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Tobacco prices seen picking up

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Latest figures released by tobacco market operator, AHL Group, indicates that prices for the commodity have been picking up in the last seven weeks of trading now averaging $2.20, the highest in recent years.

In the five-year period to 2022, the seven-week average price has increased by 34 percent from $1.61 in 2018, $1.40 in 2019, $1.52 in 2020 and $1.64 in 2021.

Meanwhile, the country has realised $22.4 million from the sale of 11.1 million kilogrammes (kg).

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The value has declined by 73 percent when compared to the $83.2 million earned during a similar timeframe last season while the volume is 78 percent lower than 50.7 million kg sold within seven weeks last year.

AHL Group General Manager Graham Kunimba attributed the pick-up in prices to market forces where demand for the commodity is reported to have elevated.

He said the dynamics have reflected on the rejection rate, which in the seven weeks has averaged eight percent, compared to 43 percent recorded during same period last year.

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“It has to do with the fact that we have produced reduced volumes of tobacco this year expected at 100 million kg against a demand of about 134 million kg and word has reached the buyers and, in trying to get as much tobacco as they planned, there is a lot of competition.

“The prices are generally good because, even on auction, the average price recorded is $1.73 reaching this far against $1.19 recorded in week seven last year,” Kunimba said.

Tobacco Association of Malawi Trust Chief Executive Officer Nixon Lita said competition on the market is an advantage to the farmers.

“We have noted good progress on the market lately. More bales are now being delivered, hence markets opening five days a week. There’s more competition and prices have picked up, there’s low rejection rate, farmers are continuing with grading and baling. With favourable weather, the leaf presentation has also improved.

“We expect more tonnage to be delivered as we get towards end May to June. In the North, the season started late, so we expect Mzuzu to pick up end May, and that is normal,” Lita said.

Tobacco is Malawi major foreign exchange earner. The slackening earnings from the crop this year are raising fears of increased troubles in the country’s balance of payment.

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