As the tobacco marketing season opens next Wednesday at Lilongwe Auction Floors, the Tobacco Control Commission (TCC) has released minimum and maximum buying prices for the crop.
TCC chief executive officer Bruce Munthali told Business News yesterday that the buying price for burley, grown by a majority of Malawians, will range from 85 cents (K379) to $4.50 (K2 007) per kilogramme (kg). Last year’s minimum price was put at $1.76 (K784) per kg.
The buying price of flue-cured, mostly the preserve of large estates, will range from 25 cents (K129) to $4 (K1 784) per kg compared to last year’s minimum price of $2.65 (K1 181) per kg while dark-fired tobacco will be bought at between $1 (K446) and $3.40 (K1 516) per kg as compared to last year’s price of $2.10 (K936) per kg.
As has always been the case, the Lilongwe market will open first followed by Chinkhoma in Kasungu on April 10, Limbe Auction Floors on April 13 and lastly Mzuzu Auction Floors on April 20, according to Munthali.
He, however, said tobacco output this year has dropped by 10 million kg to 181 million kg compared to last year’s 191 million kg, largely due to the dry spell which affected most parts of the country.
Munthali said the country will exceed its demand for flue-cured tobacco, but it may have difficulties to satisfy the burley tobacco demand.
But he said despite the output shortfall, the quality of leaf this year is still good and farmers must expect good prices.
“Last year some farmers were complaining of prices, but we hope with more buyers entering the market, the prices of tobacco will also be good this year.
“We have licensed three new buyers this year and one of them is a Chinese company named Sino-Ma, which is ready to spend around $30 million [K13 billion, at the current exchange rate] to purchase tobacco leaf and set up a plant for processing secondary tobacco products such as smokeless cigarettes,” he said.
Munthali said the Chinese company is in the process of importing equipment and has already applied for land where they will set up a processing factory.
“This is a huge investment in the tobacco sector. This company will create employment for 200 people and it will help to generate forex as well as pay taxes to Malawi Revenue Authority [MRA].
“More importantly for our industry, it will create competition for buyers and the real winner will be the farmer who will get better prices for his or her tobacco,” he said.
Tobacco Association of Malawi (Tama) chief executive officer Graham Kunimba said they are excited with the development because the new company will bring competition and farmers will have better prices for their tobacco; hence, more profits from their sweat.
The opening of the tobacco markets will be a boost to the country’s foreign exchange reserves and will further strengthen the kwacha, which has been appreciating since in mid-December 2014.
Tobacco is the main foreign exchange earner and contributes about 60 percent to the country’s forex earnings. n