There are suggestions that the current tobacco market might close early as half of the green gold volumes the country produced this year has been sold already.
Just two months into the market, the country has sold 75 million kilogrammes (kg) of tobacco, at an average price of $1.59 per kg, meaning Malawi has raised about US$123 million (approximately K90 billion).
During the same time last year, the country sold 46 million kg at an average price of $1.87 per kg a development which has raised speculation that the 2018 selling season may be shorter.
Tobacco Control Commission (TCC) statistics indicate that as at June 1, 2018, flue cured tobacco has earned the country $18 million, compared to $26 million realized during the same period last year.
The average price for flue under contract is at $2.52 per kg while last year it was at $2.75 per kg. On the other hand, prices on the auction market for flue averaged $1.46 per kg against last year’s $2.85 per kg.
TCC further says Malawi has realized $104 million from sales of burley tobacco against last year’s $56 million.
The average price for burley is $1.55 per kg while last year it was $1.64 per kg.
Auction burley is averaging $1.32 per kg against last year’s $1.41 per kg while the contract market is buying the same burley at an average price of $1.59 per kg, which is slightly lower that last year’s $1.69 per kg.
In an interview last week, TCC Chief Executive Officer, Kaisi Sadala, described the current tobacco marketing season as encouraging, as prices are improving compared to the situation last season.
“There is a lot of sanity. The buyers are doing their best to buy within the minimum prices that were agreed with the government.
“At the same time, the commission continues to urge farmers to make sure that they prepare their crop very well and grade it properly so that we do not get excuses for lower prices,” Sadala said.
He said tobacco rejection rate is hovering at between 10 and 15 percent in all markets country wide.
Last year the tobacco market closed in July but the volumes were 38 percent less than this year’s and the market was characterized by low prices.
The country earned about K155 billion ($212 million) from the ‘gold leaf’, a drop from the previous year’s K202 million ($276.4 million).
Meanwhile, the Reserve Bank of Malawi has attributed the stabilizing of the kwacha to the tobacco proceeds. Since the 2018 Tobacco Marketing Season started in April, the kwacha has remained stable at K730 to the dollar.