Tobacco Commission blames US ban for high rejection

Malawi’s Tobacco Commission blames US ban for high rejection

Post was last updated: July 16, 2020

Tobacco market regulator, Tobacco Commission (TC), has partly attributed a recent rise in tobacco rejection rate on the market to a tobacco export ban to the United States (US) market imposed last year.

According to TC Chief Executive Officer, Kaisi Sadala, some buyers are yet to ship tobacco which was bought during the previously season.

In November 2019, The US Customs and Border Protection (CBP) issued an order that all tobacco deemed to have been produced using child and forced labour are denied entry into the country.

Currently, only Alliance One International is exporting local tobacco to the US.

Figures from market operator, AHL Group, indicates that no-sale rejection for tobacco on the auction market stood at 53 percent in week 12 of sales compared to 23 percent at the same time last season.

During the week under review, Mzuzu Auction Floors recorded a 82.9 percent no-sale rejection.

Sadala said on average, daily rejection rate continue to fluctuate between 30 and 50 percent on auction market.

“The main reason is low participation by buyers on auction. This is largely emanating from the WRO as some buyers have not been able to ship previously purchased tobacco which was initially meant for the US market.

As a result, they have accumulated huge stock levels which will have to be relocated hence, negatively affecting original plans to participate on auction this year,” he said.

However, Sadala said the problem is being lessened by the coming in of a new buyer on the market.

In a separate interview, Tobacco Association of Malawi president, Abiel Kalima Banda, rated the situation as worrisome.

“We do not have a problem, our farmers properly graded the tobacco as they were taught and when we ask the buyers why the rejection is this high, we are not given a concrete answer. We will continueto engage them,” Banda said.

By end of week twelve, about 78.3 million kilogrammes of all types of tobacco were sold at an average price of $1.51. The leaf has this far raised $118.6 million.

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