Five weeks into the tobacco marketing season, a latest tobacco market update by the Tobacco Control Commission (TCC) shows that average price for the leaf has jumped by 14 percent during the first four weeks of trading.
According to TCC statistics, average price for the leaf has edged upwards to $1.47 (about K660) per kilogramme (kg) up from $1.29 (about K590) per kg during the same period last year, representing a 14 percent increase.
The major driving force in the pricing improvement, according to the analysis, is the quick jump in the price for flue cured tobacco which has increased from $2.11 (about K950) per kg last year to an average of $3.06 (about K1 380) per kg during the four weeks of marketing.
The TCC statistics also show a significant improvement in the revenue realised so far on the market at $31.8 million (about K14 billion), an 11 percent increase from $28.5 million (about K12.8 billion) earned by growers last year during the first four weeks.
Asked to comment on the market dynamics so far, TCC chief executive officer Bruce Munthali said flue cured tobacco variety has registered the largest increase in terms of average prices than burley tobacco variety.
He also said there are also no significant price differentials between auction and contract tobacco prices so far.
“We have had no major stoppages and rejection rates are varying from one market to another,” said Munthali.
Breaking down the rejection rates, Munthali said contract system rejection rate is currently less than 10 percent, but noted that auction system rejection rate at the Lilongwe Auction Floors has ranged from 12 to 40 percent.
Mzuzu auction system rejection rate, according to Munthali, has ranged from 35 to 59 percent while that of Limbe Auction Floors has ranged from 25 to 40 percent.
“We see that competition on the market is building up as we hope it will go up as the market progresses upon confirmation of orders of most of our tobacco buyers from their customers,” he said.
Random interviews among several tobacco growers at the Lilongwe Auction Floors on Monday showed that growers are generally happy with the prices, but urged tobacco buyers to pay above the minimum price matrix.
Tobacco Association of Malawi (Tama) chief executive officer Graham Kunimba said Tuesday that the association is pleased with the inflow of quality leaf at the floors which he said is unlike the first three weeks.