Tobacco output likely to shrink

Tobacco Commission of Malawi expects lower tobacco output for this year

Post was last updated: August 1, 2020

The Tobacco Commission (TC) has said it expects the country to register a shrink in the final tobacco output for this year.

TC Chief Executive Officer, Kaisi Sadala, was speaking in Lilongwe on Thursday when Deputy Agriculture Minister, Agnes Nkusa Nkhoma, toured the Lilongwe Auction Floors.

Malawi had initially planned to produce 155 million kgs of tobacco against a trade requirement of 161 million kgs.

But according to Sadala, preliminary figures from the third round of tobacco estimates currently being computed indicate that Malawi will produce less tobacco than anticipated.

Sadala said the shrinkage in total tobacco volume has been cause by shifts in the weather pattern.

“It’s not only for Malawi. It’s a regional problem. Even our friends in Zimbabwe, Mozambique and Zambia are facing similar challenge,” Sadala said.

He noted that the anticipated shrink in total production has resulted in increased competition among buyers on the auction side of the market.

“This has led to significant improvements in prices on the auction side of the market,” Sadala said.

During the visit, tobacco was being bought at a minimum price of $0.90 per kg on both auction and contract markets while the action attracted a maximum price of $1.90 per kg while the contract market had $2.40 as its highest price.

Nkusa Nkhoma said she was impressed with the prices that prevailed at the market.

She, however, observed that growers could realise more earnings from their toil, if some of the charges we’re minimised or eliminated.

Among others, Nkusa Nkhoma said buyers were forcing growers, under contract farming, to buy expensive inputs such as seed and fertilizer from them.

“We need to review some of the charges so that, at the end of the day, the grower benefits,” Nkusa Nkhoma said.

By far, tobacco remains Malawi’s top foreign exchange earner, although its share has been falling sharply in the past ten years in response to changes in prices and weather conditions, and most recently, due to the global anti-smoking campaign championed by the World Health Organisation.

In 2014, Malawi realised $361 million from sales of 192 million kilogrammes (kgs) of all types of tobacco, which declined to $337 million in 2015. But output was static.

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

In 2019, the country sold 165.6 million kgs of all types of tobacco, raking in $237 million.

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