Tag: Tobacco Commission

Malawi Tobacco Earnings up Despite Drought

Photo: Taco Tuinstra
Malawi earned 40 percent more from tobacco sales in the 2024 marketing season than it did the previous year, despite an El Nino-induced drought, reports Reuters, citing the Tobacco Commission.
The Tobacco Commission said that leaf sales increased to $396.28 million, up from $283.76 million the previous season. Over the same period, volumes increased to 133.1 million kg from 120.5 million kg.
“This represents a substantial surge,” the Tobacco Commission wrote in its final season report. “The increase in sales volume, revenue and the average price per kilogram indicates a strong and positive performance compared to the previous year.”
Despite the drought, which hit most of Malawi’s agricultural output, especially the staple food maize, the tobacco crop proved resilient, helping the country to profit from a surge in global demand.
“Global demand is high due to consecutive calamitous weather impacts in major producing countries,” said Limbani Kakhome, a spokesperson for Japan Tobacco Leaf, one of the commodity’s top buying companies in Malawi.
September 16, 2024
Malawi Earnings Up

Photo: Taco Tuinstra
Malawi has earned $295.31 million from tobacco sales to date, 40 percent more than it collected during the 2023 selling season, reports The Nyasa Times. The country sold $132.8 million kg of tobacco at an average price of $2.95.
Despite the improved earnings, the income is enough to keep the southern African nation’s economy running for just over 1.5 months, according to analysts. Malawi has long struggled with a balance-of-payment crisis.
TAMA Farmers Trust President Abiel Kalima Banda described this year’s tobacco selling season as successful, noting that auction prices had increased for the first time in up to six years. The extra income, he suggested, would motivate farmers to stick with the crop.
The Tobacco Commission has licensed 60.2 million kg of leaf for the next growing season, almost triple the volumes licensed at the same time last year.
The regulator aims to increase annual tobacco production to 200 million kg by 2028, noting that demand for Malawi’s burley tobacco has in recent years outstripped supply.
Not all stakeholders are keen for Malawi to increase tobacco production, however. In late 2023, the nation ratified the World Health Organization Framework Convention on Tobacco Control, which among other things encourages signatories to replace tobacco with alternative crops.
Malawi’s economy relies heavily on tobacco exports. Various initiatives are underway to diversify the nation’s economy, including projects sponsored by tobacco companies trying to develop supplemental income streams as global demand for cigarettes stagnates.
August 5, 2024
Delayed Payments for Malawi Growers

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Malawi tobacco growers have been complaining about tardy payments, with some receiving the proceeds of their leaf sales up to a week late, reports The Nyasa Times.
“We are expecting the Tobacco Commission [TC], as the regulator, to come out with measures to eradicate this problem,” said TAMA Trust Vice President Rhodes Sulumba.
TC spokesperson Telephorus Chigwenembe said the problem was limited to isolated cases. “However, we will find out the extent of the problem and the bottlenecks are,” he was quoted as saying.
Malawi has earned $327 million from tobacco sales since the start of this year’s marketing season, up from $282.62 million from the same period last year.
After 11 weeks of sales, growers have sold 112 million kg of all tobacco types, according to AHL Tobacco Sales. During the comparable period of 2023, the figure was 94.3 million kg.
July 5, 2024
Tobacco Earnings Jump

Photo: Taco Tuinstra
Malawi earned $81.2 million from tobacco sales in the four weeks that ended May 10—83.3 percent more than in the same period last year, reports Xinhua.
The Tobacco Commission estimates that tobacco growers will bring 140 million kg to market this year, representing a 17 percent increase over last year’s production of around 125 million kilograms. The regulator said that 30 million kilograms have been sold since the markets opened in April, a 47.5 percent increase over the same period last year.
“The seasonal average price has also increased by 28 percent to an average of 2.7 dollars per kilogram, compared to 2.11 dollars per kilogram last year,” the commission said.
Tobacco exports accounted for $389 million dollars of Malawi’s $1.1 billion exports in 2023, according to the country’s National Statistics Office.
May 17, 2024
Malawi 2024 Volume Up 17 Percent

