling season and what to expect next year.
“We have been enlightened on a number of issues which we hope most farmers will put into use for a better crop to attract good prices,” he said.
Commenting on the observations of the last selling season, Yoramu said auction grower numbers were pushed to contract market without growers’ consent, and advised them that non-sponsored growers are at liberty to withdraw their bales from contract to auction.
He said there was also overlapping of contract grower numbers, which meant one number appearing on two or three different buyers’ contracts largely due to lack of proper vetting of contract lists during registration, dual submission of same grower number to different contracts by associations and poor administration of the loan on contract system.
Tobacco wires in more than half of the country’s foreign exchange earnings, contributes 13 percent to gross domestic product (GDP), 25 percent to the tax revenue and employs more than 50 percent of Malawians.
This year, Malawi produced about 168 million kg of tobacco, raking in $361.4 million (K126 billion) in revenue, according to TCC final sales figures.
AHL figures show that the highest daily average price of $2.58 per kg on burley was registered on auction this season due to competition.