Tobacco revenue hits $49.7 million

Tobacco revenue hits $49.7 million

Post was last updated: June 2, 2020

Kaisi Sadala

Earnings from Malawi’s top export crop, tobacco, hit $49.7 million by end of week six of sales after the country sold over 32.6 million kilograms (kgs) at an average price of $1.52 per kg, figures from regulator, Tobacco Commission, show.

The revenue is, however, 3 percent shy of the $51.5 million realised during the same period last year. The volume traded is also 12 percent lower than the 37.2 million kgs of tobacco sold within the first six weeks of trading last year.

The average price is 10 percent higher than $1.38 the leaf fetched per kg.

Despite the surge in the average prices, some tobacco farmers expressed worry over what they called low prices the leaf is fetching which is not in tandem with quality brought to the market.

Some farmers we spoke to called for a waiver of the market access restrictions which was instituted as a preventive measure against spread of Covid-19.

In an interview outside the Limbe Auction Floors Monrday, a Zomba-based tobacco grower, John Matemba, feared that he could recorded losses this season as the leaf was fetching low prices.

He said most bales of tobacco he brought to the market were sold on a range of $0.80 and $0.90 per kg, despite its top quality.

“There is no one to speak for us and this year we are going to die of hunger because we will not make enough money to buy maize,” Matemba said.

Another farmer, Peter Maweha, said he would fail to settle his loans this season as earnings are way far below the money he invested in production.

Mangochi-based farmer, Dyton Kandulu, said the trend is contrary to expectations as farmers anticipated the leaf to fetch better prices this season as supply was reported to be lower than the market demand.

TC Chief Executive Officer, Kaisi Sadala, said the concerns are already being deliberated by stakeholders.

“The Commission is consulting stakeholders on the complaints relating to attending sales albeit the Covid-19 prevention measures which include limitation of people gathering at one place.

“As for pricing, our statistics show that overall prices are better this year compared to last year and rejection rate on auction is gradually reducing,” Sadala said.

Speaking in an interview last week, Tobacco Association of Malawi Chief Executive Officer, Felix Thole, said the industry has been faced with numerous challenges this year which could affect farmers’ profitability.

Thole said the auction sales have not been impressive compared to contract market, evidenced by rising rejection rate.

This season, tobacco output is estimated at is 154.6 million kgs which is about 6.6 percent shy to last year’s 165.6 million kgs.

Last year the country realised $237 million from the 165.6 million kgs of all types of tobacco sold at an average price of $1.43.

Tobacco remains the country’s major foreign exchange earner.

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