Tobbacco demand likely to dwindle—TCC

The Tobacco Control Commission (TCC) says there is a high possibility of tobacco demand dwindling due to dictates on the international market.

TCC chief executive officer Kayisi Sadala said initially, buyers demanded 175 million kilogrammes (kg) to be produced in this tobacco growing season, but the demand has been reduced further.

Tobacco is Malawi’s major foreign exchange earner

He said the figures will be made public next month. However, some inside sources have revealed that the demand will go down to around 150 million kilogrammes.

Sadala said: “Just like any other years, buying companies revise their requirements following dictates at international market. This year, the commission has been receiving revised indications, which are lower than initial projections. This follows purchases from the 2018 season that surpassed demand.  Considering that the reviews are still trickling in, the commission would advise upon consolidating everything.

According to him, any downward revision will have an impact on farmers, considering that the change is coming at a time they already made their plans based on initial projections.  This means an oversupply situation may arise. However, he added it would be too early to make conclusions considering weather impact on the production.

Sadala said indications from the seed bed area assessments shows that farmers are geared to produce but the better impression would be conceptualized after the first round assessment end January or early February next year depending on crop development in the field.

Reacting to the development, Tobacco Association of Malawi (Tama) chief executive officer Felix Thole said the news could be good as well as bad for farmers in terms of ready markets and the pricing.

“We wouldn’t says it’s good for the farmers because that figure could be reduced. What matters, however, is what has been put on the ground. The buyer would want a reduced figure but if the farmer on the ground has produced much more than that then it would spell something bad for the farmer because the volume will be big, based on what was initially demanded.

“If the demand is less than what farmers produce, that spells doom for the farmer because prices would be affected negatively. If the volume is equal to what the buyers are looking for then prices will be better and when the volume produced is less than what the buyers are looking for then it means prices should be very much good,” he said.

He added that as authorities believe that the bigger the volume the better the returns from the tobacco.

Last year, Malawi produced 106 million kilogrammes of tobacco while this year, production grew to 147 million kilogrammes against a demand of 171 million kilogrammes for all kinds of tobacco.

The slump in production to meet intended demand was orchestrated by prolonged dry spells which affected some districts in the south and central regions of the country. n

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