Tobacco Association of Malawi (Tama) Farmers Trust has said it sees the proposed new tobacco law fuelling hunger among tobacco growers.
Tama Farmers Trust President Abel Kalima Banda told The Business Times on Monday that, among other things, the bill seeks to restrict tobacco buyers from giving non-tobacco related loans to tobacco growers.
Kalima Banda said the development could see the buying companies stopping the offering of maize fertiliser on loan to growers, thereby fuelling hunger among tobacco producers.
Under the current legal environment, tobacco buying firms do provide loans for non-tobacco related crops to growers which are recovered at the auction from the proceeds of the green gold.
“What the new law is proposing is that tobacco buying companies should stop giving out loans for non tobacco-related crops. What we are saying as Tama Farmers Trust is that we are wondering as to where the proposal is coming from. We are happy with the current arrangement because it relieves the financial burden from tobacco growers to hunt for money to buy fertiliser for maize, which is a food crop.
“We wonder why, as the biggest constituency of tobacco growers in the country, we were not consulted on the matter. What the new law will do is scare buyers as they will be certain of recouping their loans on non tobacco-related crops thereby stopping offering of the loans altogether,” Kalima Banda said.
But Ministry of Agriculture spokesperson Gracian Lungu dismissed the fears by Tama Farmers Trust as baseless.
Lungu said the current law, which is expected to be repealed during the coming parliamentary meeting, already does not allow tobacco buying companies to give non tobacco-related loans.
He said, previously under DPP regime, Agriculture Minister could waive the law to give a leeway to these tobacco buyers to give non tobacco-related loans where farmers were paying back in dollars.
“When this regime came in, the current minister sought advice from Attorney General if he had such powers of waiving a law and he was advised that no one can waive a law as this can only be done by Parliament through an amendment.
“Since there were a number of amendment propositions which were to be made, the Solicitor General advised Tobacco Commission through Agriculture Ministry to repeale this Tobacco Industry Act and the relevant stakeholders were consulted, only that a law cannot satisfy every stakeholder. Others will be okay with the propositions while others will have contrary views to the same and we had to take the side which is good for the majority,” Lungu said.
He observed that Tama Farmers Trust might have taken the side of not agreeing to what the law says but the new laws are proposing that farmers who may wish to get other non tobacco-related loans should be doing that out of their choice but the companies should not make deductions from tobacco sales.
According to Lungu, the growers should pay back such loans after cashing their money when they sell their tobacco.
“The ministry is proposing this considering that the dollars Malawi realises from tobacco sales do not tally with dollars which Reserve Bank receives as most of these dollars are used to pay back those other non tobacco-related loans,” Lungu said.
On his part, Tobacco Commission (TC) spokesperson Trephorous Chigwenembe said under the Tobacco Industry Act (of 2019), buyers are already prohibited from providing inputs for alternative crops (Section 4(3). It is the enforcement of this part of the law that was lacking.
Chigwenembe said the proposed new version simply strengthens an existing provision.
“It is not completely new. However, as Tobacco Commission, we cannot comment much on this because we did our part and the proposals are going through other processes within the government structure. Anything can be done to the proposals.
“To come up with the proposals, the commission consulted widely and key stakeholders gave us their input. The Commission analysed every input in relation to the best interests of the tobacco industry in the country. As TC, we are convinced that we made enough consultations,” Chigwenembe said.