The 2020 tobacco selling season started in Lilongwe on a low note Monday without the usual pomp and funfair associated with the tobacco market with prices almost similar to those of last year.
On the auction side of the market, a maximum price recorded was $1.20 while the minimum price of 90 cents was recorded on other bales.
Things were a bit better on the contract-farmers’ side of the market where a maximum price of $2.30 per kilogramme was registered, with many bales hovering at prices around $1.50.
The unimproved prices are despite international demand for the leaf outweighing supply by about 6 million kgs. International buyers are looking for 161 million kgs of the green gold but, according to the second round crop estimates conducted recently, the country is this year expected to produce about 155 million kgs of the leaf.
Speaking when he toured the market, Agriculture Minister, Francis Kasaila, lamented poor grading of the crop which, he said, is forcing buyers to offer lower prices.
“What I would urge the growers to do is to take more time in grading their leaf so that the high quality leaf is not mixed with the poor quality leaf,” Kasaila said.
About 3,200 bales were made available for sale during yesterday’s trading down from the 10,000 bales that the Lilongwe Auction Floors handles on a daily basis.
The reduced throughput was deliberately done as one way of creating some breathing space and decongesting the floors in the wake of Covid-19.
At the start of the sales there was a bit of some confusion as buyers on the auction side tried to adjust to the new concept of buying the leaf called Secret Bidding which has taken out the services of the auctioneer.
Tobacco Commission Chief Executive Officer, Kaisi Sadala, said the secret bidding process is one way of ensuring that people are not getting close to each other in the auctioning of the green gold.
“What is happening is that each buyer would go around and put his price, followed by another one until all buyers have done that. At the end of the day, we are consolidating the bids and seeing who has indicated the highest price,” Sadala said.
He observed that in terms of the pricing, TC is satisfied, saying the no grade leaf attracted a maximum of $1.
JTI Malawi Managing Director, Fries Vanneste, said the start of the market has been slow this year in the wake of Covid-19.
“The quality from JTI is very high. We are very happy with what we have seen here and I just hope to see more of that quality coming to the market in the coming days.
“We are also looking forward to good pricing for that quality,” Vanneste said.
Tama Farmers Trust Chief Executive Officer, Felix Thole, said yesterday’s prices were not very bad for an opening day.
“The contract side has been very good. The auction side has been fairly okay,” Thole said.
Tobacco is by far Malawi’s top foreign exchange earner followed by tea and sugar.
Reserve Bank of Malawi (RBM) Governor, Dalisto Kabambe, recently told reporters that it would be very crucial for the country to allow the tobacco market flow smoothly despite the threat from Covid 19.