A saner tobacco market | The Times Group

Post was last updated: December 18, 2017

Despite the tobacco market being dictated by market forces again in 2017, a lot of tobacco farmers could afford a smile in the year following better returns made during this year’s market.

Following a sharp fall in prices that characterised the market in 2016 due to oversupply of the green gold, many frustrated farmers opted to venture into production of other crops in 2017, which saw the country failing to meet the tobacco demand in the year.

The country produced 110 million kilogrammes against a demand of 158 million kilogrammes.

The development had a direct reflection on prices of the crop on the market, hitting an average price of $2 per kilogramme towards the end against an average price of $1.58 in 2016.

Total revenue for 2017 was recorded at $212 million.

The minimum price remained low, according to some farmers, especially those on the auction market at $0.80 while other bales could fetch as high as $4.

Expectations are high, however, that the trend will continue in the 2018 season as the current number of registered farmers and the corresponding volumes expected to be produced in the coming year remain low when compared to the demand.

At the onset of the tobacco growing season, the then Acting Chief Executive Officer of the Tobacco Control Commission (TCC), David Luka, said tobacco buying companies have committed to purchase 171 million kilogrammes of all types of tobacco in 2018.

He attributed the development to failure by the buyers to purchase required volumes this year following low supplies that characterised the market.

He said this would be an opportunity for the country to realise more from tobacco sales next year.

Figures posted recently on the TCC website indicated that 42,303 farmers and farmer groups have been registered to produce tobacco in 2018 and the expected volumes are 166.5 million kilogrammes.

The projected volumes are still short of next year’s demand, with a 2.7 percent deficit.

Stakeholders in the tobacco industry have observed that growing tobacco in the right volumes that satisfy demand can enhance the industry’s contribution to the economy.

They say that over-supply has been the major challenge affecting the crop’s performance on the market.

All this has been happening when some economic commentators and agriculturalists have been stressing that global trends in tobacco sales are a reason enough for the country to start exploring other alternative crops such as legumes.

Economist, Colin Kalua, earlier said that recent developments in the tobacco industry have been perpetuated by overproduction and buyer cartels that lead to low prices being offered for the leaf.

Kalua said that the country is likely going to continue experiencing the decline in revenue from tobacco sales as a result of overproduction and poor quality tobacco making its way to the floors.

Agriculturalist, Steven Kamwendo, also said that time has come for Malawi to acknowledge that the crop cannot sustain the country’s economy going forward.

He highlighted that trends on the global tobacco market should be enough indication that the crop is slowly losing its grip and clinging to it will only make Malawi poorer.

Kamwendo further said that Malawi should start thinking of ways to salvage the situation and explore opportunities offered by other cash crops such as legumes.

It is a known fact that the revenue realised from tobacco sales has declined in recent years from $361.8 million in 2013 to $209 million this year.

However, tobacco is still the country’s major foreign exchange earner and needs to be cultivated until such a time when the country would have successfully weaned its dependence on the green gold.

Let us know what you think of this update and remember to add us on our facebook and follow us on our twitter. Make sure to come back daily for more Malawi business news updates.

Quick Links: Malawi Banking News | Malawi Technology News | Download Business eBooks | Ten Signs You Are An Entrepreneur | What is a Managing Director?

Today’s top business story: Top Commercial Banks In Malawi

Source link