Tea industry suspends auction on low output

Tea Association of Malawi (Taml) has said the dry spell that hit the country this year has resulted in low output for the crop, necessitating postponement of tea auction at Limbe Tea Auction in Blantyre.

Taml chief executive officer Clement Thindwa said in an interview on Monday that where there is no leaf, there is no business to transact at the auction, located along Kidney Crescent in Blantyre.

“This phenomenon has been clearly reflected in the depressed performance of the Limbe Auction recording the worst throughput ever, necessitating postponement of auctions into the future beyond the normal fortnightly during dry season,” he said.

Malawi tea auction is held every Tuesday.

Thindwa, who is also doubling as acting director of Tea Research Foundation for Central Africa (TCFCA) based in Mulanje, said between July 1 and October 27 2015, the Limbe Auction recorded a throughput of 1.1 million kilogrammes (kg) compared to 1.7 million kg for 2014 with a firmer average price of $1.74 (K995) per kg for 2015 compared to $1.39 (K794) per kg for 2014 over the same period.

“This is one of the reasons why the industry is advocating re-planting as a key component of its revitalisation programme driven by key players in the value chain,” he said.

Thindwa said production for the crop reached a record low of 830 158 metric tonnes (MT) in August from an average of 1.5 MT for the month over the past six years, largely due to extreme dry and dire weather conditions.

Just as this year promises to be a bad year for tea, it has also been a bad one for tobacco, the country’s major foreign exchange earner, which brings in about 60 percent of the country’s foreign exchange earnings, due to poor prices.

The tea industry is expecting a record drop in output as well as earnings in many years due to the effects of dry weather.

Said Thindwa: “These adverse weather conditions necessitated the shutting down of some factories for first time in a long time as there was hardly any leaf to process.

“This was strategically necessary to avoid some overhead costs. Even though production picked up to 1.3 million metric tonnes in September, the slide to extreme dry and scorch weather conditions in October are expected to produce some rather disappointing results for that month.”

He said unless there is some swift change in weather conditions, the country may experience the worst in the history of tea production in Malawi.

“Nevertheless and as businesspeople, we remain hopeful and are prepared to take appropriate strategic stance to mitigate the impact of these unfavourable cycles,” said Thindwa.

This state of affairs is a big blow to the tea industry, which is one of the major export crops as it brings in eight percent of export earnings, contributing seven to gross domestic product (GDP) and employs over 60 000 people, making it the largest formal labour employer after government.

Figures show that 1.5 million Malawians directly rely on the industry for livelihoods through knock-on and ripple effects.

Malawi is the second largest producer of tea in Africa after Kenya, but domestic consumption of the commodity is at a paltry two percent of an average annual production of 46 000 MT.