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Tobacco auction floors, currently experiencing low supply, will only open for business when there is enough leaf on the market until the industry gets into full swing, authorities said on Wednesday.
Tobacco Association of Malawi (Tama) executive secretary Sigman Chirambo said in a telephone interview from Lilongwe the markets will open when there is adequate supply on the floors to warrant a sale and close on dry days.
“We shall be there only when there is enough tobacco,” said Chirambo, adding that the system will work like that until the market starts receiving large volumes in the coming months.
Auction floors need to have at least 5,000 bales of tobacco to commence sales. At least all the three auction floors in Limbe, Lilongwe and Mzuzu are seeing a low supply of tobacco, which led to the authorities aborting sales in Lilongwe on Wednesday after opening on Tuesday.
Slated for opening early this month, sales were postponed at all the auction floors because of low tobacco volumes. Limbe, whose sales were disrupted soon after opening on Monday when some people protested against low prices, reopened yesterday with about 7,000 bales.
Lilongwe, which in busier times handles about 10, 000 bales, also opened for business and sales were expected to go on until today.
Economic analysts say government, which is in hard times following a freeze of about US$75 million (K6.8 billion) donor aid, opened floors early this year as opposed to month of April in a bid to get foreign exchange.
The crop accounts for about 75 percent of the total foreign exchange earnings and nets close to K14.5 billion a year in earnings.
Chirambo said early opening will assist authorities curb tobacco smuggling, which saw a lot of tobacco crossing the border into Mozambique and Zambia last year, as growers will have an opportunity to sell off whatever little they have harvested.
He said Tama has discussed with the buyers on prices but said growers should be realistic in their demands, considering that this is just the start of sales. So far buyers have offered minimum of US$0.80 (K72.80) per kilogramme, which the growers have snubbed as too little.
“To say that we should see a minimum price of US$1.00 is asking for a little too much at this stage. What will be the price for the good leaf then?” said Chirambo.
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