Earnings from tobacco—Malawi’s main export crop— hit $240 million as at the end of week 12 of sales, up from $107 million realised during the same time last year.
As at June 30 2023, the county sold about 103.2 million kilogrammes (kg) of all types of tobacco at an average price of $2.33 per kg. This is compared to 51.8 million kg sold within the first 12 weeks of tobacco sales last year, at an average price of $2.08 per kg.
Agriculturalist Leonard Chimwaza expressed optimism that, with necessary interventions, there is still hope for the leaf.
“This means that farmers will be motivated to cultivate more next year and let us just hope that we will not be met with catastrophes such as cyclones like we saw last year but, otherwise, this year’s figures bring hope,” Chimwaza said.
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Over the past few years, Malawi’s annual tobacco production has remained below 125 million kg.
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However, the country envisions that, by 2028, annual production will have increased to 200 million kg.
Figures show that this year, the country is expected to produce about 126 million kg of all types of tobacco, up from 85 million produced last year.
All things being equal, it is expected that the country would fetch more than what it realised from sales of tobacco last season.
But the revenue earned in the three-week period to date is about $10 million shy of the $250 million monthly import requirements for the country.
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It comes at a time the country continues to grapple with acute forex shortage which affected almost all sectors of the economy.
There has been glaring mismatches between forex supply and demand as the country’s imports bill stands at $3 billion compared to an export value of about $1 billion per annum.
Figures from the Reserve Bank of Malawi indicate that during the first quarter of 2023, for example, merchandise trade deficit widened to $283.5 million from a deficit of $15.7 million during the preceding quarter.
But in its recent Monetary Policy Report, the central bank expressed optimism for a possible ease in the pressure as the tobacco selling season gets to its peak.
In an interview Tuesday, Financial Market Dealers Association President Leslie Fatch said the only option to broaden the forex revenue base was to diversify the economy at large and the agriculture sector in particular.
He said while the central bank and other players continue using available instruments and tight monetary policy interventions to manage the situation, the situation remains unsustainable.
“We need to stop relying on tobacco alone as a foreign exchange earner. The question is what other avenues do we get foreign exchange from? it is unfortunate that such calls have not been given the much needed attention,” Fatch said.
Economist from the Malawi University of Business and Applied Sciences Betchani Tchereni said commercialisation of the agriculture sector remains a sure way of complementing tobacco revenue.
He said establishment of mega farms should be expedited and that the government should walk the talk on revamping the mining sector, which also would accord great potential in diversifying exports.
Reserve Bank of Malawi Governor Wilson Banda expressed hope in an earlier interview that the proceeds from tobacco will improve the foreign exchange scarcity situation.
He, however, agreed with other market players that relying on tobacco alone which is seasonal cannot help the country to have a sustainable supply of the much needed foreign exchange.
“Tobacco is giving us some foreign exchange but we just need to make such inflows permanent rather than temporary,” Banda said.
As of April this year, Malawi’s import cover was at 0.8 months, a decline of 0.1 percentage point from the preceding month of May, when the import cover was recorded at 0.9 months.
