Tobacco future still bright—Malawi Leaf

Despite challenges tobacco has been facing both locally and globally, Malawi Leaf says the future of the crop is still bright because people will continue smoking.

 

The pronouncements by Malawi Leaf general manager Jimmy Kasamale in Malawi’s capital, Lilongwe, last week come at the back of a 30 percent drop in revenue last year to $293.7 million (K49 billion), the worst in recent history from $416.4 million (K69 billion) in 2010.

This also comes after the Reserve Bank of Malawi (RBM) said in its newsletter in January that it sees slim chances of tobacco prices improving in 2012.

Apart from poor prices, there is also a global anti-smoking campaign programme on the crop championed by the World Health Organisation (WHO) on account of health considerations.

Last year, Malawi had a long and an unforgettable tobacco market season closing on November 15 2011, with prices averaging $1.24 (K207) per kilogramme, down from $1.90 (K317) in 2010.

The drop showed most growers hardly made any profit. It also had one of the worst rejection rates, peaking at as high as 90 percent, the worst in the tobacco industry history.

This season, the Tobacco Control Commission (TCC) has introduced quotas as one way of checking tobacco output to enable farmers to grow the crop based on the allocated land size.

According to the global trade requirements, international buyers are looking for between 150 million kg and 160 million kg of Malawi tobacco, said the TCC.

But Kasamale said the challenges tobacco, which wires in 60 percent of foreign currency earnings, is facing do not spell doom for industry.

“People will continue smoking. As such, we cannot discourage farmers from growing tobacco. What we should be talking about is to improve the quality of our tobacco,” he said.

Kasamale said Malawi Leaf is negotiating with buyers from overseas on the amount of tobacco they want to buy this year.

Last year, Malawi produced 235 million kgs of tobacco.

Early this month, the TCC said delayed rains and not prices will be to blame for this year low tobacco production.

Malawi tobacco growers have over the years been producing more than 200 million kgs of the leaf which contributes about 13 percent to the national economy.