Stakeholders in the tobacco industry have described the start of the tobacco selling season as fair owing the above minimum prices offered on the contract market.
However, the market also recorded a high rejection rate on the auction market.
President Lazarus Chakwera opened the 2021 tobacco marketing season on Tuesday last week at the Lilongwe Auction Floors and Minister of Agriculture Lobin Lowe opened the Chinkhoma market in Kasungu on Thursday.
It has transpired that during the first week rejection rate was recorded as high as 90 percent and most of the bales sold were bought at the set minimum price of $0.90 on the auction market while on the contract market the highest price recorded was $2.60.
In an interview Chief Executive Officer of the Tobacco Association of Malawi (Tama) Trust, Nixon Lita said the development could have stemmed from lack of competition on the auction market.
“Farmers on contract market are impressed but we have a problem with auction tobacco where rejection was over 90 percent on some days,” Lita said.
In a separate interview Tobacco Commission Chief Executive Officer Joseph Chidanti Malunga attributed the high rejection on the auction market to poor grading of the tobacco.
“We are not complaining particularly on the contract market. We have seen a few buyers paying above the minimum price which is a good thing but on the auction one we had a problem. However we managed that buyers should not offer prices below the set minimum price.
“We anticipate that the prices will pick up as the market progresses, currently we are in Limbe preparing for the start of the market, I have seen some good quality tobacco which is very unusual for Limbe so we also anticipate most of the grades being bought above the minimum prices,” Malunga said.
Commenting on adherence to Covid regulations as farmers have been allowed to enter markets during sales, AHL Group Spokesperson Teresa Ndanga said just as last year, stakeholders are adhering to the set regulations put in place.
“We have started with the secret bidding system on the auction market which we pioneered last year in response to the need for social distancing. As you know, the Tobacco Commission has also given us a nod to pilot the eMsika system where bidding will be done electronically. So we will also start the electronic marketing in due course,” Ndanga said.
According to the Tobacco Commission Mzuzu auction floors is expected to open on May 4 2021.