Burley tobacco rejection rate worries stakeholders
Despite Minister of Agriculture, Irrigation and Water Development Allan Chiyembekeza warning buyers not to reject a lot of tobacco at the auction floors, figures seen at the Lilongwe floors by Business News show that burley tobacco rejection rate is still very high.
The minister and Tobacco Control Commission (TCC) chief executive officer Bruce Munthali recently warned buyers that the rejection rate should not be higher than the tolerable levels of 20 percent, but as of Thursday only flue cured tobacco rejection rate subsided to 16 percent while burley’s is still rising.
As of Monday, the rejection rate was at 61 percent while on Tuesday the rate was at 64 percent.
Following the rise in the burley rejection rate, Business News can reveal that the tobacco marketing season, which was initially supposed to close on September 23, was first moved to September 25 and later shifted again to September 30.
The constant shifting of the closing date of the 2015 tobacco marketing season has not gone down well with several stakeholders including the influential Tobacco Association of Malawi (Tama).
Tama president Reuben Maigwa described this buying season as one of the worst in the history of tobacco growers, especially those who sell under auction system.
Said Maigwa: “I have not been to the market recently but if the rejection rate of burley is as high as 60 percent, then this is not good news. Tobacco is an expensive crop to grow and as farmers, we grow the crop to sell at the auction floors. If it is being rejected where are we going to get money to buy inputs like fertiliser and pesticides? Even though we cannot stop growing the crop, buyers must not reject our leaf because eventually many farmers will get frustrated and stop growing tobacco.”
Efforts to talk to Munthali proved futile but Auction Holdings Limited (AHL) group corporate affairs manager Mark Ndipita said his organisation sympathises with the farmers.
He said: “The reasons behind the high rejection rate on auction sales could be better explained by the buyers themselves, but it appears that some buyers are deliberately frustrating auction farmers by offering low prices on auction and higher prices on contracts sales in order to convince more farmers to sell through contract next year.”
Ndipita assured farmers who sell tobacco through auction not to lose hope because discussions are underway to protect them from price disparities and high rejection rate.
“These challenges are temporary and farmers who sell through auction system should have a hope for a better future in the coming seasons once this issue is resolved,” he said.
He added: “It is our hope that buyers will note the concerns by tobacco growers under auction because the government policy gives freedom for farmers to choose to sell whether through auction or contract. Besides, evidence is there that the quality of the leaf between auction and contract this year was almost the same and many people are wondering why there are price disparities and high rejection rates.”
As of Wednesday, over 1.9 million bales of flue cured, dark fired and burley had been sold with a total weight of 189 million kilogrammes, raking in $333 million (about K190 billion). n
