Tobacco market inspires economic hope in Malawi amid despair over coronavirus

President Peter Mutharika’s decision to allow this year’s tobacco market to operate even in the face of the coronavirus (Covid 19) pandemic, could prove to be a lifeline for Malawi’s economy which is at the mercy of the global pandemic.

In April, Mutharika announced a raft of economic measures to enable the country contend with the impact of the coronavirus.

Among the measures, he directed the Ministry of Agriculture to ensure that Auction Holdings Limited functions normally–to “operate this year’s tobacco marketing season and protect farmers”.

And it seems that amid economic uncertainty inspired by Covid 19, the tobacco market is injecting a dose of hope.

Barely five weeks into the market, figures released by the Tobacco Commission (TC)–the regulator for tobacco industry in Malawi–show that the country’s “green gold” has brought more forex into the economy compared to the same period last year.

In contrast, however, the quantity of the leaf sold so far is lower than last year in the same period.

As of Friday, 22 May 2020, a total of 25.9 million kilograms (kgs) of tobacco have been sold at the floors.

On the other hand, by the fifth week of the 2019 tobacco sales season, 27.7 million kgs had been sold.

But while the quantity sold this year is almost 2 million kgs lower than last year, Malawi has so far realised more revenue than it did in the same period last year.

TC records show that the leaf has already raked in over US$39.6 million dollars (about MK30 billion).

At this time last year, Malawi had realised US$37 billion (about MK27 billion).

And, again, the average price is 12 percent higher over last year’s.

While the price averaged US$1.36 last year, it has notched US$1.53 this year–with prospects that the price could go even higher.

“The commission expects the situation to improve in terms of leaf quality and pricing moving forward,” said TC Chief Executive Officer, Kayisi Sadala.

He added that there were issues raised earlier by some contracted growers who complained against their buyers, alleging, among other things, low prices and high rejection rate.

“The commission moved in quickly to engage the concerned buyers and the situation on the ground has improved,” he said.

Sadala applauded President Mutharika’s decision to allow the market to operate amid the coronavirus which has affected businesses.

He said tobacco remains Malawi’s major forex earner, contributing about 60 percent of the country’s forex revenue.

Sadala, therefore, noted that if this year’s market was not allowed to operate, growers and the country would have suffered.

“So, the decision by the President to direct that the tobacco market be allowed to operate in order to protect the grower, was well thought out. Otherwise, where would the growers take their tobacco? What would have happened to their workers?” wondered Sadala.

In March, before Malawi registered any confirmed case of coronavirus, the Malawi Confederation of Chambers of Commerce and Industry predicted dire impact on the local economy due to disruption of Malawi’s export and import trade links with the rest of the world, shrinking of the tourism sector and expenditure pressure on the part of government amid declining revenue.

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