Demand for Malawi tobacco at 180 million kg in 2014

The demand for Malawi’s tobacco next year has been pegged at 180 million kilogrammes (kg), which is higher than what tobacco merchants demanded this year, Business News has learnt.

Both the Ministry of Agriculture and Food Security and the Tobacco Control Commission (TCC) confirmed the figure to Business News on Sunday.

Minister of Agriculture James Munthali said in an interview on the sidelines of a 2013 tobacco industry seminar at Sun ‘n’ Sand in Mangochi, that it was pleasing that demand for Malawi’s tobacco next year is higher, but cautioned that there was need for Malawi not to overproduce the leaf.

Said the minister: “There is an increase in demand for Malawi burley tobacco worldwide but, of course ,this should be a word of caution because once there is a perception [by tobacco buyers] that there is a lot of tobacco, we might see the reverse in our recent gains.”

Munthali said last year, the ministry’s expectation was that the country would produce 156 million kg but observed that the country produced 168 million kilogrammes of tobacco.

He pleaded with tobacco industry players including growers to ensure producing their tobacco in line with Malawi’s trade requirement of 180 million kg “or we can stay not too far from that.”

The minister said government is mindful that over-supply of tobacco on the international market often results in depressed prices as buyers are left with more tobacco supply which suppresses demand for the crop.

In the just-ended tobacco marketing season, the average price has been pegged at $2.15 which is slightly down from last year’s $2.22.

Malawi still tops as the world’s largest burley tobacco producer and any likely over-supply in the country potentially chokes the world’s burley tobacco market.

But on one hand, Munthali pleaded with buyers to be mindful of the fact that sometime tobacco overproduction could stem from improved technology in the tobacco industry which he said could lead improved tobacco production per unit of land.

TCC chief executive officer Bruce Munthali said his institution will strive to control any likely overproduction of tobacco in the next growing season.

The TCC boss said the 180 million kg trade requirement is a signal that demand for Malawi tobacco is still high despite persisting threats emanating from the World Health Organisation’s Framework Convention on Tobacco Control (WHO-FCTC).

During the meeting, it was reiterated that tobacco continues to be Malawi’s lifeline, contributing 15 percent of Malawi gross domestic product (GDP),contributing 60 percent of total foreign exchange earnings and in the process anchoring Malawi’s balance of payments (BoP) position.