The Competition and Fair Trading Commission (CFTC) has placed the country’s tobacco marketing under microscope to probe suspicions of any collusion on pricing among buyers on the market.
The development comes against the background of complaints from some tobacco growers on why buyers have been offering almost the same price averaging $1 (about K713) per kilogramme for some time, while the prices of inputs and labour continues to rise.
CFTC disclosed this on Tuesday on the sidelines of a business presentation made at the ongoing 28th Malawi International Trade Fair (Mitf) titled Protecting Consumers from Misleading Conduct.
The commission’s director of consumer welfare and education Lewis Kulisewa said they are currently working with Tobacco Control Commission (TCC) and plans to sign a memorandum of understanding (MoU) are in the pipeline to ensure that there is mutual understanding in the tobacco industry, which is the main generator of foreign exchange in Malawi.
“We are putting the market under austerity supervision so that we establish the behaviour on the market. As at now, we have never been able to establish or receive tangible evidence as regards collusion on the pricing by tobacco buyers,” he said, adding that this is part of the commission’s obligation to address unequal bargaining in the marketplace.
“Our obligation as a consumer protection agency is to address inequalities in the private law relationship between consumers and traders as well as create a more transparent marketplace,” he said.
Tobacco Association of Malawi (Tama) chief executive officer Graham Kunimba said they welcome any intervention on pricing because what tobacco growers want are good prices that can earn them good returns.
AHL Group corporate affairs manager Mark Ndipita also supports the move, saying they would want to see both buyers and growers leave the market satisfied in terms of pricing.
“As AHL Group, we welcome the initiative that aims at ensuring that tobacco growers get fair prices, and at the same time, buyers get the best quality tobacco.
“It is in the interest of AHL Group to see both auction and contract farmers get fair prices for their tobacco,” he said.
Data from AHL Group indicate that average price for all types of tobacco in 2016 has been stagnant at $1.33 (K950) per kilogramme (kg) compared to $1.55 (K1 106) per kg last year.
In six weeks, earnings are at $37.7 million (about K27 billion) compared to $60.2 million (K50 billion) during the same period in 2015. n