Tobacco deficit causes K126bn forex loss
Malawi’s tobacco industry suffered a 50 million kilogrammes (kg) supply deficit in the just-ended marketing season and consequently deprived the country of about $115 million (K126 billion) in potential foreign exchange earnings, it has emerged.
The Nation calculations are based on revelations by the Tobacco Commission (TC) at a press briefing in Lilongwe yesterday where TC board chairperson Godfrey Chapola said the country only supplied 120 million kg of tobacco against a volume demand of 170 million kg.
The 120 million kg earned the country $283.7 million (about K310.2 billion), roughly translating to a kilogramme fetching $2.3.
Chapola said the supply deficit justified TC’s bid to increase tobacco production to 200 million kg in the next five years as part of its reform targets.
“We are inspired to promote increased production to ensure we satisfy global demand for our tobacco… We are confident that we will achieve this because, first, the market dynamics are working in favour of increased production,” he said.
Chapola, a seasoned agriculturalist who once served as TC general manager, said they expect the demand to expand owing to a freshly agreed deal for Malawi to supply China with 10 million kg annually.
“We will be seeing these and other additional buyers coming to Malawi, thereby increasing competition, which will have a positive effect on prices. Ultimately, our farmers will be motivated to produce more,” he said.
Meanwhile, TC chief executive officer Joseph Chidanti-Malunga has described the marketing season as a success, pointing out that the tobacco earnings jumped by 56 percent despite the supply deficit.
Last year, production stood at 85 million kg and fetched $182.1 million (around K200 billion.)
Said Chidanti-Malunga:
“Revenue increased by 56 percent from last season and average price grew by 10 percent from last year.”
However, he said the season was marred by growers’ inconsistent tobacco grading and illegal vending of the crop, the country’s chief foreign exchange earner.
Tobacco remains the country’s major foreign exchange earner.
