Tobacco demand, quota narrow, outlook positive

The gap between demand for tobacco from international buyers and production quota has narrowed this year, raising hopes that farmers may make better margins if they grow good tobacco this year.

Figures from the Tobacco Control Commission (TCC) show that the 2018 international buyer demand stands at 171 million kilogrammes against 162 million kilogrammes to be grown by 41,784 registered farmers.

Last year, buyers made a demand of 158 million kilogrammes of the green gold, of which 106 million kilogrammes were sold through the auction market.

TCC will start inspecting tobacco nurseries next week while first round crop estimates are expected early next year.

Newly appointed TCC Chief Executive Officer, Kaisi Sadala, rated the outlook as positive.

He said a clear picture of the situation would be shape up after the first round of crop estimates.

“We look forward to a good season and positive market trends next year,” Sadala said.

He said the commission targets to flash out middle men from the marketing system as they have traditionally compromised output.

Commenting on his appointment, Sadala committed to work with all stakeholders to ensure that Malawi continues to benefit from tobacco, the country’s major foreign exchange earner.

Challenges have continued to mar the marketing of tobacco on the international market following the anti-smoking lobby being championed by the World Health Organisation.

The Reserve Bank of Malawi (RBM) has, however, indicated that foreign reserves have become more resilient as other imports have overtaken part of tobacco’s contribution.

RBM spokesperson, Mbane Ngwira, said it is encouraging that these higher reserves are being achieved although the tobacco market performed dismally this year.

Economic commentators have affirmed the development and rate it as a plus for the economy because any shock resulting from lower tobacco proceeds is being absorbed with little or no impact on the foreign exchange market.