China shuns Malawi tobacco as sales start below minimum prices

President Bingu Wa Mutharika opened the marketing season and set the
minimum prices for burley fixed at 2.15 US dollars and flue cured leaf
at 3.09 US dollars per kilogramme.

These are just minimum prices for this year and I expect the prices to go above the set minimum prices, said Mutharika.

China which touted that they will a major buyer of Malawi's gold leaf'
is not amongst the buyers. The market has opened with old buyers;
Alliance One, Limbe Leaf Tobacco, Associated Tobacco, Premium Tama and
J. Wallace.

Chinese embassy in Lilongwe has since said that they have to consult with their government on the issue.

According to commercial counselor at the Chinese embassy, Yehong Sun
the embassy is waiting for their authorities in China on the issue.

I can’t tell you more because I know nothing about it. Let me contact
the authorities in China first because presently I know nothing, he
said.

Mutharika has since 2006 been setting minimum prices for all types of
tobacco, a development that has seen smallholder producers of the leaf
earning handsomely from tobacco sales.

The president said tobacco was a strategic crop for Malawi and
therefore stressed the need for ensuring that smallholder farmers were
rewarded accordingly from the sale of the crop.

Tobacco is Malawi's most important crop as it fetches about 70 percent
of the country's total foreign exchange every year. It contributes 30
per cent of the country's Gross Domestic Product (GDP), 25 per cent of
the country's tax earnings and over 70 per cent of Malawians are
directly or indirectly employed by the tobacco industry.

Last year tobacco earned Malawi about 472 million US dollars, the
highest revenue the country has realised from the crop in years.

Mutharika therefore called for restructuring of the country's tobacco
auctioning system so that it accorded the farmers the power and voice
to determine the price of tobacco at the auction floors.

What we have here is a buyers market and not a sellers marketfarmers
(sellers) have no say in the price at which their tobacco should be
sold, he lamented.

Having announced the minimum prices, Mutharika warned farmers to look
after their tobacco well to fetch good prices at the auction floors.

He observed that some farmers cheat by stuffing their tobacco bales
with things like stones, weeds and plastics to make their tobacco weigh
more, a practice he condemned strongly.

I am not fighting for such farmers as they do spoil the good
reputation of the government, responsible farmers and the nation, the
President said.

Malawi's 2009 overall tobacco production has been estimated at about
250 million kilogrammes compared to last year's 194 million kilogrammes.

Malawi introduced tobacco auctioning in 1938 with the opening of the
Limbe Auction Floors. First Head of State, Kamuzu Banda opened Lilongwe
Floors followed in 1979 and former president Bakili Muluzi opened Mzuzu
Auction Floors in 1996.

Nyasa Times (Additional reporting by Mana)