Date Of Article: 6/12/2002
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All tobacco sales on hold
By: Herbert Piriminta
The Tobacco Control Commission (TCC) has suspended trade at all three auction floors in Malawi until it establishes prices for similar leaf in neighbouring countries. TCC general manager Godffrey Chapola said a meeting with selected growers, buyers and Auction Holdings officials in Lilongwe on Monday resolved that Blantyre and Mzuzu auction floors also close like the Lilongwe Auction Floors, which was suspended the same day. Chapola said the commission has organised a committee that will visit neighbouring countries like Zimbabwe and Zambia, where prices are believed to be better, to see whether the type of leaf sold there is different from the local commodity. Lilongwe Auction Floors was closed after farmers protested that their tobacco was selling at very low prices—down to US$0.30 (about K22) per kilogramme from a minimum of US$0.60 last month. “Buyers indicated that they have a reason to lower the prices. They say demand of thin tobacco leaf is not strong at the international market. They say demand is on heavy bodied leaf,” said Chapola. He said this claim has prompted the commission to compare with prices in other countries. At the close of sales at Limbe Auction Floors on Monday, the lowest price offered was US$0.60 (about K44). This is the second time tobacco sales have been suspended this season. The first was on April 18 when farmers rioted after the prices dropped to US$0.60. Tobacco remains the major foreign exchange source especially with erratic donor aid in-flows and complete withdrawal of assistance by other donors like Denmark. Loita Investment Bank late last month described a slump in the country’s foreign exchange reserves to US$165 million (2.7 months of import cover) as a bad signal for the kwacha’s strength against other major currencies. Economic analysts have also said if the low tobacco prices persist, both growers and the country’s economy would be strangled.
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