Revenue from tobacco, Malawi’s main foreign exchange earner, peaked at $57 million (K24 billion) from the previous week’s $42.1 million (K17 billion), selling at an average price of $1.67 per kilogramme, figures from Auction Holdings Limited (AHL) have shown.
Compared to the same period last year, this year’s revenue has gone up 159 percent $22 million (K9.1 billion) out of 13.5 million kg of the leaf sold.
The $57 million is out of 34.1 million kg of the leaf sold in all the country’s auction floors.
Out of this, 32.5 million kg comprised burley, grown by a majority of smallholder farmers sold at an average price of $1.62 (K677) per kg, and 1.6 million kg flue cured, the preserve of large estates, trading at $2.63 (K1 099) per kg.
The tobacco auctioneer said in a commentary that weekly average prices continue to rise with burley prices moving by six percent on week six averages.
“Bale throughput [which is the percentage of bales sold weighed against sales capacity] stood at 65 percent in week seven. Highest throughput for the season was observed in week six when 83 295 bales were sold representing a 67 percent throughput,” reads the commentary in party.
Malawi this year is expected to realise about $300 million, up from last year’s $177 million.
Already, with the tobacco dollars trickling in, the kwacha, which has been on a free-fall since May 2012, has started appreciating and is now trading at around K413 to a dollar at National Bank of Malawi, K411 at CDH Investment Bank and K418 at Indebank.
The trickling in of proceeds from tobacco is critical because it means a boost to the country’s foreign currency reserves which could be useful to anchor the kwacha and also help the private sector to procure fuel and raw materials for production purposes.
Malawi heavily relies on tobacco which brings in more than half of the country’s foreign exchange and contributes roughly 13 percent to the gross domestic product (GDP).
The import cover, the determinant of the country’s ability to import goods and services in a specified period, is slightly above one month, an equivalent of $188.1 million (K79 billion) against the internationally recommended minimum of three months [$564m].
In an earlier interview, Tobacco Control Commission (TCC) chief executive officer Bruce Munthali expressed confidence with the level of proceeds this year compared to the same period last year.
He said if the trend continues, Malawi is poised to have a favourable tobacco market season this year.