Tobacco raises in $172.3m in 13 weeks

Tobacco, Malawi’s main foreign exchange earner, has generated in $172.3 million (K126 billion) in 13 weeks of sales at an average price of $1.95 (K1 429) per kilogramme (kg), according to Tobacco Control Commission (TCC).

The earnings are from 88 million kg of tobacco sold since the markets opened in April this year.

This compares to 83 million kg sold during the same period last year, earning $128 million (about K98 billion) sold at an average price of $1.53 (about K1 121) per kg, according to the report

Flue-cured tobacco is fetching high price and is selling at an average price of $2.89 (K2 118) per kg while burley is being sold at $1.73 (K1 268) per kg compared to an average price of $2.51 (K 1 839) per kg for flue-cured and burley at $1.37 (K1 002) per kg for burley in previous marketing season.

So far, 68.1 million kg of burley, 16.8 million kg of flue-cured, 2.7 million of dark fired tobacco and about 270 000 kg of southern division dark fired has been sold since the market opened in April.

According to figures from TCC, the leaf sold under contract marketing or integrated production system (IPS) continues to fetch good prices as compared to the one selling under the traditional auction market.

In the week 13 of sales, burley selling on the auction market was pegged at an average price of $1.45 (K1 062) per kg while the same leaf was sold at $1.77 (K1 297) per kg, representing a difference of 32 cents, according to TCC

While flue-cured was being sold at $2.89 (K2 118) per kg under contract market as compared to $2.85 (K2 089) per kg on auction, a variation of two cents.

In an interview, Tobacco Association of Malawi (Tama) chief executive officer Mathews Zulu said although the prices on auction are on the lower side, merchants are now scrambling for the leaf offered on auction.

He said some buyers are paying better prices for the leaf on auction depending on quality.

“We have observed that buyers are now scrambling for the leaf sold under auction because it is not owned by any buyer unlike contract. The lower average price on auction tobacco is coming in due to quality of the leaf,” said Zulu.

He said it is rare for growers under contract farming to present poor quality leaf, but if they do, they are also getting lower prices.

“As Tama, we are looking at how to sustain this year’s trend. The prices are better because we produced lower volumes than the required demand as most farmers shifted from tobacco to other crop such as legumes,” said Zulu.

This year’s tobacco output went down by about 36 percent to around 126 million kg.

Tobacco remains Malawi’s main foreign exchange earner, accounting for about 60 percent of the country’s foreign exchange earnings, and 13 percent of the gross domestic product (GDP).

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