FUM wants reforms in tobacco industry

The Farmers Union of Malawi (FUM) has called for reforms in the tobacco industry as one way of saving the sector from failing on the market.

In an interview with Business News on Tuesday, FUM president Alfred Kapichira-Banda said there is need for authorities and concerned stakeholders to revisit some of the policies in the tobacco industry which are contributing to its poor performance over the years.

Kapichira-Banda observed that the industry’s performance has been diminishing over the years, which he says can be rectified by revisiting some of the policies in the sector.

“We experience more and more challenges at the tobacco market as the years progress which tells us that something needs to be done or,  at the very least, redone, if the industry is to be saved,” he said.

Among other things, Kapichira proposed the elimination of intermediate buyers in the tobacco marketing system, stopping buyers from growing tobacco as well as ensuring the independence of the Tobacco Control Commission (TCC).

“For a long time, we have been telling authorities to help us fish out these middle men because they are the ones killing our markets. This is so because most middle men are ignorant of the practices in the industry.

“For example, middle men would not take their time to grade their tobacco or ensure it is properly taken care of by putting it in shades. They are not even aware of which tobacco to take to the market during opening!” said Kapichira-Banda:

He added: “Again, looking at the way the system is right now, those people that government has entrusted to buy tobacco from us have also resorted to growing tobacco. In the end, they are buying their own tobacco and they would  not even care what prices to offer to the other tobacco.”

In November 2015, the Ministry of Agriculture, Irrigation and Water Development promised to conduct an investigation into the matter, but it is yet to act on the same. Officials from the ministry were unavailable for comment.

Alliance One, one of the leaf buyers, is on record to have said contract farmers grow the crop on their behalf, a development FUM fears would lead to low prices and high rejection rates.

Kapichira-Banda added that paramount is the independence TCC, which he said should be able to make critical decisions without waiting for the hierarchy in government to act.

“TCC should be given powers to govern on its own without waiting for approval of government when implementing some of its critical decisions as was the case before independence,” he said.

Kapichira-Banda said the decision on how much crop to grow and market research on buyers demand should be left to TCC alone to decide way before nursery stage.

Tobacco contributes about 60 to 70 percent of all the country’s foreign exchange earnings, provides about 45 percent of gainful employment, 25 percent of the tax base and contributes 13 percent of the gross domestic product.

However, over the years, the industry has faced a lot of challenges ranging from poor market prices to the global anti-smoking lobby.

This year’s tobacco marketing season has come amid a 33 percent overproduction against a demand of 158 100 metric tonnes (mt), according to the first round of crop estimates released in February. The estimates had put production at 211 000 mt.

Last year, Malawi produced 192 000 mt of tobacco which earned the country $337.4 million (about K231 billion). n