Tobacco revenue hits $269.9 million

Revenue for tobacco, Malawi’s top foreign exchange earner, hit $269.9 million in week 17, after selling about three quarters of this year’s estimated output.

However, analysts and authorities have forecast that revenue from tobacco, which brings in about 60 percent of the country’s foreign exchange proceeds, will likely settle at around $300 million, 17 percent below last year’s total of $362 million.

The low tobacco earnings coupled with suspension of aid by the country’s major donors—who provide about 40 percent of the national budget—is a warning to Malawi which usually suffers a skewed trade balance with imports being higher than exports.

Auction Holdings Limited (AHL) sales figures for the period up to week 17—up to July 19—published this week indicate that the country sold over 147.4 million kilogrammes of the leaf, which is approximately three quarters of the official estimates of 193 million kilogrammes for the 2014 season.

AHL figures also show that up to week 17, 12 percent more tobacco volume has been sold in 2014 compared to 132 million kilogrammes sold in 2013 after same period sales.

According to the figures, both burley and flue cured tobacco registered a price increase of one percent to $1.94, and $2.77 per kilogramme respectively while dark fired saw a price jump of 28 percent to $1.95 per kilogramme compared to the previous season.

Earlier   this   month,Tobacco Control Commission (TCC) chief executive officer Bruce Munthali noted that up to week 16 of this year’s marketing season, earnings—what the farmer receives—dropped by three percent compared to corresponding period last year due to what TCC has described as poor prices.

Munthali pointed out that this year’s earnings are three percent lower than same period last year due to poor tobacco prices globally.

However, TCC was quoted in the media having said that January to June 2014 exports for Malawi’s major forex earner, tobacco, jumped by about 36 percent.

Available figures also indicate that in volumes the third round tobacco estimates production are at 182 million kilogrammes which represent a six percent decrease from the second round estimates largely attributed to weather-related factors.