Tobacco Commission hopeful on tobacco sales

The Tobacco Commission (TC) says this year’s tobacco marketing season has been the best so far, with better prices being offered to farmers.

TC spokesperson Telephorus Chigwenembe said this ahead of the close of the 2022 tobacco marketing season on August 12 2022, with the final sales to be conducted at Mzuzu Floors after 20 weeks of tobacco sales.

Said Chigwenembe: “This has been one of the best marketing seasons so far, especially in view of the prices offered by buyers. By the end of Week 16 [July 15], the average price was at $2.12 [K2 185]. Last year, we closed the season with an average price of $1.60 [K1 649].

“So, despite the low production compared to previous years’, the Commission is happy with how the season has gone so far.”

According to TC, Chinkhoma officially closed on July 20 while Lilongwe and Limbe floors will be closed on August 5.

By the end of week 16 of the season (July 15), 78 million kilograms (kg) of tobacco had been sold.

“Mzuzu will be the last to close because there are still significant volumes of tobacco flowing to the floors.

“The Commission will wait up to some days close to the last day of sales at Mzuzu to have a clear picture of the attainment of the projected 100 million kg this season.”

Speaking earlier, economist Milward Tobias, who is executive director of the Centre for Research and Consultancy, said the low revenue development from tobacco could affect the country’s forex reserves as there was hope for an early build-up of the reserves from tobacco.

While he was optimistic about better prices owing to low supply compared to buyer demand, Tobias said experience has shown that in Malawi there is less competition on the tobacco.

He said in an ideal situation, Malawi could get more revenue from tobacco despite low volumes as buyers would scramble to secure volumes.

Tobias advised authorities to take current weather shocks on tobacco as a learning experience and consider scaling up of crop insurance to cushion growers from the shocks.

Projected production volumes, according to the first round of crop estimates survey, is 103 million kg of tobacco against buyer volume demand of 154 million kilogrammes.

In the 2021 marketing season, cumulatively the country earned $197.1 million (about K160 billion) from tobacco sales, which is lower than $250 million that the country requires for its monthly import cover.

During the same year, the country sold 123.7 million kg of tobacco with the seasonal average price of all tobacco types at $1.59 (about K1 295) per kg, compared to $1.53 (about K1 247) per kg recorded during the same period in 2020.

This year’s tobacco market was opened on 31 March and opened with over 900 bales on offer.