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| Business |
| Tobacco growers duped |
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by
Taonga Sabola, 23 April 2006
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07:50:53
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When President Bingu wa Mutharika opened the tobacco auction floors in Lilongwe, he directed that growers be given a fair price for their leaf by setting minimum prices.
In a tough speech delivered both in English and Chichewa, the president said with immediate effect, no buyer would be allowed to purchase tobacco at a price lower than US$1.10 (K148.50) per kg. He also declared that the best leaf should attract not less than US$1.70 (K229.50) a kg.
Mutharika said he imposed minimum prices because tobacco is Malawi’s strategic commodity. It makes up more than10 percent of Malawi’s total economy, accounts for 60 percent of all the foreign currency revenue. The industry is also the largest employer.
“What I have done is not something new. It happens all over the world even in America or Europe, they don’t leave their strategic crops at the mercy of someone,” said Mutharika.
It is now four weeks since Mutharika made that pleasing statement to tobacco growers but antagonising to buyers when he opened this year’s tobacco selling season at Lilongwe Auction Floors on March 27, 2005.
Since that statement, tobacco sales have been suspended twice—first in Lilongwe and later in Limbe—as buyers refuse to comply with the presidential directive and angry growers protested.
According to tobacco auction reports, this year’s sales are yet to register a daily average of more than US$1 (K135).
Some farmers already feel demoralised, cheated, betrayed and bitter.
Charles Kalumpha, a tobacco grower from Jali in Zomba, believes it would have been better if the president had kept quiet instead of giving the growers false hopes.
He thinks it makes no sense to have such a powerful directive being ignored by buyers while the president and his executives watch helplessly.
“The situation is just as bad as it was last year in terms of prices and we have nobody to protect us. There is absolutely nothing to assure us of a good future in the industry,” said Kalumpha.
“Government needs to come in and enforce the presidential directive as the Tobacco Control Commission (TCC) has let us down,” said the angry farmer at Limbe Auction Floors on Tuesday.
TCC Regional Manager for the South Richard Chimthunzi said the daily averages hover around 95 cents (K128) per kg.
This clearly shows that most of the tobacco is being bought at less than the set minimum price of US$1.10 per kg and that not much of the leaf is attracting US$1.70.
TCC General manager Godfrey Chapola said on Wednesday that people are misinterpreting the president’s statement.
“The president did not mean that everything that looks like tobacco will fetch a minimum of US$1.10. It’s only tobacco which is good quality that will qualify for this minimum price and that the rest of the leaf that falls below this grade may fetch anything lower,” said Chapola.
Chapola says the problem is that TCC is only there to regulate the market not to set prices.
“The other problem is that buyers this year have opted for low quality tobacco. It seems they are not interested in the good quality tobacco. This has greatly affected our daily average prices.
“You need to ask them why they are doing that,” he added.
Tobacco Exporters Association of Malawi Chairman Charles Graham, however, denied assertions that buyers prefer low quality tobacco.
“We only buy from what is on the market and most of the leaf that is on the market is of low quality. It may be because it’s the start of the buying season,” he said.
He said buyers could not implement the set minimum prices as the market is controlled by what is available and how they can afford to offer.
“We are prepared to pay good prices for the good leaf but we cannot just pay better prices for something we are not impressed with,” he said.
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