Downward Trend On Tobacco Inflows
The country’s tobacco market is continuing to declined forcing some stakeholders in the industry contemplating reducing sales days as was the trend in the opening weeks due to reduced traffic
The development comes following reduced earnings from tobacco sales by 19.9 percent when compared to the $176.8 million generated in 2021 while the volumes are down by 37 percent compared to 108,027,697 kg recorded in week 14 of tobacco sales last year
Figures from tobacco market operator, AHL Group, indicate that earnings from the crop remained subdued due to low supply, seen at $141.5 million after 14 weeks of sales an amount realised after selling 67,662,289 kilogrammes (kg) of all types of tobacco at an average price of $2.09 per kg.
However, the average price remains high, with a 28 percent change, compared to the $1.63 recorded during the same time last year which some observers says could be a result of the depreciation of the local currency against the trading currency, the US Dollar.
AHL Group General Manager Graham Kunimba said traffic of tobacco reaching the markets was waning and the country may not sell 101 million kg of tobacco as anticipated.
“We are experiencing a downward trend in terms of tobacco inflows. The Tobacco Commission will guide on the way forward but, as of now, nothing yet,” Kunimba said.
President of the Tobacco Association of Malawi (Tama) Trust Abiel Kalima Banda said the trend is worrisome as it is disrupting sales for some buyers.
“The market is progressing well but we are affected with reduced stocks reaching the market; so, there have been cases where, on a particular day, the stocks for a particular buyer are not enough to warrant a sale and therefore, that buyer has to wait for some days for the stocks to be enough.
“This is affecting other stakeholders who are incurring losses to maintain workers who are sitting idle most of the time. At the rate we are going, we are not going to reach 100 million kg but we should reach 90 million kg,” Banda said.
He added that stakeholders were contemplating reducing sales days as was the trend in the opening weeks due to reduced traffic.
In a separate interview, Tobacco Commission spokesperson Telephorus Chigwenembe confirmed that the commission had noticed reduced volumes on the market in the past weeks.
“A decision has not yet been made on how to proceed following the volume trends but it will be made based on the third round crop estimates exercise which has commenced today. So by next week we will have made a decision on how to move forward,” Chigwenembe said.
Tobacco is the country’s main export crop. Malawi cumulatively earned $197.1 million from the sale of 123 million kg of tobacco in 2021, which was 13 percent higher than what the country generated in 2020 when it earned $174.97.
