Lower demand knocks tea prices
A recent report by the World Bank has revealed that weak prices affected sells of one of the country’s cash crops, tea in the first eight months of 2019.
The report says despite Malawi recording 1.6 percent increase in the production of the beverage the tea market took a knock this year.
“The market for tea has been negatively impacted by low demand, compounded by the failure to close a number of producer-buyer contracts, resulting in excess stocks and lower prices.
“As a result, tea prices have declined from an average of US$ 1.8/kg in 2018 to US$ 1.5/ kg in the second quarter of 2019, with the price standing at US$ 1.2/kg as of August 2019,” reads the World Bank’s 10th Malawi Economic Monitor.
Going forward, the bank says external demand for tea could improve due to a drought in Mombasa.
Weak tea prices came during a year when Malawi’s top foreign earner, tobacco, also suffered a similar fate.
In 2019, performance of the tobacco subsector declined, both in terms of production volume and average prices. Tobacco sales volumes declined from 202.0 million kilograms in 2018 to around 165.6 million kilograms through October 2019.
Average sales prices have also declined, from US$ 1.67/kg in 2018 to $ 1.43/kg in 2019, so that overall auction sales have declined from $337.5 million in 2018 to $237.0 million in 2019.
“This should impact tobacco exports in late 2019 and early 2020. Over the medium term, at the global level, the demand for tobacco is expected to decline by about three percent each year.
“On the other hand, sugar production has increased from 230,020 metric tons in the 2017/18 season to 252,375 in 2018/19, due to favorable weather conditions,” reads the MEM.