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| Business |
| 2004 disastrous year for tobacco industry |
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by
Rankin Nyekanyeka, 03 January 2005
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15:35:45
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2004 was a disastrous year for the tobacco industry with buyers offering very low prices for the leaf. The problem of non tobacco related materials (NTRM), especially plastic pieces, featured high in the year with growers and buyers pointing fingers at each other.
The problem started with captains in the tobacco industry warning on March 11 that the country risks losing its major tobacco buyers because unscrupulous growers were putting materials such as stones and plastic pieces in their bales. Limbe Leaf Company managing director Charlie Graham told officials who attended an annual field day at Kandiya Research Station in Lilongwe the country lost about US$ 1 million over the last few years because of the malpractice.
Thereafter, tobacco buyers boycotted sales at Lilongwe Auction Floors on April 15 after a grower confronted a buyer’s representative, accusing him of deliberately contaminating his bales with plastics to reject them. Tobacco Control Commission general manager Godfrey Chapola dismissed accusations that plastics were being deliberately put in bales, saying the bales are put under so much pressure during filling that any fresh tampering could easily be traced.
Chapola said the problem with plastic contamination is that “even the smallest piece in a tobacco bale can cause loss of millions (of dollars) and harm smokers.
The problem grew bigger and on April 29 growers from the Central Region forced Lilongwe Auction Floors to suspend tobacco sales because they found prices too low.
Tobacco Association of Malawi (Tama) first vice president Charles Mwansambo said: “What was being offered was poor. The farmers have every reason to complain and if this issue is not resolved today, we are going to refer it to the Ministry of Agriculture.
“We are going into a meeting to discuss the prices with the buyers.”
The buyers offered an average of US$ 1.11 per kilogramme for burley. Some bales went as low as 80 cents per kilogramme.
The problem persisted and on June 23, Tama president Albert Kamulaga announced that international buyers of Malawi tobacco have not yet confirmed orders for the leaf reportedly due to contamination by plastics and other non tobacco related materials. He said this has led to delayed sales at the Auction Floors, which he said are a cause of concern to growers.
Kamulaga said intermediate buyers, officially banned by government about five years ago, are the culprits in the NTRM contamination problem because they do not grade their tobacco.
On 7 July Chapola announced that earnings from this year’s tobacco sales are expected to drop from the estimated K20 billion (US$182.6million) due to a crash in dark fired tobacco prices and plastic contamination in the leaf.
A month later, at an annual conference for tobacco industry in Mangochi on November 8, captains noted that non tobacco related materials (NTRM) high cost of production and marketing , falling prices and diminishing global demand were the factors suffocating the industry.
At the conference growers accused buyers of using the NTRM issue as an excuse to offer low prices.
Tobacco Exporters Association of Malawi chairman Charles Graham, who is also managing director for Limbe Leaf Tobacco Company Limited, described the growers’ accusations as “unfair”, “unreasonable” but “understandable”.
Chapola on the other hand attributed the differences between the growers and buyers to lack of information on how prices offered to growers are arrived at.
The future for the industry is gloomy as shortage and high prices of fertiliser threatens to cut both the quantity and quality of the product, the country’s largest foreign currency earner.
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