TCC orders merit sale of rejected tobacco
As the prolonged marketing season draws to a close, Tobacco Control Commission (TCC) on Friday ordered merit sale of all types of the leaf currently at the country’s floors.
The directive will allow buyers to purchase tobacco at any price regardless of the set minimum prices to clear all the leaf that was earlier rejected.
Merit sales started on Friday at Lilongwe and Chinkhoma floors, while at Mzuzu and Limbe floors, the sales are expected to start today.
It is expected that the process will last three days.
At Lilongwe Floors, prices dropped to as low as five cents (K36.50) per kilogramme (kg).
This forced the tobacco regulator to engage buyers to improve on pricing and it was eventually revised upwards to 40 cents (K292) per kg.
TCC chief executive officer Albert Changaya, in an interview on Friday, said they had two options— either to return the tobacco to the grower or engage in merit sale.
He said: “We have gone for merit sale because we want to create space at the auction. Some of the tobacco there has been rejected for at least six times and it was under RG [return to the grower), but no farmer had come to take their tobacco back.
“We were not sure of what the market forces would be like. We thought the open sale without minimum prices was ideal.
“We were shocked when the buyers reached to as low as five cents per kilogramme although even at five cents, some tobacco was still being rejected.”
On Friday, 2 400 bales were sold at Lilongwe Floors with a 37 percent rejection rate.
At Chinkhoma in Kasungu, 1 700 bales were sold with a rejection rate of between 15 percent and 20 percent, according to TCC data.
Meanwhile, about 30 million kg of tobacco is yet to be sold and buyers have bought 157 million kg against their 132 million kg requirement.
Tobacco Association of Malawi (Tama) chief executive officer Graham Kunimba said in an interview that the ideal minimum price for the merit sale would be 80 cents (K584) per kg. n
