Malawi warns Western tobacco dealers
Malawi's president warns foreign tobacco merchants he will expell them if they continue to offer low prices...
Mutharika’s warning comes at a time when tobacco sales have just commenced at the auction floors where farmers sell their tobacco to buyers who dictate the prices.
He branded the buyers as colonialists “who are taking advantage of farmers.”
“If there is a colonialist who is adamant, he will leave immediately. I sent my officials to Brazil and Thailand where they witnessed good tobacco prices… They (tobacco buyers) are taking advantage of us… If they are not careful I will send them back. Tobacco buyers should take me seriously because I am government,” said Mutharika.
Last year, the president accused buyers of exploiting growers by offering prices that were below the cost of production and directed that the leaf was to sell at a minimum per kilogram price of $1.10 for low-grade leaf and $1.70 for good-grade leaf.
Market analysts following developments at the tobacco auction floors say this year’s prices appear to be promising – at least for now.
Last week, the lowest quality tobacco was going at US$1.70 per kilogramme while the highest went at US$2.10 per kilogramme.
Tobacco Exporters Association of Malawi (TEAM) has expressed satisfaction with the prices.
TEAM vice president Alastair Craik says the prices are good at the moment but was non-committal as to whether the trend would continue adding, “Let us wait and see.”
Official figures from the Tobacco Control Commission indicate that tobacco - known as the ‘green gold’ in the impoverished southern African country - fetched about US$9.8 million from a total of seven million kilogrammes during the first two weeks of January.
The trend is in sharp contrast to last year’s sales when only 237,899 kilogrammes of all types of tobacco were sold for US$266,700 at the current exchange rate at an average price of US$1.12 per kilogramme.
Tobacco accounts for about 80 per cent of Malawi’s export earnings annually.
Over the years all has not been well at the auction floors where buyers have been offering low prices for tobacco worth much more. And the end result has been chaos.
Last year, the disagreement between government and buyers ended up hurting innocent farmers the more.
Year in, year out - farmers are meant to believe that they are producing low quality tobacco hence the lower prices.
The once profitable product is no longer fetching the much-needed proceeds for farmers leaving them in dire straits especially when it comes to buying inputs.
Pessimists feel time has come for the tobacco farmers to switch on to other crops which are equally profitable than to cling on to a crop that is making them poorer.
But can the farmers call it quits with tobacco overnight and replace it with less profitable crops such as cassava or paprika?
Over the years, tobacco farmers have shown unwillingness to abandon tobacco because profits derived from it are much higher than those from other cash crops.
Despite high prices for farm inputs and poor prices at the auction floors, farmers are still clinging to tobacco and hope future buyers would reconsider their stance and offer better prices for the leaf.
And commentators say it may take two decades or more for Malawi to replace tobacco with another cash crop or sector that is lucrative enough to generate more forex for the nation.
Malawi’s leader of opposition in Parliament John Tembo says Malawi cannot afford to abandon tobacco for less lucrative crops.
The seasoned politician who is also president of the Malawi Congress Party, the main opposition group, intones that while it is imperative that Malawi should seriously start considering alternatives to tobacco, it would be suicidal for the country to pay less attention to the crop that is the major foreign exchange earner.
He plays down threats posed by the anti-smoking campaign, championed by the World Health Organization (WHO) to ban tobacco.
“Malawi cannot afford to stop growing tobacco, our economy depends on it. The issue of banning tobacco did not start yesterday and we need not to be shaken by anything suggested by the West,” explains Tembo.
The architect of the ambitious project is President Mutharika who insists the cotton industry has a lot of linkages and would be able to generate forex for economic development.
“We do have ready markets for cotton-based products. We can generate the much-needed foreign exchange by exporting these manufactured products in large quantities,” says Mutharika.
The president is optimistic that once Malawi meets its export quota under the Africa Growth Opportunity Act (AGOA), promoted by the United States of America, cotton farming would be on track.
He supports his dream with the historical fact that Malawians already have the knowledge and skill to grow cotton.
However, cotton farmers are already crying foul over poor prices and the President’s dream to have cotton processed into value added products might not be realised if the negative trend is not reversed.
Mutharika has since announced he would set minimum prices for cotton saying he was doing so to help alleviate poverty among poor Malawians in rural areas, who grow the crop.
The Mutharika administration has also put its weight behind the promotion and production of cassava, a multipurpose crop, which is locally described as a tree of life.
Its products are used in several industries, which include wood, baking, starch, battery-making, textiles and beverages.
The production of cassava and various cassava-based products are perceived to increase income and employment opportunities for most Malawians who are currently living below the breadline.
While the crop has been touted as one of the potential replacements for tobacco, many are questioning its profitability on the international market.
And that speaks for any other suggested replacements for the crop that will continue to contribute to the economy for many years.
It remains to be seen if government will come up with an alternative to tobacco and put to rest issues affecting farmers who toil to produce the leaf but end up carting home almost nothing.