Farmers Union of Malawi (FUM) has joined a bandwagon of critics of contract system of selling tobacco, also known as Integrated Production System (IPS), arguing it is perpetuating poverty among tobacco growers as they are “cheated”.
The farmers’ body’s stance against IPS—approved in 2012 by former president Joyce Banda—comes on the back of similar condemnation against the system by other key tobacco industry players such as Auction Holdings Limited (AHL).
“Auction system is far much better because it is straightforward. There are no cheaters and farmers are not cheated. But under contract system, the farmer is cheated.
“Where is the contract when they [tobacco buyers] take the tobacco to the auction floors?” queried FUM president Alfred Kapichira-Banda in an interview in Lilongwe.
Under IPS, tobacco buying companies and tobacco growers have contractual agreements and the growers may enter funded or non-funded contracts with buyers as part of the system.
Kapichira-Banda, a long-time tobacco grower—-said although prices on contract system seem to be high as compared to those under auction, fertiliser and other inputs which are given to the growers on loan are expensive and most of the times farmers are not consulted when contracting these loans.
He said such a situation is making most tobacco growers bankrupt as they grapple to repay their loans, hence pulling the growers into the abyss of abject poverty.
Said Kapichira-Banda: “In actual sense, in Malawi, if we say contract, it means when a farmer is going to the nurseries to sow his tobacco, he has to know the prices of his tobacco right there and that is contract, but otherwise the farmer is cheated if tobacco companies are just taking his or her tobacco at the auction without a proper contract.”
He explained that their understanding of contractual farming is that tobacco has to be bought at farm-gate and not at AHL facilities.
He described the auction system as the only standardised system of marketing tobacco not contract system.
Kapichira-Banda said FUM had taken the grievances on tobacco contract system to government, but complained that up to now government still remains mute on the matter.
“We need to have all farmers under one umbrella so that when there are problems, together we should end such problems under one such umbrella and that is Farmers Union of Malawi. FUM has taken this issue to government, but up until now there is no response.”
AHL chief executive officer Evans Matabwa recently said growers who have opted for auction system were facing delays in getting their proceeds in time unlike their counterparts under contract farming.
He also decried the absence of a legal framework governing the contract system of growing tobacco, saying such a situation only fuels secrecy among the parties involved.