Hope rises on tobacco market
AHL Group plc, managers of the country’s tobacco markets, says it is optimistic of a good tobacco on account of good prices and low rejection rates.
AHL tobacco sales general manager Graham Kunimba said rejection rate is at around 16 percent, while last year it was well over 80 percent.
He, however, said low volumes being tendered at the auction are as a result of the late onset of rains which delayed transplanting of the crop.
Said Kunimba: “The start has been better this year compared to last season with remarkable price improvement.
“I want to encourage farmers to bring their tobacco to the traditional structured market; they should not be manipulated by the vendors because it will be the vendors benefiting at their expense. I am discouraging farmers from selling to the vendors, at the auction market is where they can maximise their profits.”
As of Monday, the market had put up 907 bales for sale against the capacity of 10 000 sales a day.
On the first day of the market, 1 057 bales were offered for sale.
“We are underutilising our capacity currently because of the prevailing low supplies,” he said.
Growers had urged President Lazarus Chakwera to ensure sustainability of good prices so that farmers reap benefits from their year-long investments.
The farmers observed that traditionally, prices tumble once the president leaves the market premises.
Business News observed that there is price stability on the market as buyers maintained the prices.
By Monday, flue cured tobacco fetched $2.85 (about K2 337) per kilogramme (kg) as the highest price while burley raked in $2.30 (about K1 886) per kg as highest price on the contract market.
On the auction market, the highest price offer for burley tobacco was $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 $1.50 while the lowest was $0.90. On the contract side, the highest price was $2.40 per kg.
One of the tobacco growers from Ntchisi, Dave Malambo said he had sold 12 out of the 15 bales which he brought to the market at between $0.95 and $1.30 per kg, which he said was not enough to recoup tangible profits”.
Malambo said with low supply this year, they expect better prices to prevail.
On another hand, Nsaiwale Zakaria from Kasungu District said he brought 20 bales that were bought at between $1.10 and $1.30, which he said was better than last year’s $0.80 per kg.
On Thursday, Tama Farmers Trust chief executive officer Nixon Lita said the market has started early with good prices offered, but there was fear of high rejection rate, especially on the auction market due to moisture content as the rain season is still on.
Projected production volumes, according to the first round of crop estimates survey, is 103 million kilogrammes of tobacco against buyer volume demand of 154 million kilogrammes.
In the 2021 marketing season, cumulatively the country earned $197.1 million (about K160 billion) from tobacco sales, which is lower than $250 million that the country requires for its monthly import cover.
