Six weeks into the tobacco marketing season, Malawi has raked in $68 million (about K120 billion), 32 percent down from last year’s $100 million (about K175 billion), Tobacco Commission (TC) data show.
The data show that the market, which opened on April 20, has sold 32.7 million kilogrammes (kg) at an average price of $2.09 (about K3 799) per kg, with rejection rate easing to 55 percent from about 90 percent during the first weeks of sales .
During the same period last year, the market raked in $100 million (about K175 billion) from 42 million kg sold at an average price of $2.32 (about K4 079) per kg.
This year’s average price is down 10 percent while volumes and values are 30 percent and 35 percent lower, respectively, according to the data.
The rejection rate, averaging 55 percent, is more than double last year’s overall 26 percent rejection rate, according to TC records.
In an interview on Sunday, Tama Farmers Trust president Abiel Kalima Banda blamed the slow progress on high rejection levels.
“Prices remain very low, given the cost of production. The situation is worse on the auction floors compared with contract markets,” he said.
Kalima Banda noted that after Minister of Agriculture, Irrigation and Water Development Roza Mbilizi met buyers in the third week, rejection rates fell from above 90 percent to around 70 percent in some markets.
TC spokesperson Telephorus Chigwenembe confirmed in an interview on Sunday that rejection rate had eased since the minister’s intervention, despite remaining high.
He said: “The market is progressing well. In terms of rejections, we are encouraged by the downward trend.
“In the first two weeks, daily rejection rates were between 90 and 100 percent, but from the third week they fell to 55 percent on some days.”
TC is on record as having warned farmers that overproduction, both locally and globally, means quality and grading will be critical to securing better prices.
Poorer leaf will face higher rejection and lower returns, the TC said.
Malawi is forecast to produce 197 million kg of tobacco this year, 14 percent above buyers’ demand of 170 million kg, according to the Second Round Tobacco Production Estimates Survey.
The number of buying companies has fallen to eight from 11 last season, raising concerns that demand will weaken further.
The buyers this year are JTI Leaf (Malawi) Limited, Alliance One Malawi, Limbe Leaf Tobacco, Hail and Cotton (Malawi), Premium Tobacco, Associated Central African, African Tobacco Services and Nyasa Manufacturing.
Last season, farmers grew 221 million kg against licensed volumes of 174.4 million kg and demand of 213 million kg.
The leaf fetched an average of $2.46 (K4 307) per kg, generating a record $542 million (about K944.66 billion).
