The Third Round Tobacco Production Estimates Survey shows that Malawi’s tobacco final output is pegged at 154.9 million kilogrammes (kg), which is nine percent below the buyers’ demand of 170 million kg.
The final estimates contradict results of the previous survey, which projected tobacco output at 197 million kg, denoting overproduction which dampened prices to $2.03 (about K3 554) per kg from $2.53 (about K4 430) per kg during the same period last year, pushing up the rejection rate to above 90 percent during the first weeks of sales.
AHL Tobacco Sales Limited Weekly Market Report indicates that the fresh production picture shows that the country’s tobacco output is 30 percent below last year’s 221.3 million kg.
Tama Farmers Trust president Abiel Kalima Banda, in an interview on Sunday, expressed frustrations with the development, saying they were made to believe that lower prices were due to overproduction of the crop.
“This situation is unfortunate. In all fairness, farmers need a partial refund or return of money invested in form of a rebate because they were forced to sell under precedent that there is overproduction,” he said.
Kalima Banda said such a speculative market has huge bearing as farmers were desperate to sell the leaf at lower prices despite having invested more to produce the crop due to rising cost of production.
TC spokesperson Telephorus Chigwenembe said he needed to consult before commenting on the significance of the new data and its impact on the overall market performance.
But experts have questioned the accuracy of the survey, saying the trend shows such distorted projections.
For instance, last year TC projected that Malawi will produce 174.4 million kg against the buyers’ demand at 213 million kg, but the actual output showed the country overproduced the leaf at about 221 million kg.
In an interview on Sunday, agricultural extension services expert Leonard Chimwaza said there is need for crop estimates to be accurate to give a clear picture to economic planners in view of tobacco’s importance to the economy.
“This shows that there is more that the commission can do to ensure that the estimates are reliable and are closest to the actual picture,” he said.
TC data show that as of week 13, the country has sold 106.9 million kg of tobacco, raking in $217 million (about K380 billion) at an average price of $ 2.03 (K3 554) per kg.
This compares to about 138.9 million kg sold during the same period last year, raising $351.2 million (about K614 billion) at an average price of $2.53 (about K4 430) per kg
During the first weeks of this year’s marketing season, rejection rate was high, especially on auction market where it hit about 98 percent at some point and authorities attributed it to overproduction.
The number of active buyers has fallen to eight from 11 last season, raising concerns about further pressure on demand.
This year’s buyers include JTI Leaf (Malawi) Limited, Alliance One Malawi, Limbe Leaf Tobacco, Hail and Cotton (Malawi), Premium Tobacco, Associated Central African, African Tobacco Services and Nyasa Manufacturing.
Last season, farmers produced 221 million kg of tobacco against licensed volumes of 174.4 million kg and demand of 213 million kg.
The crop generated a record $542 million (about K949 billion) at an average price of $2.46 (about K4 307) per kg.
