Tobacco future mixed and murky

Post was last updated: October 9, 2019

Future of tobacco production in the country remains mixed and murky as earnings from the once touted green gold dwindles each year.

This year the country sold 165.6 million killogrammes (kgs) of all types of tobacco, realising $237 million at an average price of $1.43.

As at close of the 2018 marketing season, the country realised about $336 million against US$212 million of 2017 after selling 106 million kgs.

This should be cause for concern as by far, the crop remains the country’s top export crop and major foreign exchange earner.

In 2014, Malawi realised $361 million from sale of 192 million kgs which declined to $337 million in 2015 despite maintaining production amount.

In 2016, production slightly went up to 195 million kgs but earnings fell sharply to $276 million.

Due to the fluctuating revenue, commentators suggest that the country finds a lasting remedy as the leaf is less attractive on the international market following the anti-smoking campaign championed by the World Health Organisation (WHO).

African Institute for Corporate Citizenship Chief Executive Officer, Felix Lombe, said there is time has come for the country to consider diversifying its production base.

He said it is not surprising that earnings have gone down by almost 30 percent mainly due to the WHO-championed anti-smoking campaign.

“This is the trend in all countries that rely on tobacco although the decline is less than here in Malawi. The anti-smoking lobby is our big obstacle; issues of quality and over supply are secondary.

“The industry is declining and the question is whether there is another sector picking up to fill the gap left by tobacco and so far there is none unfortunately,” Lombe said.

Tobacco Association of Malawi Chief Executive Officer, Felix Thole said volume and prices have remained unstable for the past 10 years are dependent on market forces.

He said this year, opening of the tobacco market was delayed by about two weeks, a situation that affected prices.

Tobacco Commission (TC) Chief Executive Officer, Kaisi Sadala, said while a decline in earnings from tobacco is a concern, the future of industry remains stable.

“This is why the Government through the TC advocates crop size management by ensuring that we align supply to demand in addition, the industry is repositioning itself to be compliant to global dynamics so that our crop remains competitive,” Sadala said.

Ironically last month as the Commission was enforcing a 75 percent penalty on proceeds from all extra produced tobacco under the new Tobacco Act, the Minister of Agriculture, Irrigation and Water Development waived the enforcement until next season.

He indicated that currently, farmers should be made aware of stipulates of the new law.

The penalty was put in place to caution production of the crop in excess to avert effects of market forces especially reduced prices when the supply supersedes the demand.

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