Tobacco farmers have described the current tobacco market as mixed, saying although prices are higher compared to the previous year, high costs of production of the crop this year could affect the gains.
In an interview with Business News, Tama Farmers Trust president Abel Kalima Banda while commending buyers for adhering to the set minimum prices, which he indicated are higher than last year’s, said farmers may not get the most from their labour.
Banda, who is also one of the long-time tobacco growers in the Central Region, said farmers have spent a lot to save the crop this year.
“Farmers have had to spend money to get resources such as water from sources far from their gardens just to save the crop. Indeed prices this year are higher than last year’s, but our concern is that these prices do not really reflect the cost of production.”
Going forward, Banda implored authorities to ensure that farmers are allowed to give their input when making prices.
This year, projected production volumes for the green gold, according to the first round of crop estimates survey, is 103 million kilogrammes (kgs) of tobacco against buyer volume demand of 154 million kgs.
This is shy of what the country produced last year when cumulatively, the country earned $197.1 million (about K160 billion) from 123.7 million kgs of tobacco sales.
But speaking during a media briefing last week Tobacco Commission (TC) chief executive officer Joseph Chidanti-Malunga while saying the country may not reach the levels achieved last year, said the commission is still hopeful for a good season.
Malunga maintained that the commission is optimistic of a good tobacco market season on account of goods prices and low rejections despite the low volumes for the tobacco crop recorded this year.
“We can all agree the weather was bad this year, a development which affected the tobacco crop. But regardless, we are happy to see that the average prices are much better than what we have seen before as now we are hovering at around $1.95 per kilogramme.
“What is also exciting is both the auction and contract systems are faring well unlike previous experience where we have seen only the auction doing well. On top of this, the rejection rate is also low this year and in some cases there is not even any rejection.”
According to Malunga, this year buyers demanded 161 million kilogrammes but the country produced just around 100 million kgs, which is 60 million kgs short of what is being demanded this year.
Meanwhile, available data shows flue cured tobacco is fetching about $2.85 (about K2 337) per kg as the highest price while burley is fetching $2.30 (about K1 886) per kg as the highest price on the contract market.
On the auction market, the highest price offered for burley tobacco is at $1.75 (about K1 435) per kg while the minimum price was $0.95 (about K779) per kg on both markets.
Last year, the highest tobacco price on the auction floors was $1.56 while the lowest was $0.90. On the contract side, the highest price was $2.40 per kg.
The Malawi tobacco market has nine buyers, namely, Limbe Leaf, Alliance One, Premium Tobacco, Japan Tobacco International, Malawi Leaf, Associated Central African Limited, African Tobacco Services, Watergen and Voedsel.