Tobacco Rakes in K600bn for Malawi’s Economy Amidst Profit Squeezing Price Pressures
Key Business Points
- Tobacco earnings have reached $345 million, with 80% of projected tobacco sold, 13 weeks into the 2025 Tobacco Marketing Season, presenting opportunities for businesses to capitalize on the tobacco industry.
- The average price per kilogram of tobacco remains 13% below last year’s price, affecting total earnings and highlighting the need for farmers to negotiate better prices, with mipango ya biashara (business plans) that consider price fluctuations.
- Farmers’ registration for the next season has opened, running for four months from 23 June 2025, allowing smallholder farmers to prepare and plan for the upcoming season, a crucial step in kuletsa kwa maenyela (fertilizer application) and other agricultural inputs.
The 2025 Tobacco Marketing Season has seen significant progress, with tobacco sales reaching $345 million, approximately K604 billion, 13 weeks into the season. According to Auction Holdings Limited, 136.3 million kilograms of tobacco have been sold, accounting for about 78% of the projected output of 174 million kilograms. This surpasses last season’s total sales of 133 million kilograms. Tobacco Commission spokesperson Telephorus Chigwenembe noted that the increased volumes indicate a positive development for the economy, as it suggests a good harvest, which can lead to increased economic activity and job creation.
However, the average price per kilogram of tobacco remains a concern, standing at $2.53, approximately K4,430, which is 13% below last year’s price of $2.96, approximately K5,182. This price drop has resulted in lower total earnings compared to last year, with $345 million earned this year compared to $372 million, approximately K652 billion, last year. Tama Farmers Trust chief executive officer Nixon Lita described the season as mixed, with increased tobacco flow but relatively lower prices. Lita encouraged farmers to start preparing for the next season by registering and considering their hectarage and resources, particularly fertiliser application, to ensure a successful harvest.
The low tobacco prices pose economic challenges, as warned by agriculture and economic experts. Mwapata Institute research fellow Christone Nyondo noted that low prices could harm the country’s foreign exchange reserves and trade balance, making it challenging for the Reserve Bank of Malawi to stabilize the kwacha. This, in turn, could lead to increased import prices for essentials such as fuel, fertiliser, and medicines, affecting uzazi wa biashara (business growth) and maendeleo ya kiuchumi (economic development). The market structure, dominated by an oligopoly, allows buyers to maintain low prices, while farmers, especially smallholders, have limited bargaining power. To address this, farmers can panga mipango ya biashara (plan business strategies) that focus on kujenga uwezo wa masoko (building market power) and kuongeza tija (increasing productivity). As the Tobacco Commission opens registration for the next season, farmers are advised to prepare and plan for the upcoming season, taking into account their resources and kubuni mipango ya kilimo (farming plans) that prioritize uzalishaji bora (quality production) and biashara endelevu (sustainable business practices).
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