Tobacco growers have asked Ministry of Agriculture to review its cost of production formulae by considering uncertainties caused by climate change factors before coming up with reasonable minimum prices.
Tama Farmers Trust President Abiel Kalima Banda expressed this concern at a time buyers have projected 170 million kilogrammes (kg) preliminary demand for the forthcoming season while farmers still take care of the crop in the fields.
Kalima Banda said from the recent years growers have noted persistent increase in production costs due to c limate change-induced disasters like drought and floods, forcing farmers to either irrigate or replant, but such costs are not considered when calculating cost of production to determine minimum prices.
Kalima Banda said: “Our growing concern is the need to review the production costs because from the recent years farmers are incurring extra costs due to climate change factors.”
Kalima Banda, who is also a tobacco commercial farmer, said apart from the costs of farm inputs and normal labour that are considered when determining minimum prices, farmers engage extra labour for drought-induced irrigation and replanting because of floods which have become common scenarios since recent years.
According to the Tama Farmers Trust President, these extra costs, on average increases normal production costs by $0.40 (K700.40) per kg, which is a significant amount that undermines their profit.
Meanwhile Kalima Banda has also highlighted the need for more extension services during the growing season from the buying companies who control 80 percent of the tobacco production through contract-farming.
“I must say that buyers, who support 80 percent of the country’s tobacco production through contract-farming,are doing fairly well and have to continue their efforts,” he said.
Ministry of Agriculture spokesperson Salome Gangire declined to comment on the matter, saying TC is responsible for setting the minimum prices of tobacco.
Tobacco Commission spokesperson Telephorus Ch igwenembe was not immediately available for comment on the recent development, but in an earlier statement, he said there is no minimum price for the country’s tobacco as each grade has its own minimum.
He said: “In Malawi, there are 52 grades for burley tobacco; 99 for flue-cured and virginia and 48 grades for dark-fired tobacco. A minimum price is set for each of these grades.”
In an earlier interview, JTI Malawi director of corporate affairs and communications Limbani Kakhome said he is aware of the calls on extension but stressed the need for the industry to set up minimum requirements.
“As a company we have our model but I think for the industry we need to have a framework or a minimum requirement that industry players would be following as a benchmark,” he said.
Meanwhile, preliminary demand from eight buying companies stands at 170 million kg but the commission has licensed 242.5 million kg, although it has not yet done production estimates survey.
Last season, the country produced 221.2 mi l lion kg of tobacco (out of 213 million demand) which raked in $542.3 million (K949.5 billion) at an average price of $2.45 (K4 289) per kg, but in most cases growth failed to meet the demand since 2020.
For instance, in 2023/24 season, the regulator licensed farmers to grow 265.9 million kg of the leaf, but farmers ended up producing 133 million kg, which was below the 190 million kg buyers’ demand.
In 2022/23 season, TC licensed farmers to produce 172 million kg, but farmers produced 85 million kg while the demand was at 140 million kg.
Similarly, in 2021/2022, season, the tobacco regulator licensed farmers to grow 162.8 million kg against 140 million kg demand, but the output was recorded at 123.6 million kg while in 2020/2021 season, the regulator licensed about 150 million kg out of the demanded 132 million kg, but the output was 114 million kg.
