Buyers scramble for flue, dark fired tobacco
Strange but it is true. While burley tobacco is being rejected on the auction floors, flue cured and dark fired tobaccos are a darling to buyers.
The heat cure and the sun dried leaf are selling like hot cakes at the country’s tobacco selling floors.
artThis is against the trend for the past two years, which saw flue cured being bought for as low as 25 cents (about K172) per kg while the rejection rate reached as high as 97 percent during 2015 marketing season.
But this year, the tables have turned and the two types of tobacco are on high demand after growers failed to meet the trade requirement for dark fired (chikopa) while the production for flue cured (mostly Virginia tobacco) was slightly above the required quantity.
While the buyers are this marketing season demanding 4.6 million kilogrammes (kg) of dark fired, growers have only produced 2.9 million kg and 21.5 million kg of flue cured has been produced against a requirement of 21.2 million kg.
According to statistics from AHL Group, by week four of sales, flue cured was trading at an average of $2.85 (about K1 966) while dark fired was at $1.82 (about K1 255).
In an interview on Tuesday, Tobacco Control Commission (TCC) chief executive officer Albert Changaya said buyers would buy 10 percent more than their requirement of the flue—often used as flavour in cigarettes—to take care of the slight overproduction in dark fired leaf.
“Due to poor prices last year, most farmers have left flue cured production opting for burley. The situation has led to burley overproduction leading to low prices currently while the other crops are now fetching high prices,” said Changaya.
He further said there is a global under production of the leaf with Brazil, India and Bangladesh reducing production, a development that has left buyers rushing to Malawi for the leaf.
“If we regulate production and grow burley at around 140 million kg, we will have good marketing as it is [now] for the two,” he said.
Burley growers this year have produced 175.6 million kg against the trade requirement of 132 million kgs.
The crop is currently fetching an average of 89 cents per kg on auction market while the one sold on contract is attracting an average price of $1.21 (about K834) per kg.
In an interview on Tuesday president of Tobacco Association of Malawi Reuben Maigwa said while buyers are offering fair prices for Flue Cured and Dark Fired tobacco prices, Burley farmers are not happy with what their crop is fetching.
“What we invested in the farm inputs is not matching what we are getting,” said Maigwa.
He has therefore asked buyers and the TCC to notify growers on the trade requirement in time for them to abide by the demand.
“We are given the trade requirement after production then how do they expect us to produce according to demand? TCC should give quotas according to demand given by buyers. That will help in dealing with over production,” Maigwa said.
As of May 13, 21 371 million kg of tobacco had been sold at an average price of $1.28 (K833) per kg raking in $27.5 million.
