Limbe auction floors recorded a 120 percent increase in minimum prices for tobacco after buyers offered $2.20 per kilogramme (kg) as the lowest price on the opening day of the market.
This is despite a $1 per kg agreed minimum price for tobacco for this year among industry stakeholders.
The market further recorded a highest price of $3.11 superseding the $3.03 and $3 per kg recorded on open day at Chinkhoma and Lilongwe floors, respectively.
On the day 2,904 bales of tobacco were sold on the market.
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The development has excited tobacco farmers who are looking for further increases in price as the market progresses.
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It also raises expectations of improved foreign exchange reserves for the country as the crop remains Malawi’s major export.
Phalombe based Davie Nanjiwa said he was happy with the prices offered on the day.
“The highest I have gotten on my bales is $2.70. This is encouraging and I expect that as we bring more quality tobacco, we are going to get even better prices,” Nanjiwa.
Another farmer Mavuto Mankhamba said last year the average price on the open day was $1.20 but this year the minimum price being $2.20 means farmers will make substantial earnings from their labour.
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In an interview, Tobacco Association of Malawi Trust President Abiel Kalima Banda said such developments in price will help boost production in coming years.
“I’ve seen the prices, good prices what we have been looking for. So, farmers are happy with these prices so far. We have been failing to meet the demand just because of prices. Because the price is what will entice farmers to go back to the field and work hard to produce more tobacco.
“This season we are expecting production below demand because farmers were not happy. Next year we expect more farmers to produce tobacco we may even hit 200 million kg because they will envy those earning these prices now,” Kalima Banda said.
Principal Secretary in the Ministry of Agriculture Dixie Kampani, who opened the market concurred with Banda stressing that the government expects production to pick up going forward.
“The impression is very good. Actually, I think the trending from the time the president opened, this is consistent and we’re very happy as a ministry and as government, we think that the industry is progressing in the right direction.
“Meeting the demand is another thing because it’s an issue related to production, maybe because of climate shocks and other things, but we will try our best to see if we can increase because now the reaction is going to be that most farmers seeing this want to produce more,” Kampani said.
Chairperson the Tobacco Commission Godfrey Chapola said the prices are convincing of the trend for the season.
“This is only the beginning when the best tobacco is yet to come to the floors. This gives us hope that this year our tobacco will fetch much better prices. We have confidence in our buying companies that they will do their part and motivate our farmers even more through the prices that the buyers will be offering,” Chapola said.
In an earlier interview, President of the Economics Association of Malawi (Ecama) Bertha Chikadza said we should expect a significant impact in foreign exchange inflow into the country from tobacco sales.
“With the starting of the tobacco season, we should expect the kwacha to stabilise in the short term, however, we still need to diversify more in terms of exports to increase the amount of money we get from exports to stabilise the foreign exchange reserves,” Chikadza said.
The country is expected to present 140 million kg of tobacco to the market this year, 50 million kg shy of the 190 million kg demand by tobacco buyers.
During the 2023 tobacco marketing season, Malawi earned $282.62 million after selling 120 million kg of tobacco at an average price of $2.35.
Tobacco is Malawi’s main export crop.
Currently Malawi is grappling with foreign exchange reserves seen at one month of import cover recently.
