The African Institute of Corporate Citizenship (Aicc) says there is nothing government can do to save the dying tobacco industry, but more needs to be done to resuscitate the cotton sector.
In an interview on Tuesday, Aicc chief executive officer Felix Lombe said with increased global demand, cotton still has a future in Malawi.
He said: “For tobacco, reasons are well known and documented. There is nothing we can do because the challenge borders on consumption pattern and trend of the crop at global level.
“For cotton, something can be done. Access to inputs in cotton is no longer a challenge. The major challenge is access to profitable markets. Last year, the prices discouraged the farmers but this year we have seen the price picking up.”
Aicc figures show that at global level, production is expected to be at 24 million metric tonnes (MT) against a demand of 25MT with nine million MT sold thus far.
On the local front, cotton is selling at K360 per kilogramme (kg) against the recommended minimum of K320.
Despite the high potential of the cotton sector, it is currently operating at sub-optimal levels, with low cotton production levels currently estimated at 20 103MT in the 2020/21 growing season despite the national ginning capacity in excess of 50 000MT of seed cotton annually .
Tobacco, on the other hand, has seen its production in terms of volumes declining, which is partly attributed to the worldwide anti-smoking lobby.
National Statistical Office figures show that in the past decade, earnings from tobacco declined by 45 percent from $433 million in 2009 to $237 million in 2019. In 2020, Malawi earned a paltry $165 million from the crop.
Again, falling earnings from tobacco, which accounts for about 50 percent of Malawi’s total foreign currency earnings and roughly 15 percent of gross domestic product (GDP), is bad news to the foreign exchange cover.
This year, production of tobacco and cotton—Malawi’s main cash crops—will likely be lower than last season and below the five-year average, according to Aicc figures.
According to Tobacco Commission, Malawi will likely produce 122 million kg of tobacco against an estimated buyer demand of 132 million kg.
Estimated tobacco production is 15 percent below last year and 25 percent below the five-year average, figures show.
On the other hand, production of cotton is expected to be around 70 percent below the five-year average due to ongoing challenges around access to inputs and marketing.
In an interview, agriculture policy development expert Tamani Nkhono Mvula observed that a reduction in output of these crops means a reduction in revenue for the country.
“This trend of reduction has been experienced over the past years in both these crops as most farmers are leaving the production of tobacco and cotton. The profit margins and the future of these crops is uncertain,” he said.