Tobacco yearly earnings drop, now at $144m
Revenue from Malawi’s main forex earner, tobacco, is at $144 million (MK64.8 billion), a drop from $165 million (MK74.3 billion) realised during the same period last year.
Auction Holdings Limited (AHL) figures indicate that as of June 15, the sales volume stood at 85.6 million kilogrammes (kg) with 881 368 bales sold.
AHL corporate affairs manager Mark Ndipita on Tuesday said during the same period last year, sales volume was 96.4 million kg from slightly above one million bales sold.
This year’s tobacco marketing season started on April 8 at Lilongwe Auction Floors followed by Limbe Auction Floors on April 13 and Mzuzu Auction Floors on April 20. Last year, the season started in March.
Tobacco Association of Malawi (Tama) chief executive officer Graham Kunimba has expressed disappointment with the market performance thus far, blaming, among others, high rejection rates under the auction system.
“It is every grower’s wish and expectation not only to sell their products but at a responsible price too. Sadly, the market is engulfed with high rejection rates and low prices.
“Meanwhile, supply at the floors is low and our expectations are for the prices to be adjusted upwards. Sadly this is not the case as prices are still low,” he said.
Kunimba said the largest tobacco growers’ body is currently in talks with authorities on prices and work on thethe rejection rate. He said they look forward to seeing the rate going down to as low as 10 or five percent as was the case last year.
During the eighth week of the season, rejection rate for flue cured tobacco sold under the auction system registered a slight improvement from 80 percent to 72 percent, according to AHL figures.
Meanwhile, the rejection rate for tobacco sold at Lilongwe Auction Floors, as of Monday this week, was at 36.16 percent.
Tobacco Control Commission (TCC) chief executive officer Bruce Munthali in a interview attributed high rejection rates in flue-cured tobacco to global over supply of the tobacco type.
He said Malawi has not over produced flue-cured but other tobacco -growing countries have; hence, affecting every tobacco producing country.
Tobacco, which brings in about 60 percent of all the country’s foreign exchange earnings in a year, contributes 13 percent to the gross domestic product (GDP).
Last year, Malawi earned $362 million (MK162.9 billion) from 168 million kg of tobacco, a similar value it earned in 2013.
In 2012, the country earned $177 million (MK79.7 billion), a record poor performance, from $292 million (MK131.4 billion) earned in the previous year.
