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| Business |
| Tama says tobacco prices lower |
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by
Ayam Maeresa, 03 April 2003
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The Tobacco Association of Malawi (Tama) said Wednesday the national average selling price for the leaf of US$0.94 per (K86.95) kilogramme recorded in the past one month of sales is the lowest in two years.
Tama public relations officer George Mituka said in an interview prices were still a cause for concern for the growers, who have been hoping for improvement since the auction floors opened early last month.
He said the average national price per kilogramme was US$1.15 (K106.38) same period last year and was generally above this year’s price in the previous year. But Mituka said this could be because much of the tobacco was not ready when authorities opened the floors this year.
Government this year opted to open the floors one month earlier in a bid to cut out tobacco smuggling that saw huge volumes of tobacco crossing borders into Mozambique and Zambia and thereby depriving government of revenue from levies.
Economic analysts say government, which is in hard times following a freeze of about US$75 million (about K6.9 billion) donor aid, opened the floors early this year as opposed to month of April to shore up its foreign reserves.
Last year the industry realised about K14.5 billion from sales after protracted price wrangles with the buyers that caused suspensions of markets earlier in the season when the price per kilogramme fell to about K22 (30 US cents)
The crop accounts for about 75 percent of the total foreign exchange and commercial banks said two weeks ago that the industry will get close to K17 billion on an average price of K111 (US$1.20).
“There is a general worry on prices because we are seeing a lower trend,” said Mituka, adding that not much can be done about prices at the floors although the association expects forces of competition to improve prices.
Mituka said the Limbe auction floors, which was dormant for the greater part of the week, will be open for sales today and tomorrow. Lilongwe closes for business today until next week after conducting sales since Monday, he said.
He said Lilongwe will be on full throttle from next week because there will be an increased supply. But he said the market will be handling about 8,000 bales per day, down from 10,000 handled in normal periods. He said the tentative date for the opening of Mzuzu auction floors is April 14.
Auction floors need to have at least 5,000 bales of tobacco to commence sales. As of Monday, a total of 3.1 million kilogrammes of burley tobacco were sold compared to 12 million sold in a corresponding period last year.
According to latest economic analysis reports from commercial banks, a total of about 145.6 million kilogrammes of tobacco will be produced this season, representing a 5.4 percent increase over last year’s tobacco volume.
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