The Tobacco Commission (TC) has moved to tighten control over tobacco overproduction by delaying growers’ licensing and introducing stricter quota allocations to address persistent oversupply on the market.
The decision comes after Malawi this season produced 197 million kilogrammes (kg) of tobacco against buyers’ demand of 170 million kg, leaving an oversupply of 27 million kg.
The surplus has depressed prices, increased rejected rate, which hit 98 percent in the first weeks of sale, weakened farmers’ bargaining power and increased vulnerability among smallholder growers.
In a written response on Tuesday, TC spokesperson Telephorus Chigwenembe said the delayed licensing process is part of broader reforms being implemented to align production with trade requirements.
He said: “The grower licensing, which is supposed to start in June has been delayed as we are working on the quota limitations and on a Know Your Grower Project.
“The project is aimed at improving the traceability of Malawi’s auction tobacco.”
Chigwenembe said although the measures may not immediately raise prices, they are designed to correct structural imbalance in the market by preventing overproduction that leaves farmers with unsold tobacco.
The shift signals a stronger regulatory stance by TC as it seeks to cap output, improve market discipline and prevent a repeat of the 27 million kg surplus that has destabilised prices this season.
TC data show that in the eight weeks of trading up to 12 June, Malawi has sold 62 million kg at $128.8 million (about K225.4 billion) at an average price of $2.07 (about K3 642) per kg.
During the same period last year, Malawi generated $178.4 million (about K312.4 billion) from the sale of 72.7million kg at an average price of $2.45 (about K4 290) per kg.
Overall, rejection rate stands at 5.5 percent, except for auction burley which stands at 64 percent.
This is in sharp contrast to the rejection rate of as high as 98 percent in the first4 weeks of sales.
Tama Farmers Trust observed that overproduction following strong 2024 prices has led to excess tobacco stocks in 2025 and projected surplus in 2026, weakening buyer demand and pushing prices down.
In an interview on Tuesday, Tama Farmers Trust chief executive officer Nixon Lita said as a result, auction tobacco is being avoided, leaving many farmers uncertain about when they will recover their investment.
“We are working with authorities to align production with demand, and farmers must adhere to licensed quotas to stabilise the market,” he said.
Findings of a study titled ‘Maximising tobacco farmers’ returns in Malawi under declining global demand: Evidence-based policy insights for pricing, contracts and market governance’ showed that Malawi’s tobacco sector is facing mounting structural weaknesses driven by oversupply, weak market governance, declining competition among buyers and rising production costs.
Further, the study said the number of active tobacco-buying companies has declined from 11 to eight, reducing competition on the market and giving farmers fewer pricing alternatives.
Tobacco remains Malawi main foreign exchange earner and contributes about 13 percent to the country’s gross domestic product.
Last year, the crop earned a record $540 million (about K945 billion) last year, accounting for about half of export earnings and roughly a fifth of total imports, making its performance crucial to foreign exchange stability.
