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Tobacco rakes in $174 million

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Telephorous Chigwenembe

Malawi has generated $174.34 million from tobacco within the first seventeen weeks of trading, having sold a total of 81,770,326 kilogrammes (kg) at an average price of $2.13 per kg, figures from the market operator, AHL Group show.

With slightly over 19 million kg of the green gold yet to pass through the auction this year, chances are high that Malawi may surpass the $197.1 million realised from tobacco last year.

But this means the country is unlikely going to meet the both the projected market demand and estimated output for the season.

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This year’s tobacco selling season is expected to close on August 12.

Tobacco Commission Spokesperson, Telephorous Chigwenembe, said on Saturday that the Limbe and Lilongwe Auction Floors are expected to close on August 5.

Chigwenembe said the Mzuzu Auction Floors will be the last to close on August 12.

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He said the Chinkhoma Auction Floors in Kasungu already closed.

Tobacco production dropped this year owing to late on set of rains last year which affected the crop in the nursery.

After second round crop estimates, it was anticipated that the country may produce 101 million kg of tobacco. Recent market trends, however, point to the country producing even less tobacco than anticipated.

In an earlier interview, President of the Tobacco Association of Malawi (Tama) Trust Abiel Kalima Banda said production of the crop has been mainly affected low prices on the market which has forced farmers to venture into production of other crops in recent years.

Malawi heavily relies on tobacco for her foreign exchange earnings. A weak performance by tobacco in recent years has left the economy on its knees.

As at June 30, 2022, Malawi’s gross official reserves were seen at $415.73 million or 1.66 months of import cover.

Malawi needs a total of $250 million per month to finance her imports.

A recent MwAPATA Institute working paper titled Trends in Tobacco Production and Prices in Malawi indicates that from 2004 to 2019, the share of Malawian crop farmers producing tobacco fell from 16 percent to 5 percent, and tobacco’s share of the total crop production value also declined sharply.

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