Business

New Tobacco Act causes stir

…75% penalty scares growers

Confusion has emerged in the tobacco industry on when overproduction penalties stipulated in the new Tobacco Act must be effected amid fears that authorities wanted to start punishing growers this year.

The bone of contention is that President Peter Mutharika assented to the law in February this year when most farmers had their tobacco in the fields.

Growers interviewed in Lilongwe Tuesday wondered why the law was being used retrospectively.

The growers argued that it would be ideal for the government to consider applying the penalties during the next growing season when everyone is fully aware of the consequences.

Among other things, the new law stipulates that “where a grower willfully produces excess tobacco in contravention of his production quota or the contractual agreement with his buyer, as the case may be, the [Tobacco] Commission shall uplift the grower’s production quota and collect three quarters of the proceeds of the excess tobacco and remit the remaining one quarter to the grower”.

The law says three quarters of the proceeds collected by the TC shall be put together with other fines collected by the TC for the development of the tobacco industry.

It adds that, where excess tobacco is yielded as a result of natural factors that are beyond the control of a grower, the TC shall uplift the grower’s quota but collect one quarter of the proceeds of the excess tobacco and remit the remainder to the grower.

“The one quarter collected by the commission shall be put together with other fines collected by the commission for the development of the tobacco industry,” reads part of the Act.

TC Chief Executive Officer, Kayisi Sadala, confirmed Tuesday that the new penalties would take effect from this growing season.

Sadala observed that overproduction of the leaf has always been a crime even before the new Act.

“We cannot bend the rulers. A law is a law and has to be respected,” Sadala said.

Tobacco Association of Malawi (Tama) Chief Executive Officer, Felix Thole, said his organisation was equally worried with the retrospective use of the law.

Thole said Tama had been discussing with TC on when the penalties on overproduction should be effected.

“We were told that the Ministry of Agriculture would decide on whether the penalties should be effected on the current crop. Up to now we are still waiting for a response,” Thole said.

Statistics from TC indicates that this year’s tobacco production has exceeded demand by 43.82 million kilogrammes (kg).

The third round of crop estimates recently revealed that the country has produced 193.4 million kgs against a demand of 149.56 million kg.

In the next growing season, buyers are looking for 154.33 million kg of the leaf.

Tobacco remains Malawi’s top most foreign exchange earner.

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