After a volatile period of high rejection rates and poor prices, growers can now heave a sigh of relief as tobacco prices have shown signs of improving.
When the market opened about seven weeks ago, tobacco sales were characterised by disruptions as farmers cried foul due to poor prices buyers were offering.
At Chinkhoma and Lilongwe Floors, some growers even refused to sell their crop under contract or integrated production system (IPS), which was seen to be stable in terms of pricing compared to the auction system.
But seven weeks on, the average price of burley—grown by a majority of smallholder growers—on both auction and IPS have began to rally steadily to $1.39 (K993) per kilogramme (kg), representing a four percent increase compared the week before, according to AHL Group.
Earnings in week seven have jumped to $50.6 million (K36 billion) from $38 million (K27 billion) the previous week.
On the other hand, the price for dark fired tobacco has also peaked at $2.09 (K 1 472) per kg compared to $1.92 (K1 372) per kg during the same period last year.
“The general tobacco market appears to have stabilised as evidenced by the absence of sale stoppages on both contract and auction, and with an improvement in no-sale rejection percentage,” said a commentary from AHL Group.
The group’s corporate affairs manager Mark Ndipita said in an interview yesterday the mood at the country’s four floors has improved.
He said there are no longer disruptions to the marketing activities.
“Prices are improving unlike before and the market has stabilised. In fact in the last two weeks, there have not been any disruptions. Even though some farmers are still not happy, most of them are satisfied,” he said.
Ndipita said the price of flue cured tobacco has also improved to $1.97 (K1 408) per kg and $2.68 (K1 916) per kg on auction and contract respectively.
A Kasungu-based farmer Stain Katenga said he is happy that prices are picking up, but pleaded with the buyers to do more because most farmers obtained loans to grow the crop.
“The past three weeks have been alright and I cannot complain. Our wish is that the prices must continue going up because this year the market did not start well,” he said.
Minister of Agriculture, Irrigation and Water Development George Chaponda said the buyers are responding to concerns from government to raise the prices of tobacco, which brings about 60 percent of the country’s foreign exchange earnings.
“As government, we will continue our discussions with buyers to make sure that our farmers get good prices because tobacco is an integral crop,” he said.
Tobacco is an important crop to the country’s economy and contributes about 13 percent to gross domestic product (GDP).