Oversupply fears to lower tobacco prices
The Tobacco Control Commission (TCC) has confirmed that it may not be able to find a market for about 40 million kilogrammes of tobacco this year after farmers produced more tobacco than what buyers have committed to buy.
And TCC says farmers are likely to be offered low prices for the greengold this year as dictated by the law of demand and supply.
The Commission’s Chief Executive Officer Albert Changaya said there is need for Malawi to do a thorough market research in light of current trends in tobacco marketing if the country is to optimise its revenue from tobacco.
“If we start growing tobacco according to demand, the prices will be good but if we produce more than the demand, buyers offer low prices because they are overwhelmed with supply,” he said.
But Changaya was optimistic that this year’s tobacco market will run smoothly saying TCC has already released lists of tobacco growers, transporters as well as registering farmers ahead of the opening of the tobacco marketing season.
Tobacco is Malawi’s economic backbone, contributing 11 percent of gross domestic product and 60 percent of our foreign exchange earnings. However, while tobacco is central to the economy, anti-smoking lobbies and enactment of tough laws on tobacco marketing in foreign markets threatens the economic gains Malawi gets from tobacco.
Recently, France passed a law making it mandatory for cigarette manufacturers to use plain packaging in a bid to reduce smoking rates in major European countries and the move is likely to affect the amount of tobacco Malawi sends to European markets.