Govt summons buyers over low tobacco prices
Minister of Agriculture, Irrigation and Water Development Allan Chiyembekeza on Thursday and Friday last week held talks with tobacco buying companies over low prices following a general outcry from growers, Business Review has learnt.
On the agenda, according to sources at Ministry of Agriculture, Irrigation and Water Development, was also the suspension of sales of flue-cured tobacco under auction marketing system last month.
“All the licensed tobacco buyers were separately summoned by the minister at Capital Hill where, among others, the issue of low tobacco prices, high rejection rate and the future of flue-cured tobacco under auction took a center stage,” said one source who did not want to be named.
The source said the meeting followed the minister’s visit at the Mzuzu Auction Floors last week where he learnt about tobacco buyers reluctance to buy flue-cured tobacco under the auction system.
The traditional auction system of marketing tobacco is running in parallel with contract system or the Integrated Production System (IPS), an arrangement which provides for contact farming of tobacco and direct facilitation of growers by tobacco processors and buyers.
Chiyembekeza, according to the source, took his time to display samples of flue-cured tobacco under both auction and contract system and questioned tobacco merchants over their perceived ‘discrimination’ of flue cured tobacco under auction system.
“At the end of the meetings, the buyers assured the minister that they will do something on propping up better prices for tobacco and on ensuring that all the flue-cured tobacco is bought regardless of which marketing system,” said the source.
While Chiyembekeza was not immediately available for comment on Wednesday, Tobacco Control Commission (TCC) chief executive officer Bruce Munthali confirmed about government summoning of tobacco buyers over what he said a series of issues ranging from depressed tobacco prices and high rejection rate of burley tobacco.
Munthali, who said TCC facilitated the meetings between government and tobacco buyers, said it was pleasing to learn from the meetings that buyers showed commitment to purchase all tobacco this year.
“We were on a nationwide assessment of tobacco marketing last week and this is where government through the minister leant about several issues that tobacco growers raised hence the summoning of tobacco buyers,” he said.
Munthali said both TCC and government are committed also to fight the plight of tobacco growers at auction floors level through better tobacco prices.
Commenting on the performance of the tobacco market so far, Munthali said the market has cumulatively realized $216 million worth of revenue at auction floors level from 117 million kilograms of tobacco in 13 weeks.
Tobacco Association of Malawi (Tama) president Reuben Maigwa complained during the association’s annual congress in Lilongwe a week ago that there is a worrying trend where the rejection rate on better quality leaf selling under auction system is hovering well above 36 percent.
This year, burley tobacco price is ranging from 85 cents to $4.50 against last year’s price of $1.76.
The buying price for flue-cured tobacco, mostly grown in large estates, is ranging from 25 cents to $4 compared to last year’s $2.65. While dark-fired tobacco variety is being bought from $1 and $3.40 as compared to last year’s price of $2.10.
