Expectations are high as this year’s Tobacco Marketing Season opens on April 9 at Lilongwe Auction Floors, with stakeholders saying this is a timely relief for foreign exchange supply.
Tobacco Commission (TC) notice shows that after Lilongwe Floors, Chinkhoma Floors in Kasungu will open on April 11, Limbe Floors on April 14 and Mzuzu Floors on April 28.
TC spokesperson Telephorus Chigwenembe said in an interview yesterday that the regulator expects better prices than last season, considering that the buyers’ demand at 213 million kilogrammes (kg) is 22 percent higher than supply.
He said: “First, we expect that trading will be as exciting as last year’s or even more exciting than it was. This year’s trade demand is higher than expected production volumes, thereby creating an opportunity for good competition.
“A preliminary trade demand is 213 million kg while the first round of crop estimates survey projected production of 174 million kg. Secondly, we expect that we will not have many cases of nested tobacco bales.”
Tama Farmers Trust chief executive officer Nixon Lita said yesterday that the opening of the marketing season is a relief to farmers who are expected to reap from their investment.
He said: “Farmers are ready for the market, bottom leaf was reaped and cured with farmers now working on upper leaves. Institutions working with farmers on the tobacco business have also indicated readiness for the market.
“In February Tama had a series of farmer/stakeholders meetings and updates were shared regarding preparedness for the markets.”
Lita said they expect prices to be good again this season, considering the increased costs to production “with the market guided by set minimum prices per grade related to cost of production”.
Financial expert Brian Kampanje said the opening of the tobacco market brings hope for forex availability, which will help the country to pay some of its imports backlog, including inorganic fertiliser and fuel.
He said: “There are good projections that Malawi might rake in more tobacco proceeds as the initial estimates indicate that Malawi will not meet the demand from the buyers. This is likely to push up prices as there will be inadequate supply.
“This is good news for Malawi. Foreign exchange reserves will likely go up between April and July and could improve the import cover and suppress the parallel market exchange rates.”
Mzuzu University economist Christopher Mbukwa said the tobacco earnings will help to solve the country’s foreign exchange needs.
“The forex position will improve with the opening of the tobacco markets, but there is need for the country to diversify foreign exchange earning products,” he said.
Seasoned tobacco commercial farmer and Tama Farmers Trust president Abiel Kalima-Banda said although the production is below demand, if the country meets the expected feat of 174 million, it can earn a lot from tobacco.
First-round tobacco production estimates put the leaf’s output at 174.4 million kg, representing a 31 percent increase from last season’s 133 million kg.
In the last season, the country raked in $396.9 (about K694.9 billion) from the leaf sold at an average price of $2.98 (K5 217) per kg, a rise from the previous season’s $282.1 million (about K494 billion) at average price of $2.14 (about K3 747) per kg.
In 2021/2022 season, the country earned $197 million (about K344.9 billion) at an average price of $1.59 (about K2 784) per kg while in 2020/21 season, the country realised $195 million (about K341.4 billion) at an average price of $1.60 (about K2 801) per kg.
Tobacco remains the country’s main foreign exchange earner.
