AHL Group has said the entry of new tobacco buyers on the market is being hindered by contract sales as the system has resulted in low volumes of tobacco available for sale on the auction market.
The Malawi tobacco market has two systems namely contract, which was introduced three years ago and auction which has been there for the past 80 years.
AHL General Manager tobacco sales Moses Yakobe said the just ended tobacco marketing season had flows in terms of the two systems.
He said although the market registered about five new buyers, their significance was not felt because there was little or no tobacco at the auction market.
Yakobe was speaking on the sidelines of a field meeting for AHL Group which was held at Nsipe in Ntcheu on Saturday.
“The market saw an entry of new buyers of which, the buyers were only spectators as there was not enough flow of tobacco to the auction market. From our analysis, the existing buyers have created a block because majority of the farmers are under contract, which means the new buyers will have little or nothing to buy at the auction.
“We feel there is no point to invite new buyers into the market with the current situation. We noted that even after holding on to the farmers, the old buyers failed to buy all the tobacco from the farmers,” he said.
Yakobe said towards the end of the marketing season, 2,700 bales were sent back from the contract market to the auction market an indication that the buyers failed to buy all the tobacco.
“The best solution is that buyers should be buying tobacco which they have only sponsored under the contract market, whilst the self-sponsored farmers should be allowed to sell their tobacco to the auction market,” he said, adding that farmers failed to benefit because there was no competition.
He urged the farmers to stick to their qoutas to avoid tobacco oversupply on the market.
“Growers need to consider where they could have sold their tobacco when merchants started refusing their tobacco when merchants started refusing their tobacco on the basis of exhausted qoutas.
We are encouraging farmers to diversify their crops,” said Yakobe.
During the field meeting, Chitokolo Farmer Club was awarded as the best farmer club from the southern region and carted home with K500,000 and a trophy.