Malawi prices down nearly 23 percent

With tobacco sales in their final week in Malawi, growers are having to take stock of a massive drop in income, according to a story in The Nyasa Times.

Auction Holdings Limited’s corporate manager Mark Ndipita said this season’s tobacco sales had so far brought in K171 billion, down by about 30 percent from the K244 billion earnings of the same period of the previous season.

At the same time, the volume of tobacco sold fell from 190 million kg to 150 million kg.

This year, tobacco sold at an average of US$1.36 per kg, down by nearly 23 percent on the average of last year, US$1.76.

“This year we had low prices coupled with the high rejection rate,” said Ndipita.

“We are now in the last week of selling tobacco but we are not doing well.”

Meanwhile, a paper published last week by Tobacco Control, Costs, revenues and profits: an economic analysis of smallholder tobacco farmer livelihoods in Malawi, has concluded that tobacco industry claims that tobacco farming is a lucrative economic endeavor for smallholder farmers ‘is demonstrably inaccurate in the context of Malawi’. ‘From the perspective of these farmers, tobacco farming is an economically challenging livelihood for most,’ the paper says.

The paper was based on an economic survey of 685 tobacco farmers, including both independent and contract farmers, across the six main tobacco-growing districts. ‘We augmented the survey with focus group discussions with subsets of respondents from each region to refine our inquiries,’ the researchers said.

According to the results of the survey described in an abstract, contract farmers cultivating tobacco in Malawi as their main economic livelihood were typically operating at margins that placed their households well below national poverty thresholds, while independent farmers were typically operating at a loss.

‘Even when labour is excluded from the calculation of income less costs, farmers’ gross margins place most households in the bottom income decile of the overall population,’ the researchers said.

‘Tobacco farmers appear to contract principally as a means to obtain credit, which is consistently reported to be difficult to obtain.’

The abstract is at: http://tobaccocontrol.bmj.com/content/early/2016/10/08/tobaccocontrol-2016-053022.abstract