By Mcloyd Chilangiza:
Malawi’s smallholder tobacco farmers continue earning low returns from their toil, amid the ever rising cost of production, a recent study has shown. Findings of the study by the Lilongwe University of Agriculture and Natural Resources (Luanar) and the Farmers Union of Malawi (Fum) attributes the low earnings to falling global demand, reduced buyer competition and structural weaknesses in the tobacco marketing system.
This is contained in a policy brief titled ‘Maximizing Tobacco Farmers’ Returns in Malawi Under Declining Global Demand: Evidence-Based Policy Insights for Pricing, Contracts and Market Governance.’
The policy brief surveyed 300 smallholder farmers in Dowa, Mchinji and Lilongwe districts between April and May 2026.
Its findings show that fertiliser accounted for the largest share of production costs at 59 percent, followed by labour, at 17 percent.
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Transport costs accounted for six percent, cost of chemicals accounted for five percent, cost of seed was pegged at four percent, and curing cost was estimated at three percent, with other expenses seen at six percent.
This amounted to an average of K1.83 million to produce tobacco in recent growing seasons spanning 2020 to 2025.
Despite these high costs, farmers earned average seasonal revenue of K3.67 million, leaving them with a minimal profit margin.
The report also shows that farmers sold tobacco at an average price of about K3,448 per kg, although some sold the leaf to vendors at prices as low as K400 to K700 per kgs in the past five years.
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The study found that farmers under contract arrangements earn higher revenues than those selling through auction floors or informal channels.
Figures show that contract farmers earned an average of K5.95 million per season, while auction farmers earned about K2.65 million.
“The widening gap between production costs and selling prices has created what they describe as a ‘cost-price squeeze’ affecting many smallholder farmers,” reads the report in part.
The report recommends establishing a tobacco price stabilisation fund to cushion farmers from effects of fluctuating prices.
The policy brief also recommends creation of an independent grading and dispute resolution system, strengthening farmer cooperatives and improving regulation of cross-border tobacco trade to enhance transparency and farmer returns.
Agriculture policy expert Tamani Nkhono Mvula said the challenges facing tobacco farmers partly stem from policy changes that liberalised tobacco production after 1994.
Mvula said the shift increased production but weakened market regulation and in some cases contributed to declining leaf quality.
“We need to return to a more controlled production system where farmers grow tobacco under organised cooperatives so that output, quality and access to inputs can be better managed,” he said.
Speaking during the opening of the Mzuzu Auction Floors, Minister of Agriculture, Irrigation and Water Development Roza Mbilizi called on researchers and regulators to strengthen crop management systems to control production levels and stabilise the market.
Malawi is expected to produce about 197 million kg of tobacco this season, about 14 percent higher than the recommended national output of 170 million kgs.
Statistics from the Tobacco Commission shows that the country earned $26.1 million from 12.3 million kg of tobacco sold in the first three weeks of the 2026 marketing season, compared to 14 million kg valued at $31.9 million during the same period last year.
