Tama wants auction, contract market
The Tobacco Association of Malawi (Tama) is advocating for the coexistence of both contract and auction markets for tobacco.
The sentiments by Graham Kunimba, acting chief executive officer of Tama, come at a time when many farmers in the country are considering reverting to the auction system because of better prices the leaf is fetching at the floors this year.
On the other hand, the Framework Convention on Tobacco Control (FCTC) saying contract growing of tobacco should be abolished because companies are encouraging farmers to grow the crop which is blamed for fuelling diseases such as cancer.
But experts in the field say if there is only one market, prices of the crop will considerably drop.
According to statistics from Auction Holdings Limited (AHL), the average price of all tobacco types moved by two percent from week nine to $2.26 per kg in week 10.
During the same time last year, cumulative average was at 95 cents compared to $1.96 in 2012.
Kunimba said in an interview that this year’s prices at the auction floors are much better as compared to last year because there is less tobacco on the market.
“Last year, when there was too much tobacco on the market, those farmers who were on contract celebrated because the prices were good while those who sold through the auction cried foul due to poor prices. If the two markets continue to co-exist then tobacco farmers are the ones who would benefit because the two markets will continue checking each other,” he said.
However, farmers randomly interviewed in Lilongwe differed on the marketing system that is better suited to their needs.
Chairperson of the Mlumba Club in Nambuma, Homasi Kachipapa, said it is better to grow tobacco and sell it at the auction because there is competition among buyers.
He said his five bales of tobacco fetched only K67 000 (about $268) on contract while some of his friends who sold the same number of bales at the auction floors got over K120 000 (about $480).
But Gerald Ngozo from Nsalu differed with his colleague saying that his three bales fetched K113 000 (about $452) while his friends who sold their tobacco when the auction floors had just opened this year, got less for the same number of bales.
Famers Union of Malawi (FUM) president Felix Jumbe, while admitting that both contract and auction markets should coexist, said government needs to regulate to avoid cases of under growing during some seasons and overgrowing during other.
“It will be good to encourage contract growing but since things cannot just change overnight, government needs to come in and regulate the tobacco sector so that the crop is not grown anyhow,” said Jumbe.
Tobacco brings in about 60 percent of the Malawi’s foreign exchange earnings and contributes around13 percent to the national economy.
