Cumulative earnings from tobacco, Malawiâ€™s number one foreign currency earner, have peaked at $66.4 million (K16.6 billion) in the 10 weeks since the market opened in March, according to figures from Auction Holdings Limited (AHL).
This is good news because the revenue will boost foreign currency reserves particularly in the commercial banks and make available the much-needed forex to the private sector.
The tobacco dollars are being transferred to commercial banks following a directive by the Reserve Bank of Malawi (RBM) on May 7 2012. Tobacco brings in more than 60 percent of the countryâ€™s foreign exchange revenue and contributes about 13 percent to the national economy.
The prices have also jumped to an average of $1.88 (K470) per kilogramme from last yearâ€™s 88 cents (K220) during the same period.
Tobacco Control Commission (TCC) chief executive officer Dr. Bruce Munthali attributed the rise in prices to competition and a good working relationship with the buyers.
â€œOutput this year has been low and buyers are scrambling for the leaf resulting in prices going up. We have also developed a good working relationship with the buyers,â€ he said.
Tobacco output has this year dropped by 35 percent to 151 million kilogrammes from a record 232 million kilogrammes last year.
The drop has been attributed to the introduction of quotas to match the quantity of the crop with the size of the land and the dry spell that hit some tobacco growing districts.
Currently, the rejection rate has dropped to two percent in week 10 after remaining static at five percent in the past weeks, said AHL.
â€œVolumes sold on a daily basis remain relatively low and below the normal national trading capacity. Latest unofficial indications suggest that national volumes could be much lower than earlier announced,â€ said a commentary from AHL.
According to the figures for the week ending June 1 2012, about 30.3 million kilogrammes of burley, grown by a majority of smallholder farmers, has been sold raising $56.3 million (K14 billion) at an average price of $1.86 (K465) per kilogramme.
Dark fired has brought in $1.7 million (K425 million) out of 777 457 kilogrammes sold at an average price of $2.26 (K565)per kilogramme whereas flue cured, the preserve of large estates, has raked in $8.3 million (K2 billion) with 2.8 million kilogrammes sold at an average price of $2.94 (K735) per kilogramme.
Tobacco has for the past years been dropping. Last year, the earnings dropped to $292 million (K73 billion) from $410 million (K103 billion) the year before.
The Farmers Union of Malawi (FUM) has this year, predicted a further drop of 36 percent to $186 million (K47 billion) due to lower than expected output.