The Tobacco Control Commission (TCC) has said it has to plead with buyers every year to get excess leaf from farmers due to overproduction, something that leads to lower prices.
TCC in a news statement released this week has argued that overproduction leads to price drop and generates unmanageable discontent among farmers.
The statement, which has been signed by TCC chief executive officer Bruce Munthali, has warned that the tendency is not sustainable and further cautioned that tobacco farmers should also get away from the habit of getting huge loans from tobacco buying companies or micro financing institutions.
According to TCC, the 2014 marketing season total earnings stood at about $361.56 million from 192 million kilogrammes. Although this year the country sold more tobacco by volume, the earnings are slightly lower compared to last year’s $361.84 million from 169 million kilogrammes, a reflection that the leaf’s average prices were lower.
“Key challenges during the marketing season include increased prevalence of nesting, low demand for dark fire cured tobacco and increased prevalence of illicit trade in green leaf. The year was also highlighted by global oversupply in tobacco leaf and concerns on the synchronisation of the contract tobacco sales plan with auction tobacco sales,” he said.
Munthali said in the press statement auction flue cured tobacco sales were marred by excessive oversupply leading to high rejection rates and depressed prices.
He said the initial flue cured tobacco production target of 23 million kilogrammes was surpassed by eight million kilogrammes which resulted in marketing hiccups.
Flue cured auction sales were suspended for a long time during the season due to lower prices.
Earlier, during the tobacco marketing season which closed on September 5, Tobacco Association of Malawi chief executive officer Graham Kunimba described suspension of auction flue cured tobacco sales as sad, adding that it was unfair to farmers.
He pointed out that farmers produced the leaf for the market, hoping that it will be bought and argued that the suspension will affect farmers’ livelihoods while the quality of the leaf will be compromised.
However, TCC has said the major overseas customers, particularly the blue chip customers are satisfied with the conduct of 2014 Malawi tobacco market, despite the fact that there is oversupply within the Southern Africa Development Community (Sadc) and globally.
Regardless of the oversupply there is no reported carry over stock at farmer level while the authority has encouraged tobacco farmers to manage tobacco production in line with trade requirements if a sustainable price regime has to be realised.