Buyers protest tobacco input loans restrictions

Tobacco buying companies have protested a directive by the Tobacco Commission (TC) stopping them from extending farm input loans to tobacco growers for production of alternative crops contrary to the Tobacco Industry Act.

In an interview, JTI Leaf Malawi corporate affairs director LimbaniKakhome said the provisions as quoted by the TC contradict the need for crop diversification.

He said: “We submitted our position for the amendment of the Act, what is the rationale of limiting inputs when the government is promoting diversification in the sector.

“Determining of the type of inputs to farmers on behalf of buyers is against the gazetted tobacco regulations of 2014 which give power to the contracting company to determine.”

In a seperate interview, Limbe Leaf Tobacco Company legal and corporate affairs director Febbie Chikungwa in a written response said the prohibition is contrary to the Tobacco Industry Act which mandates the TC to promote diversification.

She said: “Currently, the prohibition is hampering our efforts to promote food security for all contracted farmers and to diversify with tobacco to generate an additional income that adds further to the farmer’s overall living income.

“It is important that government’s drive is supported by the private sector and in particular the tobacco industry, and we hope the review of the Tobacco Industry Act will take these sentiments into account”.

On her part, Alliance One Tobacco corporate affairs manager Fran Malila in a written response said they strongly believe that by providing inputs at lower than market levels, they provide a sound sustainable platform from which the farmer can grow tobacco alongside other crops and achieve a living income and a sustainable future.

She said: “It is necessary for us to prove our farmers have food security and if we can’t, we will find it very difficult to prove we are producing tobacco in the compliant manner required and, therefore, it will seriously jeopardise our future with those discerning customers.”

As a company, Malila said they are very confident the system they have in place is a very fair production environment and if it was bad, the farmers, banks and TC would not have allowed it to carry on for the eight years it has been operational.

As part of contributing to agricultural diversification away from tobacco, buying companies have been providing farm input loans to farmers on contract for alternative crop production.

However, while the Tobacco Industry Act provides for diversification of crops away from tobacco, the same law restricts buyers from issuing farm input loans for other crops to growers.

Section 4 (b) of the Tobacco Industry Act provides for the promotion of crop diversification through rotation between tobacco and other crops while Section 45 (3) of the same Act provides that in case of funded production, a buyer shall not provide inputs for alternative crops.

Reacting to the concerns, TC chief executive officer Joseph Chidanti Malunga said the Tobacco Industry Act does not allow issuance of the inputs from buying companies to farmers for production of alternative crops.

He said for the past two years, TC with authorisation from the Ministry of Agriculture, implemented a waiver of the provision of the Act to allow companies provide loans to farmers for alternative crops.

Chidanti Malunga said: “This new government is correcting the legal anomaly because you cannot waive a law, it’s only Parliament that can change laws not individuals through a mere waiver.”

He said too much input loans to tobacco growers affects their income as the large chunk of proceeds is depleted by loan repayment to tobacco buying companies.

Tama Farmers Trust chief executive officer Nixon Lita said on inputs for contracted growers, Tama would love to see growers getting only tobacco contract production inputs.

Section 45(3) of the Tobacco Industry Act of 2019 provides that “in case of funded contract farming, production of alternative crops may be the term of the contract, but the buyer shall not provideinputs for the alternative crops.

Shortly after the Tobacco Industry Act was gazetted in 2019, the industry, which included buyers, associations and farmers, asked for the section to be reviewed.

The government reacted swiftly to industry stakeholders’ request, and a waiver was included in the section which players understood would remain in place until a review was conducted.