‘Tobacco auction system still relevant for Malawi’

Malawi Government has said despite recent policy changes in the marketing of tobacco in Malawi, it has no intention to completely flush out auction system.

“As of now we can’t do away with auction system. This system provides checks and balances in our tobacco industry,” said Controller of Agricultural Services in the Ministry of Agriculture Gray Nyandule-Phiri in an interview on Tuesday.

He was speaking on the sidelines of a study tour by a Malawi delegation at the Tobacco Sales Floor (TSF) which is one of the three major tobacco auction floors in Zimbabwe.

His statement comes at a time Malawi has just adopted the Integrated Production System (IPS) of growing tobacco which has sparked discontent among some key tobacco stakeholders in the country.

Under IPS or commonly referred to as contract framing is allocating 80 percent volume of all tobacco output with the remaining 20 percent being allocated to the traditional auction system.

Such a situation has prompted some players in the tobacco sector to speculate that government intends to eliminate auction system of marketing tobacco in the near future in favour of contract farming.

“Even if auction system is allocated 10 percent, it will still be an important basis for our industry,” he added.

He cited Zimbabwe which he said still attaches more importance to auction floors which he said acts as a basis or a benchmark for contract marketing.

In Zimbabwe, 64 percent of tobacco marketing is allocated for contract farming volumes while the remaining is for auction, but according to the Tobacco Industry and Marketing Board of Zimbabwe (TIMB), the figure changes during the course of a marketing season depending on market forces.

Nyandule-Phiri explained that it is the wish of government to see the proper inflow of foreign exchange in the wake of adopting IPS which he said addresses the issues of traceability of tobacco from farmers.

TIMB deputy manager Meanwell Gudu said auction system in Zimbabwe is still the backbone of the industry as it dictates the overall pricing structure for the industry.

“Our auction system is still the basis for contract pricing and we can’t through it away,” he said.

Malawi intends to upscale the production of flue-cured tobacco in the next growing season hence, the Malawi delegation in Zimbabwe, which has over the years excelled in flue-cured farming.

According to Gudu, Zimbabwe has favourable climate for the growth of flue-cured tobacco.

The country produces an average of 150 million kilogrammes of flue-cured tobacco per annum.