No plans to phase out auction market—minister
Minister of Agriculture, Irrigation and Water Development says government has no plans to phase out the auction system of selling tobacco.
Since the introduction of integrated production system (IPS) or contract system of selling the leaf in 2012, 20 percent of tobacco is sold through the traditional auction system while the remaining 80 percent goes through IPS.
In an interview on Monday during the opening of Mzuzu Floors, Minister of Agriculture, Irrigation and Water Development Joseph Mwanamvekha assured growers that the auction system is here to stay.
He said 20 percent is just a minimum and growers are at liberty to sell their leaf on either platform.
“The minimum will be changing from year to year according to farmers’ preference to either sell on auction or contract,” said Mwanamvekha.
The minister assured that the auction market will not phase out because the system controls IPS.
Mwanamvekha said although the leaf sold under contract market seems to be fetching higher prices, there is need to consider deductions tobacco growers are subjected to.
Over the years, growers have been accusing tobacco buying companies of forcing growers to be contracted to a buyer by offering lower prices of same quality leaf on auction market while the same attracts higher prices under IPS.
For example, as the Mzuzu Floors was opening on Monday, tobacco offered on auction attracted prices ranging from 80 cents (K586.40) to $1.90 (K1 392) per kilogramme (kg) while the same quality on IPS was bought in the ranges of 80 cents to $2.40 (K1 759) per kg.
Growers have since interpreted this trend as a deliberate ploy by buyers to gradually phase out the auction market and force them to be on IPS.
One of the farmers, Sailini Nyanjaya from Engucwini in Mzimba District, who grows burley tobacco, said the growers feel the auction market system is on its way out.
“Although I have never signed a contract with any buyer, I will soon do as there are fears that the auction market will gradually be phased out ,looking at the prices our leaf is fetching,” he said.. n
