The Tea Association of Malawi (Taml) has expressed concern over continued low tea prices that buyers are offering at its Limbe market, fearing it may affect growers revenue and its contribution to the economy.
Taml chief executive officer Beyani Munthali on Tuesday said on average—as of this month (August)—the prices per kilogramme (kg) of tea is $1.25 (about K925) compared to last year’s $1.95 (about K1 443).
He attributed the low prices to oversupply of tea on the global market which he said is affecting local suppliers, especially smallholder growers.
Said Munthali: “The prices have been way below the anticipated amounts compared to last season. The reason being over supply of tea on the market but also the reduced prices by 70 cents lower than last year in other tea auction markets such as Mombasa in Kenya, among others.
“The oversupply is a general trend in the tea industry, but the Malawian tea producer has been hit very hard. The growers will still work to produce high quality tea which can at least fetch fair reward in terms of prices”.
As a remedy Munthali said growers will be looking to increase grower access to buyers on the Malawi market.
He said the production climate has been good with better grower output, but said it may mean nothing amid low prices offered by buyers on the tea market.
According to Munthali this year growers have produced about 45 million kg compared to the 50 million kg produced last year.
The Reserve Bank of Malawi (RBM) Financial and Economic Review report for the second quarter of 2019 show that produced amounted to 13.5 million kg in the second quarter compared to 21.2 million kg and 13.4 million kg in the preceding quarter and the corresponding quarter of 2018, respectively.
It said in the quarter under review, tea volume of 3.3 million kg valued at $4.9 million (about K3.6 billion) was sold through the Limbe auction market at an average price of $1.52 (about K1, 124) per kg.
The value is slightly lower than $1.53 (about K1 132) per kg in the preceding quarter and US$1.84 (about K1 361) per kg in the second quarter of 2018.
Tea is the second cash crop from tobacco that fetches significant amounts of forex for the economy and economists fear poor showing of aggregated cash crops may lead to imported inflation.
Economics Association of Malawi (Ecama) president Chikumbutso Kalilombe said if the cash crops prices from the combined threshold will go down as it is then there may be pressure on kwacha currency.
“When there is pressure on the currency we will be talking about imported inflation where prices for imported essential goods such as fertiliser and fuel might go up. Unless we get something to offset it we will have to look at this development with a bit of fear,” he said. n