Tanzania’s President John Magufuli yesterday was the fresh face when he officially opened the 2019 Tobacco Marketing Season in Lilongwe, but for Malawian tobacco growers it was the same story of poor prices.
Price tags seen on burley tobacco sold on the day at Lilongwe Floors under contract farming ranged from $0.90 (about K665) per kilogramme (kg) to $2.30 (about K1 700) per kg.
The opening prices did not go down well with most tobacco growers who described it as a raw deal on the basis that it was not commensurate with the cost of producing their tobacco.
“I have sold 21 bales of burley tobacco at an average of $1.90 per kilogramme. Last year, when the market opened, I sold my tobacco at an average of $2.20.This means that I will struggle to repay my loans,” said Ernest Josaya, a contracted tobacco grower from Mpempha Village, Traditional Authority Kabudula in Lilongwe.
Yet another grower, Abel Kumwenda, who is also president for Phindu Tobacco Growers Association, observed that most of the tobacco sold on the first day is from lower leaf and usually attracts low price.
He said he expected the prices to pick up as the market progresses.
Farmers Union of Malawi (FUM), which earlier lamented that tobacco prices have remained stagnant for the past 25 years despite the cost of farm inputs surging, was also not pleased with opening day prices.
“The prices of almost every farm input that a farmer uses when producing tobacco has gone up substantially over the years. The price of basic goods and services in the country has also gone out of the reach of most farmers,” said FUM president Alfred Kapichira Banda in an interview.
But National Association of Smallholder Farmers in Malawi (Nasfam) chief executive officer Betty Chinyamunyamu hailed government’s decision to remove the three percent withholding tax on tobacco for farmers selling less than 10 bales of the leaf.
In his address after Magufuli, who was in the country on a two-day State visit had declared open the tobacco marketing season at exactly 9.54 am, President Peter Mutharika announced the removal of withholding tax on tobacco proceeds from the sale of less than 10 bales.
In reaction, Chinyamunyamu said: “We are pleased with this announcement because most of our farmers are smallholder farmers and this means their take-home proceeds will increase.”
While growers protested the pricing, Mutharika, on the other hand, bemoaned the tendency among tobacco buyers to offer high prices at the onset of the tobacco market and later give growers low prices. He said the practice was unfair.
Magufuli commended Malawi for promoting other cash crops such as coffee, sugar and tea at a time the future of tobacco is under threat due to the Framework Convention on Tobacco Control (FCTC) championed by the World Health Organisation (WHO).
Final crop assessment conducted from February 24 to March 8 established that this year’s tobacco output is at 205.46 million kg against a buyers’ demand of 166.8 million kg.
In recent years, the country’s tobacco industry has faced numerous challenges, including fluctuating prices offered to growers, hostile weather conditions, oversupply on the market, increased cases of non-tobacco related material (NTRM) nesting, unfavourable regulatory environment and FCTC guidelines.
But the recent passing of the Tobacco Industry Act of 2019, enacted in February this year, offers hope to industry players who are optimistic that the law will protect the tobacco grower and bring sanity in the production and marketing of the crop touted to generate up to 60 percent of foreign exchange earnings.
The opening of the Lilongwe Floors will be followed by Chinkhoma Floors in Kasungu on April 29, Limbe Floors on May 2, Mzuzu Floors on May 6 and Kabwafu Satellite Market in Mzimba on May 16.
Tobacco contributes about 13 percent to the country’s gross domestic product (GDP).