|
|
|
|
| Business |
| Tobacco revenue to hit K25bn |
|
by
Taonga Sabola, 08 June 2006
-
07:16:27
|
Despite all the price problems that have hit the tobacco industry in recent times, the Tobacco Control Commission (TCC) says it expects a 9.8 percent revenue jump, thanks to increased production of 158 million kilogrammes this year compared to 145 million kilogrammes last year.
Tobacco revenue is expected to hit US$178 million compared to US$162 million realised during last year’s selling season.
However, a dwindling cumulative average price of 91 cents per kilogramme—as a result of auction burley getting an average of 83 cents (98 cents in 2005), contract burley selling at US$1.01, auction flue-cured leaf averaging of US$1.44 (US$1.56 in 2005) and contract flue averaging US$1.41 (US$1.54 in 2005)—as at week 11 of tobacco sales send strong signals of tough times ahead.
“With the already sold tobacco and considering the unsold tobacco, it is projected that the total revenue realised on the floor will be US$178 million. This means a 9.8 percent increase over last year’s revenue of US$162 million.
“This increase is attributed to slightly higher production of 158 million kilogrammes this year as compared to 145 million kilogrammes last year and also the sought for prices for this year,” reads part of tobacco market report compiled by TCC General Manager Godfrey Chapola.
As at Week 11 of the tobacco selling season—May 11 to 18, 2006, the market had netted US$27.85 million which is by far less than the US$38.4 million (about K5.37 billion) obtained during the same period last year.
In terms of volumes, by Week 11 the market sold 30.5 metric tonnes of the leaf which is about 16 percent less than the 36.3 metric tonnes recorded during the same time last year.
Tobacco is the principal export accounting for around 60 percent of export earnings, making Malawi vulnerable to weak tobacco prices.
Tobacco is Malawi’s most important cash crop and the country needs the tobacco dollars the most, especially during this time of the year.
Government and the International Monetary Fund (IMF) have agreed that all forex earned from tobacco sales up to June this year should clear outstanding import payments accumulated over the past year.
It is believed that the move will help government meet crucial targets to qualify for a debt forgiveness plan called Highly Indebted Poor Countries (Hipc) initiative to be decided this month.
Malawi has a foreign debt of about US$2.9 billion, of which US$1.6 billion is owed to the World Bank, US$322 million to the African Development Bank and US$88 million to the IMF.
In 2000, under the enhanced Hipc initiative, the World Bank and the IMF agreed to support a debt-reduction package for Malawi. Total Hipc assistance was estimated at US$1 billion in nominal terms.
The tobacco marketing season was opened on 27 March by President Bingu wa Mutharika who announced minimum grade reserve prices of US$1.10 and US$1.70 for low and high quality tobacco respectively to empower the grower to put a value on that which is produced.
Since then, prevailing prices on the floors are yet to impress leading to several sales disruptions on all floors the latest being a 10 day suspension effected on May 15, 2006.
|
| |
|
|
|
|
|
