Minister of Agriculture, Irrigation and Water Development Allan Chiyembekeza has expressed disappointment over continued over-production of tobacco.
The minister has since blamed the situation on the industry’s failure to manage crop size in line with demand from the buyers.
Chiyembekeza, speaking in Lilongwe on Wednesday when he opened the 2015 Tobacco Industry Seminar, also linked continued over-production to failure by industry regulator Tobacco Control Commission (TCC) to manage production quotas of growers and late submission of trade requirements.
He said: “I am aware that farmers who claim to have over-produced go to TCC for quota uplifts. This should stop with immediate effect because this is how vendors or intermediate buyers are accommodated.”
Malawi is currently ranked as the largest producer of burley tobacco in Africa, but ironically, the country does not add much value to its tobacco.
Chiyembekeza said he was aware that TCC has been failing to enforce production quota regulation effectively because tobacco buyers submit trade requirements late.
The minister also linked this year’s low tobacco prices to oversupply on the market.
He said: “We need to start managing our crop size because the global tobacco trends are changing and there is need for us to be proactive.”
In the 2015 Tobacco Marketing Season, Malawi sold 192.7 million kilogrammes (kg) of all types of tobacco against a trade requirement of 179 million kg. The economy earned $337.4 million at auction level, down from $361.6 million worth of revenue realised in the 2014 season.
Commenting on the non-tobacco-related material (NTRM) in tobacco, Chiyembekeza said it was pleasing to note that the magnitude of the problem has reduced over the years due to awareness campaigns.
However, he bemoaned increased cases of illegal cross-border trade in tobacco among neighbouring countries which he said disturbs the balance between supply and demand on the Malawi market as well as earnings.
Reacting to the minister’s concern, TCC chief executive officer Albert Changaya admitted that over–production of tobacco this year led to depressed prices.
He also attributed low prices this year to limited competition by the buyers on the market.
Further, Changaya updated participants that currently TCC has registered 26 000 growers compared to 39 800 growers registered for last year. He attributed the reduced number to poor prices which, he said, have frustrated some growers.
The seminar, among others, will review the performance of the tobacco sector in 2015 and come up with resolutions to addressing the challenges that faced the industry during the year. n