Tobacco Control Commission (TCC) yesterday met all tobacco buyers to resolve the cancellation of sales of flue-cured leaf under auction system at all the country’s auction floors.
This follows the suspension of the sales two weeks ago due to high rejection rate, which went up to as high as 80 percent.
In May 2012, government adopted the Integrated Production System (IPS) or contract system of selling tobacco, in which 80 percent of all the tobacco is sold under the system while 20 percent is sold under the tradition auction system.
TCC chief executive officer Bruce Munthali said yesterday, among other issues, they are asking buyers to support auction crop by buying it and to share the plight of farmers who invest a lot in the crop.
He said the one-week delay is affecting growers who mostly have to repay bank loans.
“If they delay, it is a cost to the farmer who needs the money to repay loans. In this case, farmers will have to cough more in terms of interest rates because most of them borrow from the banks,” said Munthali.
He said at the meeting the buyers will also voice their concerns, which will be communicated to the growers.
Munthali said the tobacco is facing a lot of challenges because globally demand for the crop is low.
He, however, said growers selling the leaf on contract are safe because buyers already committed to buying the leaf.
According to Munthali, 1 800 bales of flue-cured tobacco are in stock in all the country’s auction floors.
Commenting on the marketing season, he said this year’s sales are progressing well, as at the moment and 90 million kilogrammes (kg) have been sold raising $153 million.
Out of this, 10.4 million kg was sold on auction valued at $15.7 million while 79.7 million kg was sold on contract attracting $137.3 million.
Tobacco growers under auction have been complaining that their tobacco is only allocated two days in a week as compared to those selling under IPS.
Proponents of IPS argue that it will address fluctuations in leaf pricing, declining global demand due to emerging strict global regulatory regimes and global over supply, among others.