Malawi gears up for 2013 tobacco selling season

As the Malawi tobacco selling season starts on Monday March 18, players in the industry have expressed confidence that growers will get their just rewards in terms of good prices buoyed by the leaf’s good quality.

Sales of tobacco, a crop that wires in more than half of the country’s foreign exchange earnings, contributes 13 percent to the gross domestic product (GDP) and supports millions of Malawians, will open at Lilongwe Auction Floors on Monday, according to the Tobacco Control Commission (TCC) public relations officer Juliana Chidumu.

On Wednesday, she said, the market will open at Chinkhoma in Kasungu and thereafter at Limbe Auction Floors on March 18, with Mzuzu opening last on April 8 2013.

Chudumu said, as a tobacco regulatory body, all is set for the opening of the sales this year.

“Contracts [for farmers] have already been prepared,” she said, but did not reveal the minimum prices for this year’s selling season.

Tobacco buyers and TCC in February concluded talks on setting the minimum prices and forwarded them to government for approval. Most probably, they will be announced at the opening of the Lilongwe market.

The Tobacco Association of Malawi (Tama), a group of more than 300 000 farmers, has expressed hope that the prices this year will be better in view of the quality of the leaf produced.

“We expect fair returns in tandem with the quality of the leaf. I hope we are not demanding something that is outside this world and we don’t expect any problems in terms of prices,” said Tama chief executive officer Graham Kunimba this week.

Tama has already signed contracts with transporters in the Central and Southern regions and vehicles have already been dispatched to load the leaf.

Kunimba said in the Northern Region, discussions are underway with transporters.

He said the tobacco farmers association registered 17 000 clubs which could translate to over 350 000 individual farmers.

Both the TCC and Tama have attributed this year’s good quality leaf to the adoption of Integrated Production System (IPS) approved by government which entails tobacco buyers combining farming and marketing strategies by dealing directly with the farmers in producing the leaf.

IPS has improved micro-financing as the system has embraced the financing of farmers through provision of fertiliser, improved loan structures and training programmes among tobacco farmers.

Under IPS, 80 percent of the leaf will be sold through the contract system, with the remaining 20 percent going under the auction.

Auction Holdings Limited (AHL) said in a statement it will operate both auction and contract systems of trading tobacco.

“In view of this, we would like to advise our farmers, transporters, commercial graders and all other stakeholders that selling of tobacco will be on first come first served basis,” said the auctioneer.

AHL has requested all players in the industry to adhere to booking-in system as this determines smooth receiving of tobacco.

“All stakeholders and the public are being asked to observe the rules and regulations that govern the marketing of tobacco, including all security requirements,” reads the statement.

This year, according to the first tobacco estimates, the country has produced 150 million kilogrammes, up from last year’s 79.8 million kilogrammes, the worst in 14 years, according to TCC.

Malawi in 2012 raked in $177.8 million from the leaf, a 40 percent drop from the previous year’s $293.7 million.