Tobacco market excites AHL group, growers
Despite some tobacco growers expressing dismay with low prices the leaf is fetching, especially on the auction market, AHL Group says this year’s marketing season is smooth with no market closures.
During the previous seasons, sales of the leaf, that brings in about 50 percent of foreign exchange earnings, were characterised by misunderstandings due to prices, leading to suspension of the sales. To date, no market has been suspended due to price disagreements.
When The Nation visited Lilongwe Floors on Friday, sales were going on smoothly, but some farmers interviewed blamed buyers, especially under the auction system, for buying their leaf at below set minimum prices.
But Lilongwe Floors assistant manager Samuel Mkutche, in an interview, downplayed the issue saying complaints cannot be avoided in any
set up.
He said: “This season, the market is going on smoothly. In the 11 weeks, there has been no suspensions.
“This shows that farmers are happy and we are also happy. We know expectations of farmers were high because this year, there is less tobacco than what the buyers are looking for.”
This year, buyers were looking for 171 million kilogrammes (kg) as per international trade requirements, but it is expected that the country will only produce slightly above 149 million kg.
Mkutche said the quality of tobacco on offer is much better than last year.
At Limbe Floors, the market is also progressing well, with rejection at below 20 percent, according to floors manager Moses Yoramu.
“The prices are also improving now because good quality tobacco is coming in. The buyers are also offering good prices compared to the beginning of the sales,” he said.
As of Friday, Limbe Floors had sold 15.9 million kg of all types of tobacco, raising $27.8 million (about K20 billion) at an average price of $2.29 (K 1 678) per kg.
Limbe Floors, which has more farmers on contract or integrated production system (IPS), is expected to close at the end of July, according to Yoramu.
A tobacco grower from Nyezelera in Phalombe, Patrick Mwalabu, said he has so far earned K10 million.
“I am yet to finish selling all my bales, but I think the market is better than last year,” he said.
At the end of 11 weeks, AHL Group figures show that 107.23 million kg of tobacco was sold as compared to 74.75 million kg sold during the same period last year.
Cumulative earnings were recorded at $182.97 million (about K134 billion) at an average price of $1.71 (K1 253)per kg from $144.47 million (K105 billion) last year, at an average price of $1.93 (K1 414) per kg.
