Tobacco market operator, AHL Group, has indicated that the country may not offer anything close to 100 million kilogrammes (kg) of tobacco owing to reducing levels of traffic at their markets.
However, low supply of the commodity on the market has intensified competition among buyers which, in turn, has sustained higher prices on offer.
According to figures from the group, the average price has been hovering around $2.08 per kg, representing a 26 percent rise when compared to the $1.64 per kg recorded last year.
Meanwhile, the country has realised $127.4 million from the sale of 61 million kg in 13 weeks of tobacco sales.
The value has dropped by 24 percent compared to $167.7 million realised during the same period last year while the volume has declined by 40 percent, considering that 102 million kg were recorded after 13 weeks.
AHL Group General Manager Graham Kunimba said competition for the leaf is high owing to low supply.
“We have noted that buyers are paying higher prices on contract to maintain the farmers and entice them [to continue producing tobacco other than] diverting to other crops; so, they are paying better prices even on auction to acquire the bales before another buyer comes in.
“The projection for tobacco this season was 100 million kilogrammes but looking at the current trend, the growers may not be able to supply the volume while buyers demanded more. We expect the prices to continue being above last year’s prices until the market closes,” Kunimba said.
President of Tobacco Association of Malawi Trust Abiel Kalima Banda collaborated the story.
He attributed the low supply to climate and weather shocks that hit the country at the end of last year and early this year.
“The farming season saw delayed rains, which started in the first week of January this year, which is not in line with tobacco production because farmers start preparing earlier.
“Apart from delayed rains, early this year, we have seen two storms which swept crop fields across the country especially in the Southern Region; so, all these factors have affected tobacco output,” Banda said.
According to the World Bank Malawi Economic Monitor report launched on Tuesday in Lilongwe, the storms Malawi faced early this year swept away 77, 000 hectares of crop fields.
Tobacco remains Malawi’s top export and foreign exchange earner.
Justin Mkweu is a fast growing reporter who currently works with Times Group on the business desk.
He is however flexible as he also writes about current affairs and national issues.