Some tobacco farmers in Malawi’s capital, Lilongwe have asked government to revise the current share in the marketing of tobacco on contract and auction system.
Currently, according to the newly adopted integrated production system (IPS) or commonly known as contract farming, 80 percent of all tobacco output this year is being sold under contract farming whereas the remaining 20 percent is allocated to auction system.
However, 10 weeks into the 2013 tobacco marketing season, some farmers have expressed discontent with the 20 percent share for auction tobacco sales which they argue is small and leads to sales delay.
In a letter to the Ministry of Agriculture, Akunkwindira Mpinganjira, who leads a group of concerned farmers, said the growers want the auction system to have a 60 percent market share.
He argued that thousands of tobacco bales have been piling at the auction floors because the current 20 percent is limiting chances of selling their tobacco.
“We are against the 20 percent share which has been allocated to tobacco sold under the auction market. The auction market should be given 60 percent because a lot of farmers are suffering as their tobacco is not being sold,” said Mpinganjira.
He also said many trucks are failing to offload tobacco bales at Kanengo Auction Floors because of slow progress in selling of the leaf under the auction market.
In a statement released on Tuesday, Auction Holdings Limited (AHL) said it shares the farmers’ concerns about the current market sharing arrangement of selling tobacco at the auction floors because their floors are currently operating below capacity.
“We sympathise with the tobacco farmers on the delays that they are experiencing since we realise that such delays consequently affect their financial plans and general economic well-being.
“Our facilities and systems have always been ready and capable of marketing tobacco on daily basis under both auction and contract sales. At the moment, these facilities and systems are operating below capacity,” reads the statement in part.
Currently, AHL said tobacco auction sales are only conducted two days in a week whereas the other three days are for contract tobacco sales.
During last year’s Economics Association of Malawi (Ecama) annual general meeting (AGM) in Mangochi, AHL chief executive officer Evans Matabwa warned that adoption of IPS would lead to over 60 percent of the tobacco in the country to be “economically stranded”.
Minister of Agriculture and Food Security Prof. Peter Mwanza could not be reached on Thursday.
But Malawi President Joyce Banda last year said her administration had approved the new tobacco production system to fight against external shocks affecting the tobacco industry.