Firm punches holes in new tobacco act

 JTI Leaf (Malawi) Limited has punched holes in the Tobacco Industry Act of 2019, saying it needs to be reviewed to facilitate a smooth business environment.

The Tobacco Commission (TC) and Minister of Agriculture Lobin Lowe are on record as having conceded of the flaws in the law, saying government was reviewing it to be tabled in Parliament in November to become more user friendly.

JTI Leaf Malawi Limited corporate affairs and communications director Limbani Kakhome said in an interview on Friday after a media tour of some of the firm’s projects in Lilongwe that chief among the concerns is the banning of the provision of farmer inputs for alternative crops.

He said: “Growers should have the freedom to choose whether

 or not to be provided inputs for alternative crops. Note that one of the Tobacco Commission’s mandates is to promote crop diversification. Section 45 [3] of the Act impedes on this mandate.

“We already spent $650 000 [about K533 million] on procurement of fertiliser for our farmers to use for alternative crops, but with the restrictions, we will resort to selling at the commercial market price.”

Kakhome said while the Act in Section 67(3) compels buyers to participate both on the contract and auction markets, they feel the law should be reviewed to give freedom of choice of market from which a buyer wants to buy its tobacco in accordance with its business strategy.

He observed that despite not being in the law, TC requires a buyer to walk the line even when the buyer is not participating in sales at the market.

Kakhome said they want to

 see the ambiguity in the definition of an estate in Section 64(2) of the Act reviewed because the current interpretation excludes small-scale growers who would benefit more from having their tobacco transported.

Additionally, JTI also wants the reviewed law to remove restrictions on tobacco buyers operating tobacco floors outlined in Section 79(2) to create more tobacco floors to promote competition and give better services for growers.

While authorities are pondering on removing buyers from the composition of the TC board in line with Section Six of the Act, JTI feels that the current composition, which includes buyers, should be maintained to sustain inclusive status in decision-making that affects the industry.

In an interview, one of the tobacco growers, Shadreck Pondamali of Kanyelere Zone at M’bwatalika in Lilongwe, complained that the ban on the provision of inputs for alternative crops will affect his farming because over the years, he has relied on the input loans from JTI for maize production for food while tobacco is for economic gains.

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

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

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

He argued that diversification does not mean mandatory issuance of inputs to growers instead of encouraging them to voluntarily demand inputs for production under contract production.

Malunga 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.

Tobacco Industry Act 2019 was touted as a complete departure from the old Act of 1938, which was later reviewed in 1971 to protect growers from exploitation as there are stringent penalties, including huge monetary fines and imprisonment.

Tobacco still remains Malawi’s major export crop, contributing about 60 percent to foreign exchange, 13 percent to the national economy and the sector employs millions of people directly and indirectly.