New law blamed for low tobacco sales

Tobacco Association of Malawi (Tama), the country’s largest tobacco growers association, has attributed low tobacco volumes being brought on the floors this year to the new Tobacco Industry Act.

Tama chief executive officer Felix Thole said in an interview on Friday that the new Act has introduced some changes which the market is struggling to adopt.

For instance,  he said the new Act mandates TC to register transporters of tobacco to the floors unlike in the past when associations identified their own transporters.

Thole said the development is leading to slow delivery of tobacco to the floors as some transporters are facing problems to register with the TC.

He said: “The industry is trying to implement some of the provisions in the new Tobacco Industry Act and one of the areas affected is transportation.

“The Act provides that Tobacco Commission [TC] should take charge of the transport, which was previously taken care of by the associations such as Tama and others.”

At the end of week nine, about 64 million kilogrammes (kg) of tobacco were sold on the floors, raising $92 million (about K67.8 billion), according to TC figures.

This is a 26 percent drop from last year’s 87 million kg of tobacco, which raked in $145 million (about K107 billion) during the same period.

Thole said transporters are obliged to register with the TC and there are fees to be paid which some of them do not have.

“This is a nationwide problem in as far as transportation of tobacco is concerned.

“There has been some logistical issues that we understand the TC has been working on with both growers and merchants in implementing the new law and this has had a bearing on the progress of the market,” he said.

TC corporate planning and development manager Hellings Nasoni, in an interview, admitted that the development may have an impact on the marketing season as the delays could affect the volumes sold in a particular week; hence, having a protracted selling season.

He said there have been discussions with the buyers specifically for the contract market on the volumes they would buy from growers.

“At the onset of the contract market, buyers were still finalising the logistical arrangement so that there is an increased uptake by the contract market while on auction market because it’s an open market there has been a fast flow of volumes,” said Nasoni.

TC second round tobacco production estimates showed the country has produced 205.5 million kg of tobacco this year against an international trade requirement of 152 million kg.

Last year, the country sold 202 million kg and raked in earned (about K244 billion).