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Financial securities firm, Continental Discount House (CDH) has said proceeds from this year’s sales of tea, the country’s second major forex earner, are expected to be higher compared to last year.
In its June economic report, CDH said while total tea production will be similar to the preceding year’s production level of about 42 million kilogrammes, average prices are expected to be higher on the whole in 2004.
According to CDH, recent figures indicate that the average price of tea for the 2004 calendar year at the Limbe Tea Auction were 10.93 percent higher over last year’s.
On June 29, 2004, tea was selling at about K107.91 (US$0.99) per kilogramme compared to about K97.01 (US$0.89) per kilogramme on a similar date last year.
“The higher prices recorded so far in 2004 have been attributed to improved quality resulting from low production levels early in the year, which implied more time for the tea producers to look after their tea,” reads the report.
However, CDH says poor rains at the onset of the growing season also led to a slow growth of tea bushes which again resulted into high quality tea.
“Expectations that there might be less tea on offer following the poor rains early in the growing season also contributed to the high prices as tea buyers bid high for the available tea to buy in advance,” notes CDH.
With a 12 percent share of the country’s exports, tea is second to tobacco which has 59 percent while sugar is third with 11 percent.
Malawi exports about 39 million kilogrammes of tea annually and ranks number two to Kenya as the second largest producer and exporter of tea in Africa while in the world the country is ranked among the 12 largest producers of the crop.
Commenting on the declining earnings in money market rates, CDH said political will coupled with “intellectual ability” on the part of President Bingu Mutharika, Finance Minister Goodall Gondwe and Reserve Bank of Malawi Governor Elias Ngalande are the building blocks on which the country’s hope of lowest interest rates hinge.
While bemoaning the technical collapse of the country’s programme with the IMF, a development which might frustrate the monetary authorities’ objectives, the exchange rate of the kwacha against the US dollar will remain stable due to inflows of dollars from tobacco, tea and project donor funding.
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