TCC consults on 2014 Tobacco prices

The Tobacco Control Commission (TCC) says it is consulting stakeholders in the country’s tobacco industry on next year’s minimum prices for burley, flue-cured and dark fired tobacco varieties.

TCC chief executive officer Bruce Munthali said in an interview on Sunday that the commission is on the verge of finalising the consultations before submitting the proposed indicative prices to government, through the Ministry of Agriculture, for approval.

He said the process is being led by TCC and has involved tobacco buyers, grower organisations, the Tobacco Association of Malawi (Tama) and the National Association of Smallholder Farmers in Malawi (Nasfam) and the Agriculture Research and Extension Trust (Aret), among other key stakeholders.

“It is an important process because if mishandled it can generate a lot of negative repercussions in the tobacco industry and economy at large and that is why we believe in wider consultation,” said Munthali.

According to the TCC boss, the proposed minimum prices take into account the cost of key farm inputs such as, fertiliser, seed, chemicals and also reflect the prevailing macro-economic variables such as inflation and interest rates, among others.

Munthali recalled that during the last marketing season, minimum burley price was pegged at $1.69 per kg but said the final market average prices for the leaf was recorded at $2.02 per kg.

On flue-cured tobacco, he said the indicative prices set in 2012 season was $2.64 per kg but said the market ended up recording an average price for the variety of $3.10 per kg.

He the minimum price for dark-fired variety was set at $1.80 per kg which he said was way below the market prices of $2.60 per kg by close of the market.

The TCC boss also explained that the set minimum prices are used as benchmarks for competition among tobacco buying companies.

In the 2012 tobacco marketing season, the final average price marginally declined to $2.14 per kg from an average price of $2.22 per kg recorded last year, representing a 4 percent decrease.

The market saw the country selling 168.6 million kilograms of tobacco as compared to 80 million kilogrammes sold last year, which represents a 111 percent increase.

In revenue terms, Malawi has earned $361.7 million from tobacco crop this year, a figure which represents 103 percent increase over last year’s earnings, according to TCC figures.