Tobacco earnings rise to K361bn in 9 weeks

Trade Dynamics: Navigating Oversupply Risks for Malawi’s Business Growth

Post was last updated: April 21, 2026

Key Business Points:
– Malawi expects to produce 197 million kg of tobacco this year, exceeding buyers’ demand by 14%, which may put downward pressure on prices
– Only 8 tobacco buying companies are operating this season, down from 11 last year, reducing competition
– TC emphasizes proper grading and quality as crucial for maintaining good prices in an oversupplied global market

The Tobacco Commission (TC) has called on tobacco growers to ensure proper grading of their leaf as the 2025-2026 marketing season begins today in Lilongwe, warning that global oversupply could significantly impact prices if quality standards are compromised.

According to the latest production estimates, Malawi is projected to produce 197 million kilogramme of tobacco this year, representing a 14 percent increase above buyers’ demand of 170 million kg. This production surge comes at a time when global tobacco yields are already higher than market requirements.

“The global market currently has more supply than demand, giving buyers a wide pool of countries to purchase from,” stated Telephorus Chigwenembe, TC spokesperson. “Presentation of perfectly graded, good quality tobacco is the only sure way of attracting better prices and making Malawi’s crop more competitive.”

The challenges facing the industry are multifaceted. Agricultural experts warn that reduced demand coupled with increased supply could create market uncertainties that may affect prices even when quality standards are maintained. Leonard Chimwaza, an agricultural extension services expert, noted that falling demand could lead to price drops as supply increases. He expressed concerns that weaker prices tend to increase cases of tobacco smuggling, which further undermines the formal sector.

This season, only eight buying companies are operating in Malawi compared to eleven in the previous season. The firms participating this year are JTI Leaf (Malawi) Limited, Alliance One Malawi, Limbe Leaf Tobacco Company, Hail and Cotton (Malawi) Limited, Premium Tobacco Limited, Associated Central African Limited, African Tobacco Services, and Nyasa Manufacturing Company.

Abiel Kalima Banda, president of Tama Farmers Trust, expressed optimism about the quality of the tobacco produced this season. “I am convinced that most farmers have produced quality tobacco because of the sensitisation campaigns we conducted. Our survey also verified that favorable rains in most areas have ensured production of good quality tobacco.”

The marketing season commences with Lilongwe Floors opening today, followed by Chinkhoma Floors in Kasungu tomorrow. Limbe and Mzuzu floors will open on April 23 and May 5, respectively.

Last year, Malawi faced a similar situation when it sold 221 million kg against a demand of 213 million kg, raising concerns about the regulator’s enforcement of production quotas. Despite the oversupply, the leaf was sold at $2.46 per kg, generating approximately K944.66 billion in earnings.

Tobacco remains Malawi’s primary foreign exchange earner, contributing about 60 percent to the country’s foreign exchange earnings and 13 percent to its gross domestic product. The industry’s performance continues to be crucial for Malawi’s economic stability and development.

Chimwaza advises that farmers should focus on quality over quantity in future seasons, recognizing the market saturation that currently exists. “The oversupply issue should make farmers realize that prioritizing quality can yield better returns even in challenging market conditions,” he said.

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Vanessa Banda
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