TOBACCO CONTRACT, AUCTION PRICES TUMBLE
A weekly analysis by the Tobacco Control Commission (TCC) has shown that prices for both contract and auction tobacco has tumbled by four and 10 percent respectively, in the second week against the same period last year.
This means that growers are still weeping all the way to the bank over relatively low prices despite authorities maintaining that the market has stabilised in terms of prices.
The market update analysing the second week of trading shows that the average price for burley tobacco, grown by a majority of smallholder farmers, under auction was $1.13 per kilogramme (kg) against an average price $1.25 per kg last year, representing a 10 percent decrease.
A similar trend is shown in the average price for contract tobacco, as the average price has dropped to $1.28 per kg to $1.23 per kg, representing a four percent drop.
At national level, the tobacco regulatory statistics show that overall, the average price for burley tobacco has declined by six percent to $1.19 per kg from $1.26 per kg in the second week of sales last year.
On a positive note, however, TCC says so far 11.2 million kg of tobacco has been sold on the market compared to 5.4 million kg sold during the same period last year, representing 108 percent high jump.
This has resulted in revenue for the second week rising to $13.3 million from $6.8 million chalked last year, which is an increase of 95 percent.
This means that the revenue realised which is more than last year during the same period is on account of more volumes sold this year.
Tobacco Association of Malawi (Tama) chief executive officer Graham Kunimba noted that most of the challenges that characterised early days of the leaf’s sales are still persisting, citing increased no-sale bales and low prices.
“I think most of the problems are still there, for instance, cases of no-sales and buyers sticking to paying minimum prices. That is a problem because prices are not favourable,” he said.
His outcry was supported by president of Central Region Tobacco Growers Association (CRTGA) Ernest Chadzunda who yesterday bemoaned poor tobacco prices for most of its members and called on buyers to jack-up the prices.
He also expressed hope that as the market progresses, quality tobacco will be coming at all the auction floors which he said should improve prices for growers to benefit.
Tobacco industry players generally agree that the early days of the market is filled up with tobacco from vendors who hope to cash in on good prices despite their leaf not being properly graded.
As far as I am concerned, the most important entity in this market of hours is the farmer, period. When the market tanks, the farmer suffers most; and ultimately this picture reflects on the national economy. Poor tobacco farmers: they have to contend with climate change and associated unfavorable weather, AND this – the oligopoly of buyers! At least late Bingu tried, albeit unsuccessfully, to fight for better prices. He knew that the tobacco companies are still making big profits, all on the back of the farmers. But what is this president doing beside saying “yes bwana” to the oligarchs? Absolutely NOTHING! And where is that hubris the president was showing during the first week of opening the auction floors? Was she naïve?