Malawi has to date earned $131 million (about K96 billion) from tobacco in week 18 of sales, figures from Tobacco Commission (TC) show.
This is an 18 percent drop from $160 million (about K118 billion) realised during the same period last year.
Despite the average price at $1.57 (about K1 161) per kilogramme (kg) being five percent better than last year at $1.47 (about K1 087) per kg, the drop in earnings is largely because of reduced volumes.
In week 18, about 93 million kg of tobacco was sold compared to 119 million kg sold during the same period last year, representing a 22 percent drop.
So far, figures show that about 20 million kg out of this year’s 113.3 million kg is yet to be sold.
In an interview yesterday, TC chief executive officer (CEO) Kayisi Sadala expressed concern over the subdued earnings and volumes despite higher trade requirements.
He said: “The commission actually licensed 10 percent more than the trade requirements for contingency purposes.
“The development is a big concern to the industry and the national economy as tobacco remains our main source of export earnings. In actual fact, most buyers won’t meet their trade requirements.”
Sadala said the regulator has started registration for the forthcoming growing season and has encouraged growers to register.
On his part, Tama Farmers Trust CEO Nixon Lita said production this year is lower than expected partly due to weather conditions, despite estimates pointing to an output of 156 million kg.
“This will mean low income to farmers as the figures are showing production will be below potential,” he said.
Betchani Tchereni, associate professor of economics at The Polytechnic—a constituent college of the University of Malawi—said this means foreign exchange will be a challenge and will likely affect importation of other essential commodities.
He said: “For the medium to long-term, we need to diversify this economy more.
“We need to begin to look at other areas of the economy such as mining, energy and industry. In such a way, the risks associated with one area may be mitigated.”
Results of the third and final round tobacco crop estimates done in July show that tobacco output has gone down by 26.7 percent to 113.3 million, attributed to poor weather pattern.
This is a drop from 161 million kg buyers’ demand.
Last season, Malawi earned $237 million (about K175 billion) from tobacco, a 29.8 percent drop from the previous year’s $337.5 million (about K249 billion) realised in 2018.
Tobacco, touted as the country’s main foreign exchange earner, contributes about 13 percent to the country’s gross domestic product.
