By Claire Ngozo
LILONGWE, Aug 18 (IPS) – Malawi is reducing the production of tobacco following huge losses by smallholder tobacco farmers and commercial estates trading the crop on the country’s only official tobacco markets, the auction floors.
Tobacco has been the country’s sole main revenue earner accounting for up to 60 percent of the foreign exchange estimated at 950 million dollars. Malawi’s tobacco accounts for five percent of the world's total exports, according to the country’s ministry of agriculture.
Commercial production of Malawi’s tobacco leaf dates back to 1889 when it was introduced by colonisers from Virginia in the U.S.
But since 2008, the auction floors have been seen prices plummeting from an average of 3 dollars per kilogramme to 50 cents this year. On average, a tobacco farmer spends up to one dollar to produce a kilo of tobacco, according to the ministry of agriculture.
The Farmers Union of Malawi (FUM), an umbrella body of farmers’ organisations, attributes the low prices to the global anti-smoking lobby, which has led to demand for the crop reducing. The farmers’ body also blames the drop in sales on the current economic crisis.
FUM has asked its members to reduce the production of tobacco and increase the production of coffee, cotton and sugar, which already contribute to the country’s foreign exchange earnings. At the moment, the tobacco farmers in Malawi produce 220 million kilogrammes of tobacco against a current market demand of only 160 million kilos.
‘Farmers are used to growing the crop as it has been known to bring a lot of forex to the country but now we need to change because the situation on the markets is not good,’ said Felix Jumbe, president of FUM.
He said FUM has been scouting the international market to assess which crops Malawian farmers could diversify into. He said groundnuts, legumes, soya, apples, paprika, wheat and sesame have been found to have a market potential for the local farmers.
‘As a country, we have invested very little in the production of other crops. We have made enough losses from tobacco and it’s high time we moved towards the production of other crops which are in demand on the international market,’ said Jumbe.
He said for a long time many Malawians have depended on tobacco farming for their livelihoods and have been living on profits from sales. ‘Many households are now struggling to survive and we have to start exploring alternatives if we have to keep on depending on agriculture,’ Jumbe told IPS.
Up to 85 percent of Malawi’s 13.1 million citizens rely on agriculture for their livelihoods.
James Kupinda, 38, from Kaphuka in central Malawi has been growing tobacco since 1991. He dropped out of secondary school and joined his three older brothers in the family business of producing the cash crop.
Kupinda explained that his family has been growing tobacco on communal land and has been part of a cooperative, which they formed with seven other families in the village.
‘We take the produce to the auction floors as a cooperative. We used to make good profits until three years ago when the prices started going down,’ Kupinda told IPS.
He said all the members of the cooperative could afford to send their children to school and buy food to last them the whole year when the prices were good on the auction floors.
‘Things are not the same now. It is a struggle to pay school fees for our children and enjoy good lifestyles like we used to before,’ said Kupinda.
He said the members of the cooperative are planning to grow less tobacco this year. ‘We are thinking of growing soya and paprika,’ Kupinda said.
Malawi is reeling under an acute foreign exchange shortage, which has led to the rationing of forex for the private sector. The lack of foreign exchange has also been blamed for the country’s fuel shortages.
It is not only farmers who are concerned over the loss of trade in tobacco. Government authorities are also disappointed with the loss in foreign exchange. As of the end of July, Malawi had only made 118 million dollars from tobacco sales as compared to 334 million dollars recorded at the same time last year, according to Reserve Bank of Malawi Governor Perks Ligoya.
Ligoya said at a press conference on Aug. 9 that this season’s tobacco market was especially disappointing and alarming.
‘We will not be able to make up for the losses made at the auction floors this year,’ said Ligoya.
He said the country needed to strategise on how to move forward in light of the low tobacco prices. Ligoya also recommended the urgent diversification of crops, which are marketable internationally.
Meanwhile a major tobacco-growing company, Press Agriculture Limited, which has been growing the crop for over 20 years, announced that it will stop cultivating the crop altogether due to the poor prices on the market. The development will mean up to 24,000 workers will lose their jobs.