MalawiÃ¢â‚¬â„¢s tobacco regulatory body the Tobacco Control Commission (TCC) wants to restrict the 2011/2012 growing seasonÃ¢â‚¬â„¢s tobacco production to between 150 million kg and 160 million kg to be in line with the global trade requirements, chief executive officer Dr Bruce Munthali has said.
This represent a 20- million kg demand fall from the 180 million kg Munthali indicated that the buyers were interested in as at September 2011.
This will be a 32 percent drop from last yearÃ¢â‚¬â„¢s output of 235 million kg. To control production to this level, the TCC has introduced quotas that will enable the farmers to grow the crop based on their land size.
“In 2011, tobacco prices were depressed in Africa because of oversupply of tobacco.
“But what we intend to do is to restrict the production of the leaf to between 150 and 160 million kg this year and that is according to our trade requirements for tobacco,” said Munthali in an interview.
He said the tobacco regulatory body wants tobacco production to be in line with the land size so that farmers produce good quality leaf to attract better prices on the floors.
Malawi tobacco growers have over the years been producing more than 200 million kgs of the leaf that wires in about 60 percent of foreign exchange earnings and 13 percent to the national economy.
Experts argue that whenever tobacco is overproduced, prices normally go down because demand is largely suppressed.
In June 2011, government unveiled plans to introduce a policy to manage tobacco production to balance the reduction of further erosion to tobacco farmersÃ¢â‚¬â„¢ income and profitability with production to the global trade requirements.
The need to regulate production comes at a time when the prices of tobacco in last yearÃ¢â‚¬â„¢s growing season hit rock bottom with most farmers registering losses.
Revenue from tobacco last year went down by 30 percent to $293 million from the previous yearÃ¢â‚¬â„¢s $416 million. The drop was attributed to the high rejection rates, which hit 90 percent at one time, and overproduction of the leaf which led to prices being suppressed.