Tobacco prices improve, rejection rate hits 96%

Despite tobacco prices showing signs of improvement, rejection rate for the leaf sold under the auction system this week hit 96 percent and 80 percent at Limbe and Mzuzu floors respectively.

This scenario forced growers sale of the leaf at the two markets.

Both AHL Group and Tobacco Control Commission (TCC) confirmed the two markets were suspended on Wednesday up to Monday next week to sort out the differences.

“Although there is an increase in average prices for burley and flue cured tobacco on both markets [contract and auction], the current challenge that has resurfaced is high rejection rates,” said Mark Ndipita, AHL Group corporate affairs manager.

“The situation was bad at Limbe Floors as it recorded a rejection rate of 82.2 percent on Monday and on Wednesday, the situation got worse with an unprecedented seasonal high rejection rate of 95.6 percent,” he said.

Speaking separately, TCC chief executive officer Albert Changaya said the rejection rate is still high because there is an assumption that tobacco was overproduced.

“I summoned buyers, but we have not really agreed what needs to be done until we establish if indeed farmers overproduced,” he said.

The second round crop estimates showed that there been a 33 percent glut in tobacco against buyers’ demand of 158.1 million kilogrammes (kg).