25 million kg tobacco yet to be bought

Post was last updated: October 14, 2016

Over 25 million kilogrammes of tobacco is yet to be sold at the auction floors, representing 14 percent of the total volume the country produced this year.

AHL Group has confirmed that after 26 weeks of sales, there is still uncertainty over when the market will be closed.

Some farmers and economic commentators we spoke to say the large volumes of tobacco still in farmer’s hands, made worse by the high rejection rate, may further delay the closure of the market.

Others even estimate that the market may extend to November or December. Previously, the market closed after 26 weeks of trading.

Statistics from AHL Group show that in 26 weeks of tobacco marketing, the country has traded 156 million kilogrammes of the leaf for a consideration of $238 million. The leaf has been trading at $1.53 cents per kilogramme.

This year’s estimated crop production based on the third crop assessment that was conducted in June was 182 million kilogrammes.

This means that about 25 milion kilogrammes is yet to be sold representing 14 percent of total production.

AHL Group Corporate Affairs Manager, Mark Ndipita, said it is still unclear when the market will be closed as it will depend on the time the tobacco at the floors will be offloaded.

“As of now, it is a bit difficult to predict the exact date the season might end because the country is still experiencing high rejection rates at the floors,” Ndipita said.

As at Tuesday this week for instance, the Lilongwe Floors recorded a 62.43 percent rejection rate while the Limbe and Mzuzu Floors recorded a rejection rate of 83.3 percent and 58.1 percent respectively. Chinkhoma registered a rejection of 45.8 percent.

According to Ndipita, the development could have a spillover effect in the coming season.

“The worrying thing is that we still have more tobacco, about 14 percent, which is yet to sold while at the same time, the rainy season is fast approaching putting farmers who have not yet sold a single bale in an awkward position as they are likely to struggle in the preparations for the next tobacco season,” he said.

In a separate interview, Tobacco Association of Malawi (Tama) President, Reuben Maigwa, said the growers have lost confidences in the system.

“There may still be a future in tobacco but the current trends entail less has been done in ensuring the farmers reap from their efforts. The rejection rate is high and buyers seem content with the leaf they have bought this far,” said Maigwa.

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