Point blank. The Reserve Bank of Malawi (RBM) says it sees slim chances of tobacco prices improving in 2012.
The RBM’s comments come barely two weeks after the Tobacco Control Commission (TCC) expressed optimism that 2012 season would register some improvements.
In its latest research and statistics weekly newsletter, RBM says the future of the green gold looks obscure.
“Apart from poor prices, there is a global campaign programme against the crop on account of health considerations.
“Waves of global financial crisis that have hit hard economies that buy a lot of Malawian tobacco have not spared the industry either. Seemingly, there is slim probability that prices would improve in the next season,” says RBM.
The bank further says the current situation has resulted in calls for crop diversification in the economy.
“The likely candidate to parallel tobacco production, among others, is cotton,” said RBM.
TCC spokesperson Juliana Chidumu told reporters in Blantyre late last month that her organisation is putting in place all the necessary measures to ensure that the 2012 marketing season is successful.
“Tobacco’s future remains promising and we are doing everything possible to ensure that the problems that rocked the 2011 marketing season do not reappear in 2012,” said Chidumu.
Malawi had a long and forgettable tobacco marketing season in 2011 with prices averaging $1.24 (K207), down from $1.90 (K317) in 2010.
According to a research by Agricultural Research and Extension Trust, it costs a farmer $1.22 (K204) to produce a kilogramme of burley tobacco.
This clearly shows that in the 2011 farmers have hardly made any profit.
“The low prices are attributable to lack of strong competition among buyers and a calculated desire not to compete in order to buy the tobacco cheaply. The situation has been worsened by the absence of alternative markets,” says RBM.
