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Bitter aftertaste for tobacco growers

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The 2015 tobacco sales season could open with the spectre of inefficiencies that infest the tobacco industry in Malawi hanging in the face of tobacco growers who suffered unjustified deductions on their sales cheques last season.

The occurrence added to the pile of well-documented, sometimes illegal, operations in the supply chain which strip the tobacco grower bare while other players reap the profits.

AHL Group, which manages tobacco auction floors in the country, made the erroneous deductions for growers that sold their crop at the Lilongwe Auction floors.

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Details in our possession show that some of the farmers that suffered the deductions are from clubs such as Chilipansi, Adayamba Bwanji, Msadzakanene, Chinkhuti and Umodzi in Lilongwe, Kasombe in Nkhotakota, Yalumba in Rumphi and Kaswadongo in Kasungu.

These clubs were among the 70 that were affected, according to a report we have seen as compiled by an official from National Smallholder Farmers Association of Malawi (Nasfam).

The farmers are supposed to be deducted by AHL a statutory payment of 8.5 percent based on the bales a farmer has sent to the auction floors.

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In this case, however, the 8.5 percent deduction was repeated several times on their sales cheques to an extent that some of the farmers had all their earnings wiped out.

AHL told Malawi News it has since repaid the famers that were affected.

And chairpersons for Adayamba Bwanji Club, Vincent Gona, and for Msadzakanene Club, Peter Chimthela, confirmed last month they had been paid back their money.

They hoped the problem would not recur.

But AHL, while indicating the problem was actually not unique to last season, said the clubs we have named suffered because of inefficiencies at Nasfam to which they are affiliated.

Mark Ndipita, Corporate Affairs Manager at AHL Group, said the deductions were not necessarily because of incidences caused by system errors or network breakdown.

“Our findings show that these specific double deductions to these clubs occurred due to wrong submission of data by Nasfam,” he said.

He claimed this happened because Nasfam had changed the person responsible for their deductions.

But Nasfam disagreed.

“The problem is AHL,” said Beatrice Makwenda, Head of Policy and Communications at Nasfam.

And a report we have seen as compiled by Nasfam’s IT department also insists the problem did not originate from Nasfam.

“The most disturbing part of it was that AHL thought the problem originated from data capturing by Nasfam staff; we also vehemently pushed it to them with tangible facts….The problem was not where data was originating [Nasfam] but rather where data was submitted [AHL],” reads the report.

Makwenda also indicated the problem of deduction is a recurrent one.

“The over deductions happen almost each and every year, but as for the multiple deductions on bales, this was for the first time and some of the farmers were badly affected such that little was remitted to their accounts,” she said.

She suggested more farmers could be affected but they were suffering in silence.

“There are farmers who belong to other grower bodies (without presence on the ground and with no proper follow-up mechanisms) who for sure have experienced the same,” she said.

Ndipita, however, said in the event of network problem, the deductions “are traced and rectified immediately”.

He said AHL is keen on ensuring that farmers get their money as quickly as the sales are done such that from next sales season, AHL plans to be paying the growers within two hours after the sale of their tobacco.

The deductions was one of the many problems in the industry clattered by multiple and profiteering players –all of whom demand their pound of the flesh from the grower’s earning.

Tobacco growers in Malawi suffer a minimum of seven statutory levies which they pay through deductions from their tobacco proceeds from the auction floors.

In addition, the growers come up against a catalogue of informal expenses to meet between tobacco production and tobacco selling, expenses which eat further into their proceeds.

The Tobacco Control Commission promises reforms for the sector.

However, various studies show that between 1990 and 2011, the tobacco industry in Malawi has been subject of about 25 reform measures.

This was probably the largest number of reforms to have been implemented in an agricultural sector in Malawi in that period.

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