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The woes of low tobacco prices
By
Our Reporter - 11-06-2002 |
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It may be normal in a liberalised economy for prices to move up and down but the news that tobacco prices at the Lilongwe Auction Floors are so low that sales have had to be suspended doesn’t help much to give a glimmer of hope in a very difficult financial year for Malawi.
Faced with a serious food shortage, a meagre two-month foreign reserve cover, rising fuel prices and erratic donor-aid inflows, the nation expected that, at least in this selling season for tobacco—Malawi’s number one cash crop—pressure on the economy would ease a bit.
Now that hope hangs in the balance and, depending on what happens to the buyer-determined tobacco prices in the coming days, the country may experience a serious foreign exchange shortage which is likely to exert unbearable pressure on the kwacha, further soaring the already high inflation rate and slowing down the wealth-generating process.
But low tobacco prices are also a big disincentive to the growers who naturally expect their effort to yield good returns.
All this calls for an early remedial action, assuming there is anything at all that can be done to salvage the green-gold industry. Otherwise, we seem to be seeing symptoms of a cash crop that is fast outliving its usefulness. |
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