Tobacco rejection rate worsens, hits 76%

Tobacco growers selling their leaf under the auction system should brace for tough times ahead as the rejection rate of the leaf hit 76 percent yesterday, up from 30 percent on opening day of sales.

AHL Group corporate affairs manager Mark Ndipita confirmed yesterday that 4 003 bales were on offer under auction system, but only 24 percent of the leaf was sold.

Last year, rejection rates hovered between 20 percent and 30 percent at the start of the marketing season.

Prices of burley leaf continued to be lower than those of last year, with the lowest recorded yesterday still at $0.80 (about K552) per kilogramme (kg) and the highest at $1.51 (about K1 041) per kg.

However, growers on contract farming went home smiling again as prices hit the $2 per kg mark again.

“The highest price on contract system today was $2.20 [about K1 518] per kg,” said Ndipita

In his remarks when he opened the 2016 Tobacco Marketing Season at Lilongwe Floors on Wednesday, President Peter Mutharika asked buyers to treat growers fairly this year.

Tobacco Association of Malawi (Tama) chief executive officer Graham Kunimba on Wednesday said buyers were hesitant to buy the leaf at this stage because they think it belongs to intermediaries.

He said: “The whole market can be described as a mixed bag.”

This year’s marketing season comes amid a 33 percent over production against a demand of 158.1 million kg, according to first round crop estimates which were released in February. The estimates had put production at 211 million kg.

Last year, Malawi produced 192 million kg of tobacco which earned the country $337.4 million (about K216.8 billion).

Tobacco is Malawi’s main export crop, contributing about 60 per cent of foreign exchange earnings and 13 percent of the gross domestic product (GDP). n