Photo: Taco Tuinstra
Malawi will produce 17 percent more tobacco this year than it did in the 2023 growing season, reports Malawi24, citing a survey conducted by the Tobacco Commission (TC).
The TC projects production of 140 million kg this season. Last year, the country’s farmers sold 120 million kg.
While the projections are up over those of last year, they are down from earlier estimates. The first crop survey conducted in January 2024 showed a 21 percent increase in 2024 tobacco production from that of 2023.
TC Public Relations Officer Telephorus Chigwenembe attributed the decrease to prolonged dry spells in most parts of the country and the poor establishment and performance of some dark fire cured tobacco in the Malawi’s northern region
The report of the first nationwide survey credited the good prices offered in 2023, increased number of growers, increased sponsorship and availability of inputs as reasons for the larger crop estimates.
Tobacco estimate surveys in Malawi are conducted by players in the industry and are coordinated by the Tobacco Commission.
April 2, 2024
Malawi Extends Grower Registration Deadline

Photo: Taco Tuinstra
Malawi’s Tobacco Commission (TC) has extended the registration and licensing period for tobacco growers until Jan. 31, reports The Nyasa Times.
TC spokesperson Telophorus Chigwenembe said the extension period will allow farmers who missed the December deadline to obtain the proper documentation.
The regulator has also waved late registration penalties and will allow farmers to pay the associated fees after the sale of their tobacco this year.
The TC said it would conduct its first crop estimates in February for the upcoming growing season.
January 14, 2024
Malawi Regulator Satisfied With Prices

Photo: Taco Tuinstra
Malawi’s Tobacco Commission (TC) is satisfied with the prices that buyers offered in the 2023 tobacco marketing season, reports Malawi24. The regulator hopes the prices will motivate farmers to grow more tobacco next season
“This year’s trade demand was at 170 million kilograms and we have supplied 120 million, which means there is a great market opportunity at our disposal,” TC Board Chair Godfrey Chapola was quoted as saying. “One of our strategic goals for the next five years is to raise our annual production to 200 million kilograms.”
The TC will also be pushing to increase scale and irrigation in tobacco farming over the next five years.
Chapola said proposed tobacco legislation currently being considered in Parliament would create a more conducive environment for all players and ensure that tobacco remains a strategic crop for Malawi.
During the 2023 tobacco marketing season, Malawi earned $282.62 million after selling more than 120 million kg of tobacco at an average price of $2.35.
August 17, 2023
Growers Welcome New Buyer on Market
Tobacco growers in Malawi have welcomed the debut of a new tobacco purchaser, Nyasa Tobacco Buying Co. (NTBC).
According to a report in the Nyasa Times, NTBC paid $3.06 per kg for burley tobacco at the Lilongwe Auction Floors on July 10.
Tobacco is Malawi’s largest agricultural export, earning the country much-needed foreign currency. Growers, however, have not always been satisfied with the prices offered for their leaf.
Tobacco Commission President Joseph Malunga recently assured the country that his organization would bring in more buyers to promote competition.
Tobacco Reporter recently published a special report about efforts to diversify Malawi’s economy and develop supplemental value chains to reduce the country’s reliance on the golden leaf.
July 13, 2023
Broadening the Base

Photos: Taco Tuinstra
Malawi seeks to reduce its heavy dependence on tobacco.
By Taco Tuinstra
The impacts of Malawi’s balance-of-trade crisis were visible in late March even to an infrequent Western visitor who could afford to stay at an upscale hotel. Certain items on the room service menu were consistently out of stock, for example, while getting around Lilongwe required queuing for gasoline and hoping the petrol station would not run dry before the driver reached the pump.
Because Malawi imports more goods and services than it exports, it suffers a chronic shortage of hard currency. In 2020, the latest year for which figures are available, the country’s import bill was $2.8 billion, versus exports of only $800 million, according to the National Statistics Office. With not enough U.S. dollars to pay for imports, many foreign-made goods were simply unavailable.
For Malawi’s well-heeled international guests, the shortages represent mere inconveniences. Upon return to their home countries, they will be able to generously make up for the missed food items and travel without worrying about fuel. For the average Malawian, however, the trade deficit represents a real problem. Among other things, the dearth of foreign currency prevented the nation from importing enough fertilizer for its Maize and other crops this year, spelling trouble for food security and social cohesion. While Malawi was peaceful during Tobacco Reporter’s visit in late March, some feared civil unrest. “It’s coming,” warned an industry veteran.

