Commission moves to revive auction system
Tobacco Commission (TC) says it will introduce regulations on tobacco sold under the traditional auction system to ensure traceability of leaf and enhancing quality.
TC’s move comes at a time tobacco buyers prefer the contract system or Integrated Production System (IPS) of selling tobacco purportedly because it enables them to deal with traceability and quality issues as they offer extension services to contracted growers.
In an interview on Saturday, TC chief executive officer Joseph Chidanti-Malunga observed that the industry is becoming more sensitive to issues of compliance.
He said: “The tobacco industry is controlled by a channel of people that buy the leaf. The buying companies, therefore, require countries to satisfy certain conditions before they buy from those countries.
“These companies demand that countries producing tobacco respect issues of human rights and desist from child labour, among others.”
Chidanti-Malunga said TC will ensure that the tobacco bought on auction is as traceable as tobacco under contract farming, which buyers have a 100 percent assurance that it was cultivated using proper channels.
“This is why we are coming up with these regulations to trace this tobacco to give the same assurance buyers have on contract tobacco to ensure that the system continues,” he said.
Chidanti-Malunga said the country cannot do away with the auction system of selling and TC wants to ensure that it continues by ensuring that tobacco under the system is competitive.
“We are thinking of providing an authenticity card from the TC so that the buyers can buy with a free mind knowing that the tobacco is certified and has met all the required regulations to be bought and consumed with no issues attached,” he said.
Such a situation prompted some players in the tobacco sector to speculate that government intends to eliminate the auction system of selling tobacco in the near future in favour of contract farming.
Tama Farmers Trust president Abel Kalima Banda in an interview yesterday said it is important that the tobacco regulator moves to ensure that the tobacco sold on the auction system is attractive.
He said: “Preference of tobacco sold under auction has over the years declined and we know the reasons. The coming of TC now to put more regulations on the system is welcome as it would ensure farmers under this system gain as their colleagues on contract.”
The IPS allows tobacco buyers to offer farmers necessary inputs, extension services and loans and they also provide direct facilitation of growers by processors and buyers.
The system runs side by side the traditional auction system in which tobacco growers are not under the watch of tobacco buyers and are left at the mercy of tobacco merchants.
Malawi adopted the IPS in 2012 as one way of ensuring sustainable production of the country’s main foreign exchange earner amid rising quality issues.
Currently, about 80 percent of the country’s tobacco is produced and sold on contract with the remaining 20 percent sold under auction system.
Tobacco still remains the country’s key cash crop, contributing about 60 percent to foreign exchange earnings, 15 percent to the national economy and the sector employs millions of people directly and indirectly.
