As tobacco growers are weeping over poor prices in the 2011 marketing season, government is also nursing its wounds over lower than expected revenue which has gone down by a third.
Players in the industry and other commentators have all agreed that this yearÃ¢â‚¬â„¢s selling season has been one of the worst, registering, at one time, the highest rejection rate at 90 percent with overall revenue dropping by 30 percent.
Former Finance Minister Ken Kandodo predicted to Parliament when presenting the 2011/12 budget that this season may turn out to be one of the worst in the countryÃ¢â‚¬â„¢s tobacco history.
Since the markets opened in March, prices have been pathetic, hitting 40 cents at one time.
Kandodo projected the earnings to be about $300 million but final figures from the Auction Holdings Limited (AHL) released this week show that revenue stood at $293.1 million down from last yearÃ¢â‚¬â„¢s $416 million.
The average prices for this year was at $1.24 per kg down from last yearÃ¢â‚¬â„¢s $1.89 per kg, said AHL.
This yearÃ¢â‚¬â„¢s earnings have been lower inspite of the volumes being higher at 236.7 million kgs as compared to 220 million sold last year, the figures show.
A breakdown of the figures show that this year, burley alone, grown by a majority of smallholder farmers, raked in $235.5 million out of 208 million kgs sold at an average price of $1.13 per kg. Comparatively, in 2010 burley with 193 million wired in $342.9 million at an average price of $1.77 per kg.
In terms of flue cured, the preserve of large estates, revenue peaked at $50 million with 23.8 million kg of the leaf sold at an average price of $2.11 per kg compared to $66.8 million achieved last year out of 24 million kg sold averaging $2.75 per kg.
With 4.6 million kg of Northern Division Dark Fired (NDDF) being auctioned, $7 million has been realised at an average price of $1.54 per kg compared to $6.3 million achieved out of 2.5 million kg sold at an average price of $2.50 per kg, according to the figures.
Government this year set the minimum price of burley at $1.80 per kg down from the previous yearÃ¢â‚¬â„¢s $2 per kg and flue cured was revised to $2.40 per kg from the initial $2.82 per kg. Last year, the minimum price was pegged at $3 per kg.
A tobacco grower, Denis Dias, who is also a Tobacco Association of Malawi (Tama) councillor in Namwera, Mangochi, told Business News on Tuesday that farmers have this year lost a great deal.
“Most of the farmers secure loans to supplement what they have. With the experience of this yearÃ¢â‚¬â„¢s marketing season, most of them are complaining that they will not afford to repay the loans,” he said.
Chairperson of Central Region Tobacco Growers Association of Malawi Ernest Chadzunda earlier said that despite prices improving towards the end of the marketing season, most of the farmers suffered a setback during the season on account of low prices and high rejection rates. This has affected their overall revenue.
Tobacco is MalawiÃ¢â‚¬â„¢s main export crop and contributes about 60 percent to the countryÃ¢â‚¬â„¢s foreign exchange earnings. It also accounts for 30 percent of the Gross Domestic Product (GDP)Ã¢â‚¬â€the amount of goods and services produced in a country in a year.
This is the second year in a row for tobacco revenue to drop. Last year, the revenue dropped by 5.5 percent in a year which was also riddled with price disagreements between the growers and buyers, a situation that led to the market being disrupted on a number of times.