Visit the countryside in April/May, and you will see how people’s lives change when the tobacco markets open. If the markets fail, however, there will be poverty in the villages.
Nixon Lita, CEO, TAMA Farmer’s Trust
One cause of Malawi’s economic problems is the fact that it relies too heavily on a single commodity. Tobacco accounts for between 12 percent and 15 percent of Malawi’s gross domestic product and between 40 percent and 70 percent of export earnings, depending on who you ask and on the season. Cultivation alone employs nearly half a million people, according to the Tobacco Commission, which regulates the trade. Those figures make Malawi the world’s most tobacco-dependent country.
They also leave Malawi vulnerable to factors outside its control, including climate change and global cigarette sales. “Visit the countryside in April/May, and you will see how people’s lives change when the tobacco markets open,” says Nixon Lita, CEO of the TAMA Farmers Trust, describing the influx of cash at the start of each selling season. “If the markets fail, however, there will be poverty in the villages.”
Last year is a case in point. Due to unfavorable climate conditions during the growing season, Malawi produced only 85.09 million kg of tobacco in 2022—the lowest volume in a decade, according to the Tobacco Commission. Despite higher per-kilo prices than in 2021, farmers earned just $182.12 million from their leaf sales last year. The reduced inflow of foreign currency in 2022 has left Malawi struggling even harder than usual to import essential items. The money made from this season’s larger crop (see “Back to Normal”) is unlikely to make up for the shortfall.
Malawi’s overreliance on tobacco will become an even greater problem as global cigarette consumption stagnates. Already, the country’s leaf sales are down considerably from only a few years ago. Between 2016 and 2021, tobacco exports in real terms dropped by 42 percent, according to the World Bank. While local merchants are confident that Malawian burley—the country’s predominant tobacco variety—will continue to find buyers in the near future (see “Enduring Demand“), they are acutely aware that the industry should start preparing for a future with less tobacco, especially as the World Health Organization Framework Convention on Tobacco Control measures to discourage cigarette consumption start to bite.
Malawi tobacco growers benefit from structured markets, which give them access to customers worldwide. Such infrastructure does not exist for many of the country’s other commodities. The video shows leaf being auctioned at the Lilongwe sales floors.
Spreading the Risk
To broaden Malawi’s economic base, stakeholders have stepped up efforts to develop other sectors. The TAMA Farmers Trust, for example, expanded its mandate in 2019. Originally established to represent only tobacco farmers, the organization is now helping its members produce other crops as well. Tobacco merchants such as Limbe Leaf Tobacco Co. (LLTC) and Alliance One Tobacco Malawi (AOTM), too, are encouraging diversification. Leveraging their existing farmer-support structures, they are now also disseminating inputs and agronomic advice for nontobacco crops to their contracted growers.
Another big push comes from the Foundation for a Smoke-Free World (FSFW), which is an independent U.S. nonprofit organization that is funded by annual gifts from PMI Global Services. Established to “end smoking in this generation,” the FSFW focuses its grantmaking and charitable activities in three categories: health and science research aimed at helping smokers quit or switch to less harmful products, industry transformation and agricultural diversification.

We should not make the same mistake as with tobacco by developing just one value chain.
Candida Nakhumwa, vice president and Malawi country director, Foundation for a Smoke-Free World
The foundation’s agricultural diversification objectives include ensuring that smallholder farmers in Malawi impacted by the declining demand for tobacco are supported to find sustainable alternative livelihoods. To advance these objectives, the FSFW has made grants to set up two institutions—the Centre for Agricultural Transformation (CAT), a science, business and technology incubation hub, and the MwAPATA Institute, an independent agricultural policy think tank that conducts research to inform and improve agricultural-related policies.
Candida Nakhumwa, FSFW vice president and country director in Malawi, stresses the importance of developing multiple value chains simultaneously. “We should not make the same mistake as with tobacco by developing just one,” she says. In selecting alternative commodities, Nakhumwa urges Malawi to prioritize both exports and import substitution. “We are spending precious foreign exchange on importing things that we should be producing domestically,” she says. “For example, we can make cooking oil from soya beans or sunflower and use that as an import substitute.” Soya beans and sunflower, along with traditional Malawi crops such as groundnuts, also enjoy growing demand internationally, representing export potential.

