Oversupply chocks tobacco market

With just a few weeks before the tobacco marketing season closes, oversupply of the leaf has chocked the auction floors forcing buyers to offer lower prices to clear the crop off the floors, an AHL group commentary indicates.

Figures from AHL Group show that the weekly average price fell to $1.69 (K1 233.70) per kilogramme (kg) in week 22 from $2/kg (K1460) recorded in the same period last year.

So far, after 22 weeks of sales, 192.8 million kg of tobacco has been sold compared to 106.5 million kg sold last year, according to AHL.

Despite registering a decline in prices, the country has raked in more foreign exchange earnings in excess of $325.1 million (about K237.3 billion) from the commodity which is a 53 percent jump from last year’s $212.5 million (about K155.1 billion).

Tobacco Control Commission (TCC) chief executive officer Kaisi Sadala said in an interview on Wednesday there is nothing to distress stakeholders about the continued supply of tobacco versus lower prices describing the trend as normal.

He said the prices that are currently being registered are normal given the fact that the market is coming to an end.

“Usually when the market is drawing to an end, we have what we call merit sale just to make sure that the tobacco is sold at that point in time.

“Ideally the market would have been closed by now because those that had tobacco to sell sold their crop. The tobacco coming in now is likely to be remainder of what farmers have already sold at the market,” he said.

Sadala said by now both Kanengo and Mzuzu floors were supposed to be closed but are still trading, saying the biggest challenge has been logistical issues facing the buyers which have in the end resulted  in their failure to clear bought tobacco from the floors thereby limiting available space to lay new bales for sale.

However, he said overall the market has been a success this year with fewer disruptions and thanked stakeholders in the industry who contributed to the good season.