IPS improves Malawi tobacco quality

Malawi’s Tobacco Control Commission (TCC) says there are strong indications of good quality tobacco in the 2013 marketing season buoyed by the Integrated Production System (IPS).

TCC chief executive officer Bruce Munthali told Business News in the capital, Lilongwe when asked to give a picture of the 2013 tobacco production.

This follows the completion of the first round estimates of leaf production by the tobacco regulatory body.

“Basically, IPS has improved micro-financing. As you are aware, the concept has embraced the financing of farmers through the provision of chemicals, fertilisers, improved loan structures and also an improvement in training programmes among tobacco farmers,” said Munthali.

Malawi is changing its system of selling tobacco, moving away from the traditional auction method to IPS, commonly known as contract farming, which was earlier approved by President Joyce Banda.

IPS is an initiative in which tobacco buyers combine farming and marketing strategies by dealing directly with farmers in producing the leaf.

In the 2012/13 tobacco season, the system will see 20 percent of the leaf produced being sold through the auction system.

Munthali said following TCC’s first assessment, tobacco production is pegged at 150 million kilogrammes this year.

Last year, Malawi’s tobacco volume registered a 66 percent decline to 79.8 million kilogrammes down from 237 million kilogrammes in the previous season.

Munthali said the TCC has already started the second tobacco estimates mid February which, he said, is scheduled to be completed in the first week of March.

He said the rolling out of IPS has already proved that the concept will help Malawi produce tobacco in compliance with good agriculture and labour practices and good environmental management to make Malawi a core market for tobacco.

Commenting on the opening of this year’s tobacco marketing season, Munthali said the Lilongwe Auction Floors is expected to be opened mid-March followed by the Limbe and the Chinkhoma floors end March before the Mzuzu floors open in early April.

Last year, tobacco marketing season opened on March 26 and was officially closed on August 14 2012.

President Banda said when she opened the 24th annual congress by the Tobacco Association of Malawi (Tama) that government approved IPS to fight against external shocks affecting tobacco industry.

Following the approval, there have been mixed reactions to the new tobacco system with other tobacco institutions warning that the system will potentially render most vulnerable growers destitute as they will have to deal with the immediate shock of losing out traditional revenue from tobacco.

The fears are based on the premise that the selective order of organisations under the IPS will obviously cut off many of the small-scale transporters, in the process denying them the opportunity to access economic benefits.

One of the tobacco buying firms, the Japan Tobacco International (JTI), has since touted IPS, arguing that while the policy shift will be gradual, the initial steps government has taken are significant to send good signals for the future of Malawi tobacco.

Last year, Malawi raked in $177.8 million from tobacco, 40 percent down from the previous year’s $293.7 million.