At a time when tobacco growers especially those selling their crop under auction are still licking their wounds due to poor prices, Minister of Agriculture, Irrigation and Water Development George Chaponda has admitted that something needs to be done on tobacco pricing.
Since the market opened three weeks ago prices for tobacco sold under auction have been low hovering between 80 cents (about K554) per kilogramme (kg) to $1.20 (about K831) per kg compared to last year’s tobacco marketing season.
In random interviews at the Lilongwe Auction Floors at Kanengo, growers said if prices continue to be lower than that of last year, most of them will abandon the crop next year.
“I brought five bales to be sold under auction, but only one has been bought at a price over $1 (K660) while the rest have been purchased at 80 cents.
“I spent more than K63 000 to buy fertiliser and chemicals to produce the crop. I also need to pay casual workers from the sales. However, I don’t think I will have enough money remaining to pay the workers and invest in next growing season,” said Maliro Satola, a burley grower from Dowa District.
While another grower, Biskot Satifano said 10 bales of his crop have so far been rejected three times at the auction.
“I am helpless. I have only sold three bales to date,” he said.
This trend is what has displeased Chaponda, saying there was need to normalise the situation.
In an interview on Tuesday, Chaponda said he is not satisfied with prices offered and he will soon meet with buyers and growers representatives to find a solution.
“We have to find a lasting solution to these problems and we will soon find ways and means of making sure that both buyers and growers are happy,” said Chaponda.
This year’s marketing season comes amid a 33 per cent over production against a demand of 158.1 million kg, according to first round crop estimates which were released in February. The estimates had put production at 211 million kg.
In an earlier interview, the Tobacco Association of Malawi (Tama) chief executive officer Graham Kunimba indicated that buyers are hesitant to buy the leaf at this stage because they think it belongs to middlemen.
“The whole market can be described as a mixed bag, but I think buyers are rejecting the good leaf being sold under auction because this is not yet the time for the good leaf to be found in the floors.
“Maybe they are thinking that this tobacco belongs to middlemen; hence, rejecting it,” said Kunimba.
Some of the buyers interviewed at the floors at the beginning of the marketing season complained of tobacco being over conditioned saying the practice is affecting quality of the crop.
This year’s marketing season comes amid a 33 percent over production against a demand of 158.1 million kg, according to first round crop estimates which were released in February. The estimates had put production at 211 million kg.
Last year, Malawi produced 192 million kg of tobacco which earned the country $337.4 million (about K216.8 billion).
Tobacco is Malawi’s main export crop, contributing about 60 per cent of foreign exchange earnings and 13 percent of the gross domestic product (GDP).