Buyer’s perspective on IPS

Alliance One Tobacco (Malawi) Limited, one of the tobacco buying companies, has said it is buying the leaf in phases as a control measure.

This, the company said, is because it does not want to exhaust its quota of buying tobacco from one region leaving out tobacco from other regions.

Alliance One leaf production manager, Ron Ngwira, in an interview blamed Tobacco Control Commission (TCC) for failing to manage growers’ quota, a situation that has led to over production of the leaf.

He said buying in phases allows them to give all contracted farmers a chance to sell their tobacco before the buyers’ desired quota is exhausted.

Ngwira said non-financed contract farmers are identified by institutions such as National Smallholder Farmers Associations of Malawi (Nasfam), Tobacco Association of Malawi (Tama) and tobacco growers’ associations.

Said Ngwira: “In October 2014, Tobacco Control Commission [TCC] was given a trade requirement for both contract and auction farmers to be 142 million kg.

“But come 2015, growers produced 168 million kg which means that before even the buying companies started buying this season, there was well over 20 million tonnes of tobacco in the companies’ warehouses in Kanengo, Lilongwe.

He said about 80percent of Malawi’s tobacco is bought by big five companies, which entail that tobacco must come from contracted farmers because it is easier to trace such tobacco should it have issues on the market such as use of child labour, nesting or traces of chemicals not allowed in the tobacco production sector.

This scenario could explain why there has been high rejection rate this year, peaking at as high at 98 percent in some instances.

Ngwira said there are a number of strategies government can employ to normalise the situation.

He said government could consider removing the minimum price so that buyers can buy the surplus tobacco at any price because even if they did, in the present situation it can take the companies up to four years to offload that tobacco.

“Government must find money with which it can remove this 40 million kg of tobacco and put it somewhere so that next year, the same tobacco can be bought. “Another way could be that farmers must bring back the same tobacco to the market next marketing season.”

Experts have long argued that if output is not controlled, price are always depressed. n