Tobacco earnings jump, now at $138m
Revenue from Malawi’s main forex earner tobacco jumped to $138.3 million (about K56 billion) in 11 weeks of sales which is 38 percent of last season’s total revenue of $361.84 million ( about K148 billion).
This is good news to the economy and if the trend continues, it means the country will realise more foreign exchange from tobacco, which wires in about 60 percent of all the country’s forex in a year and contributes 13 percent to the gross domestic product (GDP).
Auction Holdings Limited (AHL) sales report show that as of week 11, over 83 million kilogrammes (kg) of tobacco were sold at an average price of $1.67 (K688) per kg.
The tobacco auctioneer has also indicated that after some weeks of suspension, flue cured tobacco auction sales resumed last week, resulting in a slight positive impact on the volumes sold.
Auction sales market for flue cured tobacco were suspended due to a high rejection rate and low prices which the Tobacco Association of Malawi (Tama), a grouping of mostly smallholder growers, said were lower than last year.
Tama chief executive officer (CEO) Graham Kunimba said auction prices for flue cured tobacco just before the suspension averaged $1.65 per kg compared to $2.65 per kg last year while contract flue cured tobacco prices averaged $2.14 per kg compared to $2.63 per kg last year.
After the resumption of the flue cured market, the leaf’s price jumped by nine percent to an average $2.52 per kg while in total it has fetched $12.8 million out of 5.6 million kg sold.
Last year after selling 168.67 million kg and raking in a total $361.84 million, tobacco prices averaged $2.15 per kg.
Total flue cured tobacco sales were recorded at 19.75 million kg with revenue of about $61 million at an average price of $3.10 per kg.
Authorities have pointed out that exports are forecast to rise this year as tobacco production continues to increase with Tama forecasting demand for tobacco at 210 million kg, a 25 percent increase compared to 2013 and prices remain buoyant.
However, analysts have noted that the risk of low tobacco prices may lead to lower revenues though it may be offset by large production volumes.
Earlier, Tobacco Control Commission (TCC) CEO Bruce Munthali indicated that the country is expected to produce 167 million kg of burley tobacco, 21 million kg of flue cured and three million kg of dark fired tobacco.
He said the demand for burley is expected to range between 150 and 160 million kg, slightly below the projected production for the leaf, but noted that demand for other tobacco types corresponds with production.
