Tobacco Commission speaks on weak tobacco earnings

post was last updated: October 11, 2019
Kaisi Sadala

The Tobacco Commission (TC) on Wednesday attributed the low prices that prevailed on the market during the just-ended growing season to inferior quality of the leaf at the start of the market and inaccurate forecasting by the authorities.

Briefing reporters in Lilongwe on how the market, which closed on September 27 progressed, TC Chief Executive Officer, Kaisi Sadala, said a total of 165.7 million kilogrammes (kgs) of all tobacco was traded realising around $237 million at an average price of $1.43 per kg.

The traded volumes, realisation and average price attained were all lower than those attained last year where Malawi sold 202 million kgs, realising about $337.5 million at an average price of $1.67 per kg.

“There are a number of factors that affected the average price this season. First, we went into the season believing we had too much tobacco only to realise at the end that there wasn’t that much tobacco,” Sadala said.

Crop estimates had indicated that Malawi would produce around 206 million hectares of the green gold but the country only produced 165.7 million.

Sadala said the overestimated production figure could have created the impression to buyers that the country had plenty of tobacco, thereby affecting pricing.

“But we saw a pickup in prices towards the end when it was realised that the country did not have that much tobacco,” Sadala said.

According to Sadala, the authorities would sit down to address the problem so as to avoid a repeat of the situation.

“In addition, the quality of the leaf at the start of the market wasn’t that impressive,” Sadala said.

He added that the market also experienced high rejection rates of above 26 percent this year as compared to below 20 percent last year, owing to perceived oversupply.

Looking into the next growing season, Sadala said grower registration and licensing opened on June 17 and closed officially on September 30 in line with Section 36 of the Tobacco Industry Act No. 10 of 2019.

He added that there was an extension up to October 4 to accommodate late applications.

“Over 50,000 licenses have been issued to growers, a slight increase over 2018/19 season,” Sadala said.

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