Tobacco marketing not satisfactory—AHL Group
Tobacco sales have not been satisfactory this year, especially on the auction market as evidenced by statistics, which show that only 13 percent has been sold under the system.
This is in contrast to the agreement that 80 percent of the leaf should be sold under integrated production system (IPS) with the remaining 20 percent under auction.
AHL Group corporate affairs manager Mark Ndipita said in an interview on Tuesday the performance tobacco marketing this season is gloomy largely due to high rejection rates, peaking at as high as 90 percent, which have characterised this year’s season.
“Some farmers are still coming to the floors every week, but their bales continue to be rejected, which is also affecting the quality of the leaf.
“The worrying thing is that rainy season is fast approaching, but we still have bales that are yet to be sold,” he said.
Ndipita said the country is now feeling the pinch of the leaf’s supply glut, reduced competition on auction market and the effect of allowing merchants to recruit non-funded growers into contract even though they were not supported in any way in terms of extension advice, loans and inputs.
In an earlier interview, Farmers Union of Malawi (FUM) president Alfred Kapichira-Banda faulted the Tobacco Control Commission (TCC) for the continued reduced demand of the country’s main forex earner, calling on authorities to start looking for other markets for the country’s leaf.
But Tobacco Control Commission (TCC) chief executive officer Albert Changaya, while acknowledging receiving complaints from farmers, wondered why some of the farmers have not had their leaf sold.
“As a commission, we have just learned that there are some farmers who are yet to sell their tobacco. It is very unfortunate that they could stay for this long without selling even a single bale of tobacco.
“But again, the question would rest on what they have been doing all along to ensure that they sell their tobacco,” he said.
This year, buyers’ demand for the leaf was pegged at 171.1 million kilogrammes (kg) for all types of tobacco, down from last year’s 178.2 million kg.
Earnings from the leaf are expected to drop by about 30 percent this year owing to low prices. n
The statement that “As a commission we just learnt….” by TCC is very unfortunate and disturbing. Under which rock has the commission been not to notice that tobacco in the country was not selling. Not only is this going to wipe out many tobacco farmers, even worse, is the fact that the Malawi currency will depreciate severely this year. With that mishap will be souring hyper inflation in Dec to Feb time frame.
What is required is an emergence purchase of the leaf from farmers to give them relief to feed their families. Govt may have to hold stock for this year but at least you have relieved the farmers and the economic activities can continue as multiplier effect from farmer consumption/reinvestment of the sales revenue. Secondly, FISP, a program that imports a lot of farm inputs must be suspended for this year in order to safeguard forex disequilibrium. We must make interactive decisions in this country depending on the situation. It cannot be one size fits all even when the situation has shifted regardless of political consequence.
Long term please reform the sector to remove export bottlenecks such as the need of minimum 500,000kg quota which is there to serve large corporations not to facilitate sales that will benefit the country. If someone can export 50,000kg that will contribute to annual national sales. All constraints on exporting of anything must be removed in Malawi urgently so that next year sales can improve. Please take this hid seriously and act on it to mitigate the pending economic disaster due to lack of ample tobacco sales volumes this year! The life blood of any nation is the volume of its exports so drive exporting by all means not put constraints on it!
I share the frustration of FUM!