For crops like soya bean, sunflower and bananas to succeed, Malawi will need to replicate some of the factors that have allowed tobacco to thrive, notably infrastructure and a deliberate focus on productivity
Building Markets
For crops like soya bean, sunflower and groundnuts to succeed, however, Malawi will need to replicate some of the factors that have allowed tobacco to thrive, notably infrastructure and a deliberate focus on productivity. Over the years, the Malawi government gave lots of support to tobacco at the expense of other crops that also had potential, according to Nakhumwa. As a result, the markets for those other value chains remain underdeveloped.
“The fact that tobacco has a structured market in Malawi, with auction floors and contracting companies, means that leaf growers have access to buyers worldwide—something that is not necessarily the case for producers of other crops,” says Nakhumwa. Without a structured market, producers of nontobacco crops will simply be trading in Malawi kwacha instead of earning hard currency on the global market.
A structured market also gives confidence to financiers. “Tobacco farmers are not paid in cash; they receive their payments through the bank—so the lenders know they will recover whatever they loaned to the farmer,” says Nakhumwa. Access to finance in turn means access to agricultural inputs, including inorganic fertilizers, which are imported.
In addition, tobacco has benefited from research and agronomic advice, both through the leaf merchants and the government’s Agricultural Research and Extension Service Trust. Such services have historically been provided at much lower levels to other crops, although this is starting to change as stakeholders adjust to evolving market conditions.
Due to suboptimal agricultural practices, nontobacco farmers in Malawi are producing at only 30 percent to 40 percent of their potential, according to Nakhumwa. The country’s soils suffer from high acidity and low nutrient levels. These can be fixed using both organic and inorganic fertilizers. However, with commercial banks charging interest rates of 20 percent to 30 percent, tools to improve the soil, such as agricultural lime and inorganic fertilizer, remain out of reach for many smallholder farmers.
Low productivity means that even though there is demand for Malawi’s nontobacco crops, the country is in many cases unable to satisfy it sustainably. “When a customer in South Africa signs a forward contract, he will want assurance that the goods are going to be delivered consistently,” says Nakhumwa. “If we can supply for only two months and then run dry, we are no longer an attractive supplier for them. The customers may in that case prefer to deal with a seller in Brazil or elsewhere who can guarantee supply.” This is why the FSFW is focusing on enhancing productivity at the farmer level and creating new markets through the CAT.

At a demonstration farm on the outskirts of Lilongwe the CAT offers a platform for private sector partners to showcase technologies to help farmers optimize their operations.
Strengthening Skills, Raising Productivity and Creating New Markets
The CAT aims to boost agricultural productivity through science, technology and innovation while helping innovators turn their ideas into sustainable agribusinesses to create new markets for the alternative commodities produced by smallholders. At a demonstration farm on the outskirts of Lilongwe, the organization offers a platform for a wide range of private sector partners to showcase technologies to help farmers optimize their operations.
Alongside technologies such as irrigation and ground sensors, the farm features different varieties of maize, groundnut, soya beans, rice and sunflower, among other crops. It also works with agronomists to transfer knowledge: What happens if you plant 10 cm apart or practice double-row planting? What happens if you tweak the amount of fertilizer? According to CAT Executive Director Macleod Nkhoma, such demonstration plots are an effective way to disseminate information to smallholder farmers and promote the adoption of technology, especially in a country with low literacy rates like Malawi.
In addition to its work on the farm, the CAT helps agricultural entrepreneurs with skills that enable them to access finance and grow their agribusinesses while providing markets to smallholder farmers. “Banks tend to be wary of unstructured markets,” says Macleod. “They view those value chains as very risky.” By supporting the development of these agribusinesses, the CAT helps them to become bankable.
Already, the center has supported several agricultural ventures, including a project by Hortinet that seeks to reinvigorate Malawi’s dormant banana business through tissue culture (see “From Imports to Orchards”) and an initiative by JAT Investments, which aims to replace the button mushrooms that are currently imported into Malawi with domestically cultivated varieties (see “Fungi Fever“).
The CAT is helping Hortinet to expand its farmer base from 200 to 700 contracted growers. “Without CAT’s support, we would not have had the capacity to supply that many growers with our banana plantlets,” says Hortinet Executive Director Frank Washoni. JAT Investments benefited from CAT assistance in procuring seeds (spawn) and infrastructure in support of mushroom production. “The CAT helped us procure seed, infrastructure and training, allowing us to grow our growers’ network from two to seven farmers club.” says JAT Investments Operations Director Temwani Gunda. “It we had to work on our own, it would have taken much longer.”

