Two weeks before the official closing of the tobacco market, the Tobacco Commission (TC) says it is hopeful of meeting the 2021 grower demand.
In an interview yesterday, TC chief executive officer Joseph Chidanti Malunga said as at July 28, 110 million kilogramme (kg) of tobacco had been sold at an average of $1.63 (about K1 300) per kg, raking in $181 million (about K148 billion).
He said: “We predicted that we are going to have 120 million kg and as we speak, we are at 110 million kg. Probably, if the market goes on for the next two weeks, we should be able to hit what we projected.
“Even the average price is much better this year.”
Malunga said the commission is, however, looking at ways of reducing the cost of pricing tobacco so as to increase farmer profit margins.
Among others, he said, the TC are looking at having loans for inputs issued to farmers reduced by buyers.
TC has since issued a directive stopping buyers from issuing farm input loans to tobacco growers for production of alternative crops other than tobacco.
Meanwhile, to increase tonnage for buyer demand, the commission says it is reviewing the Tobacco Act, where a penalty on human rights violations will be introduced.
Said Malunga: “We must be very abiding to the EU Supply Chain Due Diligence and America’s Withholding Order Release which demands that we prove that our products have not been produced under human rights violations.
“These regulations in Europe and America will affect any crop we send to these continents, not just tobacco. So, we don’t want to be caught in this trap.”
According to TC production estimates, Malawi will likely produce 122 million metric tonnes of tobacco against an estimated buyer demand of 132 million metric tonnes.
Estimated tobacco production is 15 percent below last year and 25 percent below the five-year average.
Last year, the country sold 112.89 million kg of tobacco, realising $173.5 million (about K142 billion). The earnings were 27 percent below the $237 million (about K194 billion) realised during the 2019 season.
The National Statistical Office (NSO) figures show that since 2009 export earnings from tobacco has declined by 45.00%, from US$450.00 million to US$237.00 million in 2019.
However, the Malawi Agricultural Policy Advancement and Transformation Agenda outlined several constraints government would have to address, including investment in infrastructure, government input subsidies, technical knowledge to farmers, research and development, as well as agro-processing instruments.
In response, tobacco buying companies submitted their position on the amendment of the Tobacco Industry Act to the Tobacco Commission, which stops them from extending farm input loans to tobacco growers for production of alternative crops and inhibits diversification.
Tama Farmers Trust chief executive officer Nixon Lita earlier said as regards inputs for contracted growers, Tama would love to see growers getting only tobacco contract production inputs.
He said additions that are not listed as essential are on record of increasing loan package and thus eating into would be grower profits hence the TC and Ministry of Agriculture need to enforce the prescribed inputs only.
Meanwhile tobacco farmer registration has started at Limbe, Kanengo, Chinkhoma and Mzuzu auction floors with the commission hoping to register over 50 000 growers.
The commission says buyer demand for this season will be established by next month.