A law expert, Chikosa Silungwe, has said Malawi needs to embrace the Integrated Production System (IPS) also known as contract farming in tobacco production to ensure that smallholder farmers produce quality leaf.
Presenting a paper titled: “Investment Law Reform and the Tobacco Sector in Malawi,” during a Malawi Law Society conference in Mangochi, Silungwe said the emergence of the Framework Convention on Tobacco Control (FCTC) has brought with it heavy obligations that have made the value chain in tobacco production capital intensive.
He said IPS helps tobacco buyers offer financial as well as extension service support to growers for them to produce the type of tobacco that the buyers need in order to meet their international demands.
“The IPS in the tobacco sector entails that tobacco farmers, especially the smallholder farmers, grow the required volumes and quality in a sustainable manner. It involves the establishment of contractual obligations between tobacco farmers and tobacco buying companies.
“These contractual agreements are meant to reinforce the relationship between farmers and buyers and also create a conducive environment for addressing compliance and traceability issues,” Silungwe said.
He called on the government to ensure the Tobacco Act is brought before Parliament and to also ensure that the Tobacco Act provides for the principle of IPS.
“The principle (IPS) first emerges under the subsidiary legislation. This is problematic since the concept itself ought to be part of the Principal Act; namely, the Tobacco Act. Second, in the same way the investment laws do not make any reference to the tobacco sector, there is no link between the Tobacco Act and the investment laws,” Silungwe said.
He said there are a number of positive pointers that have emerged following the introduction of the IPS in the tobacco sector in Malawi in 2005.
Silungwe further said the system enables a direct contractual relationship between the smallholder farmers and a buying company, the assurance of a competitive and fair pricing as the buying company takes into consideration cost of production, the assurance of the integrity of the market bearing in mind the compliance and traceability obligations that are required by the tobacco manufacturing industry and improvement of quality and yield of the tobacco crop.
“Despite the anti-smoking lobby as enabled under the FCTC framework, the tobacco sector remains critical to the Malawi economy as it is still the number one foreign exchange earner and contributed significantly to the country’s GDP and its tax base,” he said.
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