How rational are tobacco farmers?

It has now become a song sung every year: some tobacco farmers and/or traders are skipping the local auction floors in favour of neighbouring countries. We call this smuggling of tobacco because there are no agreements that we know of that allow tobacco farmers (except buyers at the auction floors) to export the “green gold” from the country.

Malawian farmers are expected to sell their tobacco at the Malawi auction floors. The buyers, who are largely foreign companies or local companies created by global conglomerates, buy the tobacco for resale elsewhere.

When stories of “tobacco smuggling” are reported in the media, the message is often coached in such a way to make the reader appreciate how sneaky or evil the local Malawian traders or farmers can sometimes be. These are the people who have auction floors available to them to sell their tobacco. For some reason known to themselves, but largely to run away from taxes and levies, they decide to sell in other countries. Tangentially also, the story is that which talks of better prices in neighbouring countries. What do these stories tell us?

One story we should have followed, investigated and come up with a solution is: why is it that tobacco prices almost always seem to be better in neighbouring countries compared to prices in Malawi? Mind you, the trader who sells their tobacco in neighbouring countries does not even mind the risk of being caught, the high transportation costs involved and in some cases, the uncharted routes that the cargo must take to avoid detection. Even with these traps, our traders and some farmers still decide to skip the local auction floors and visit the neighboring countries. What I get from this is that there is something really wrong on our side of the border.

The second aspect I would want to learn is: what impact does the smuggling of tobacco out of the country have on local tobacco prices? Does it mean that since there is less tobacco on the auction floors then the prices are much higher than they would otherwise have been? Does this mean Malawi ends up earning more or less revenue from tobacco? These are key questions which we should all attempt to have the answers. If we grew more tobacco to satisfy local auction floors’ demand and as well satisfy the foreign auction floors’ demand, would we be better off or worse off?

Let me conclude by commenting on the University of Malawi students who are demanding higher stipends from government. Some have blamed the students while others have put the blame on government. There are also others who have blamed the Council of the University of Malawi. There are people, such as Dr Mathews Chikaonda, who argue that university students have been spoon-fed far too long.

Chikaonda contends that government is unwisely spending money on student upkeep. The students believe that they are entitled to be fed and bathed by government. Who is right here?