In terms of weight, Alliance One Tobacco Malawi’s contracted farmers already produce four times more food than tobacco.
Simon Peverelle, managing director, AOTM
The Tone at the Top
To live up to their potential, the nontobacco crops will also need better policy frameworks. According to MwAPATA Executive Director William Chadza, export bans and foreign exchange quota currently disincentivize production. “Farmers are often unable to access hard currency to import agricultural inputs in time for the growing season,” he says. In addition, some government market interventions, frequent policy reversals and the unpredictable business environment limit private investments in the agricultural sector. Contradictory policies relating to land and crops present a hurdle as well, according to Chadza.
Encouragingly, Malawi’s leadership increasingly appreciates the need to broaden Malawi’s economic base. Whereas the government in the past may have been reluctant to acknowledge the changing situation on the global tobacco market, it now appears more cognizant of the new realities. At the opening of the 2022 marketing tobacco season, Malawi President Lazarus Chakwera openly called for a diversification strategy. “The tone at the top is important,” says Nakhumwa. “If the leaders cannot acknowledge that there is a problem and we need to pivot, stakeholders will not rally behind you.”
Perhaps surprisingly to some, diversification has also been embraced by the tobacco industry. LLTC is supporting growers with certified food crop seeds grown on company farms in the Kasungu district while researching and developing other food crops for exports. It has collaborated with Feed the Future USAID and will be rolling out low-tech irrigation systems to boost productivity. AOTM has made a big bet on groundnuts (see “A Gamble on Goobers”), helping its contracted farmers increase yields and quality with improved varieties, farming equipment and agronomic advice. In March 2022, the company opened a groundnut processing facility in Lilongwe with the capacity to process 50,000 tons per year.

It took us more than 50 years to develop the tobacco industry to where it is now,” he says. “There is no way other crops will all of a sudden replace tobacco.
Joseph Malunga, CEO, Tobacco Commission
The merchants’ investments in productivity, meanwhile, have enabled tobacco farmers to double their yields, allowing them to produce the same volumes of leaf on fewer hectares and release land for food and other cash crops. Tobacco industry leaders see no contradiction between their support for nontobacco crops and their primary business, arguing that farmer livelihood sustainability is in their interest. “Diversification makes sense,” says Simon Peverelle, managing director of AOTM. In terms of weight, he points out, the company’s contracted farmers already produce four times more food than tobacco.
But even with government and industry behind diversification, it will take time for Malawi to overcome its heavy reliance on tobacco. Tobacco Commission CEO Joseph Malunga believes the golden leaf will remain a major crop in Malawi for years to come. “It took us more than 50 years to develop the tobacco industry to where it is now,” he says. “There is no way other crops will all of a sudden replace tobacco.”
Nonetheless, Malunga acknowledges that Malawi needs to spread its eggs over more than one basket. “It is dangerous for us as a country to rely on one thing because if something goes wrong, you are definitely in trouble,” he says. Rather than looking for commodities to replace tobacco, however, Malunga urges Malawi to promote crops that work alongside it, just like the leaf merchants have been integrating food crops into their tobacco operations.
Malawi has a long way to go, but through the combination of government, industry and nonprofit initiatives currently underway, it should be able to gradually develop a more diverse economy with multiple crops and livestock generating income, so that a bad season in one sector won’t automatically reverberate across the entire country. The stakes are high, witnessed by the economic difficulties in the wake of last year’s short tobacco crop. Success will mean not only greater food security but also more hard currency to import the items that Malawi cannot produce at home. With luck, it may even boost tourism, as the country’s struggling hospitality sector will be able to stock more of the items its foreign customers expect.
Taco Tuinstra is Tobacco Reporter’s editorial director.Based in Raleigh, North Carolina, USA, he coordinates the work of staff writers and contributors.On his watch, Tobacco Reporter has won several awards for editorial excellence.Since joining the magazine in 1997, Taco has visited more than 75 countries to meet industry representatives in their markets and to report tobacco news firsthand.

