Malawi, the worlds largest burley tobacco producer, said it will deport officials of Alliance One Inc. and the local unit of Universal Corp. for paying below government-mandated prices for the leaf (pictured).This is the action I have taken, President Bingu wa Mutharika said in a speech broadcast live on the state-owned Malawi Broadcasting Corp. radio station today. They have been defying my orders to pay better prices and I have decided to chase them.
The government yesterday revoked temporary work permits for officials of Alliance One, Universal-unit Limbe Leaf Tobacco, and Premium Tama Tobacco Co., and gave them a 24-hour deportation order.
Calls to the head office of Alliance One in Lilongwe were not answered. A person who answered the phone at Limbe Leaf in the city said Chairman Mathews Chikaonda is the only official authorized to speak to the press and he is unavailable because hes in China. A receptionist at Premium Tama said Managing Director Tom Malata is unavailable to speak to the press.
Malawi started setting minimum prices for the various grades of tobacco two years ago after it accused merchants of putting farmers out of business. While dealers denied that they underpaid farmers, Wa Mutharika on April 6 threatened to deport buyers if prices didnt improve.
Cant Allow It
They have been telling our farmers to grow better quality leaf and yet what they are buying at the auction floors is the low quality tobacco, he said today. They have been doing this deliberately to accuse the farmers of producing low quality leaf and paying them less. I cant allow that.
This season Malawi set a price of $2.15 a kilogram (2.2 pounds) for burley tobacco and $3.09 a kilogram for flue-cured tobacco. Tobacco Control Commission Chief Executive Officer Bruce Munthali on Sept. 4 reported that buyers were ignoring these prices, the president said today.
The southern African nation relies on sales of the leaf for 60 percent of its export earnings. Burley tobacco is a lower- grade variety of the leaf used to fill cigarettes flavored with higher-grade flue-cured tobacco.
Malawi is forecast to produce 245 million kilograms (539 million pounds) of burley this year, according to the Web site of Universal. Thats more than double its closest rivals, Brazil and the U.S., and more than a quarter of global output. Flue- cured production of 25 million kilograms is about 0.6 percent of the projected world crop.
Universal, the worlds largest tobacco merchant, owns 58 percent of Limbe Leaf through its Continental unit, with the remainder owned by Press Corp. Ltd. of Malawi, according to Limbes Web site.
Bloomberg
Post published in: Economy