Malawi’s Tobacco Industry Sees 16.6% Price Drop: What It Means for Business

Key Business Points

• The average price of tobacco in Malawi has plummeted by 16.6% this year, despite a rise in production costs, affecting the profitability of local farmers.
• The Tobacco Commission reports that 14 million kilograms of tobacco were sold at a cumulative value of $31.9 million, a 40.6% drop from the same period last year.
• The decline in tobacco prices poses a challenge to Malawi’s major export crop and foreign exchange earner, with high input costs potentially compromising farmer profitability.

Malawi’s tobacco marketing season has been marked by a significant decline in prices, with the average price per kilogram dropping to $2.28, a 16.6% decrease from last year’s price of $2.67. According to the Tobacco Commission’s latest report, the sales figures for the first three weeks of the season are concerning, with a total of 14 million kilograms of tobacco sold at a cumulative value of $31.9 million. This represents a 40.6% drop from the same period last year, when 20.1 million kilogrammes were sold, valued at $53.7 million.

The decline in tobacco prices is attributed to various factors, including reduced trading days in the first three weeks of the market. Tobacco Auction Holdings Limited General Manager Graham Kunimba notes that the reduced volumes are a result of the limited trading days, while Tobacco Association of Malawi Trust president Abiel Kalima expresses concerns that the current sales figures do not give hope to farmers, given the high input costs incurred during farming.

The tobacco industry is a critical sector in Malawi’s economy, accounting for a significant portion of the country’s foreign exchange earnings. With a demand of 213 million kilograms for the 2025 market season, the decline in prices poses a challenge to the industry’s growth and development. As Malawi’s major export crop, the tobacco industry is a key driver of economic growth, and any decline in prices has a ripple effect on the broader economy.

The situation is a concern for local farmers, who are already struggling with high input costs. The decline in prices may compromise their profitability, making it challenging for them to recover their costs. Kuvala kwambili, or "doing business," in Malawi’s tobacco industry requires careful consideration of these factors to ensure sustainable growth and development. As the industry navigates these challenges, it is essential to identify opportunities for improvement and invest in strategies that enhance productivity and competitiveness.

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