June 1, 2023
Enduring Demand

Photo: Taco Tuinstra
Malawi burley remains popular even as global smoking rates stagnate
Even as cigarette sales stagnate in many markets, demand for Malawi burley remains robust. An important component in the toolbox of the tobacco blender, burley is a key ingredient not only in the popular American blend cigarettes but also in roll-your-own and make-your-own products along with pipe tobaccos.
Due to last year’s short crop, leaf merchants are anticipating strong interest this season. In 2022, the country produced only 69.2 million kg of burley—against an estimated demand of 150 million kg. This year, the Tobacco Commission is expecting 106 million kg.
While burley is produced in several countries, including in southeastern Africa, industry representatives are confident that Malawi can hold its own against other suppliers. “Malawi is still a preferred origin of burley,” says Joseph Malunga, chief executive of the Tobacco Commission. “Even regionally, our burley is better than that from other origins.”
Malunga suspects that demand for Malawi burley will increase as the country tackles concerns raised by customers about agricultural labor methods. Traditional rural African practices, such as tenancy, in which a farmer provides workers with food and housing during the season but pays them only after the harvest, or requiring children to help out on the family farm, are frowned upon in Western countries where many tobacco buyers are headquartered.

The commission has done a lot to communicate what customers want, but some farmers will get the message very late. It will be a gradual transition.
Joseph Malunga, CEO, Tobacco Commission
Tobacco companies have been pressuring their suppliers to abandon these habits, and in 2019 the Malawi government banned tenancy. Leading buyers of Malawi leaf have systems in place that not only prohibit their contracted growers from deploying children or tenants but also include elaborate verification mechanisms. In 2020, such systems helped Limbe Leaf, Alliance One International and Premium Tobacco Malawi quickly convince U.S. Customs and Border Protection (CPB) that their supply chains were free of forced labor when the agency temporarily prevented Malawi tobacco from entering the United States based on concerns about forced labor. Impressed by the leaf merchants’ responsible supply chain management, CPB swiftly lifted its ban on tobacco imported by those companies.
Recognizing the progress made, some customers who left due to compliance issues are now coming back, according to Malunga. “They see that we have been doing our homework.”
But while the tobacco produced under contract with leaf merchants generally complies with the standards expected by Western governments and customers, the picture is less clear for the independently cultivated tobacco sold at auction, which accounts for approximately 10 percent of Malawi tobacco production.
The country’s tobacco industry is dominated by smallholder farming. With nearly half a million individuals cultivating leaf in Malawi, many of them living in remote areas and many of them illiterate, it will take a while for the message to reach everybody. “We have made big strides—to the extent of having laws,” says Malunga. “But you cannot expect these practices to stop overnight. The commission has done a lot to communicate what customers want, but some farmers will get the message very late. It will be a gradual transition.”
Don McAlpin, managing director of Limbe Leaf Tobacco Co., which is affiliated with Universal Corp., hopes the change will come sooner than later. For Malawi to maintain its appeal on the global market, it will be essential for the noncontracted growers to meet ESG targets, he says. “Any perceived concerns about sustainability or ESG issues in Malawi create a reputational risk to the Malawi brand and could impact Malawi tobacco regardless of the percentage that is contracted and compliant.” –T.T.
June 1, 2023