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TCC blames supply glut on prolonged sales season

Tobacco Control Commission (TCC) has said this year’s marketing season has been one of the longest, blaming the situation on the leaf’s supply glut.

Some of the tobacco is yet to be sold largely because of high rejection rate, which peaked at as high as 95 percent, a situation that led to suspension of the market a number of times.

This year's tobacco selling season has prolong
This year’s tobacco selling season has prolong

TCC chief executive officer Albert Changaya, said in an interview on Tuesday, Limbe Floors will close on October 21, but a decision is yet to be made on the closure of Chinkhoma, Lilongwe and Mzuzu floors.

He said: “If my memory saves me right, there have been some years when the marketing season has gone on up to December.  Next year we will restrict production.”

Changaya said to solve the problem next year, output will be restricted at 151.1 million kilogrammes (kg) for all types of tobacco. This year’s estimates put production at 211 million kg of all types of tobacco.

Other players in the tobacco industry argue that the prolonged selling season will likely affect production of the leaf next year because some farmers will have difficulties to raise enough capital.

A statement from AHL Group said weak demand and competition exacerbated by withdrawal of some merchants from the buying line is affecting weekly burley prices.

“Low contract offerings and high rejection rate on the auction market affected weekly throughput as only two million kilogrammes of all types of tobacco was sold in week 27 compared to 3.2 million kilograms sold in the previous week 26.

This year’s marketing season comes amid a 33 percent over production against a market requirement of 158.1 million kg, according to crop estimates.

Last year, Malawi produced 192 million kg of tobacco, which earned the country $337.4 million (about K216.8 billion).

Tobacco is Malawi’s main export crop, contributing about 60 percent of foreign exchange earnings and 13 percent to gross domestic product (GDP).

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