The Integrated Production System (IPS), a tobacco growing arrangement that enables buyers to establish direct contractual relationship with growers, has more than doubled the leaf’s yield per hectare in Malawi, the Tobacco Control Commission (TCC) has said.
IPS was introduced and first implemented in the 2012/13 tobacco growing season as part of wider tobacco industry reforms to address the leaf’s over-production that has been suppressing market prices, discouraging tobacco farmers and resulting in underproduction in the 2012 season, worsening foreign exchange availability.
Tobacco is Malawi key export crop, wiring in more than half of the country’s foreign exchange earnings, contributing 11 to 13 percent of the total gross domestic product (GDP), employing 12 percent of the population and making up 25 percent of taxes collected in Malawi.
TCC chief executive officer Bruce Munthali, in a tobacco industry write-up seen by Business News, said average tobacco yields is at around 1 700 kilogrammes per hectare compared to 800 kg per hectare for most smallholders non-funded farmers.
“This [IPS system] has improved quality [and] has also resulted in an average increase of five percent on price for the IPS crop.
“In addition, IPS support to food production seems to have had a positive impact on farmers’ maize crop harvests, helping them reach 4 500 kilogrammes per hectare, which is an increase from the previous average of 2 000 kilogrammes per hectare, thus contributing to food security,” he said.
Under IPS, 80 percent of the crop grown is sold through the contract system in which prices are pre-agreed while the remaining 20 percent is sold under the traditional auction system.
Munthali said IPS has stabilised the tobacco market with most farmers who participated benefiting from better returns because the system provided training and access to loans and fertiliser.
Last year, TCC engaged a consultant to review the efficacy of IPS after some growers complained that they were short-changed in terms of pricing and delayed payments.
But government has insisted that the challenges associated with IPS were inevitable for a system that is new.
Growers complained that they were contracted without any price indication prior to the start of the season which industry experts argued is contrary to the basic principles of the system.
Tobacco industry authorities say government is currently working to create the necessary legal framework for IPS to protect tobacco farming through the amended Tobacco Act yet to go to Parliament.