Malawi : Suspensions Hit Growers Hard

Source from:  June 4, 2006, 9 hours, 52 minutes and 15 seconds ago. By ANDnetwork .com  06/05/2006

Three times this year, government of Malawi has had to suspend tobacco sales at the auction floors due to price wrangles between farmers and buyers on one hand and government and buyers on the other. What has worsened the situation this year is the buyer's decision to ignore President Bingu wa Mutharika's directive to purchase tobacco at a set minimum price. Some of them, like Eric Bauleni, have had to spend more thousands of their hard earned kwachas on transporters waiting to off-load the leaf, food, security and accommodation. Is it any wonder Bauleni, from Nyezerera in Phalombe, is a bitterly disappointed grower? The suspension bloated his landed costs, made him miss family for close to two weeks and wasted precious time he could have used to prepare for the next growing season. "I left Phalombe on a hired truck with my tobacco bales a night before the announcement of the suspension. When I reached Blantyre in the morning, I was told sales were suspended," says Bauleni. Bauleni says it costs K500 a bale to transport tobacco from Phalombe to Limbe Auction Floors. For his 70 bales, the farmer had to cough K35, 000 and for the extra days spent waiting for the market to open, he paid the transporter K300 a bale per night. The cold chilly weather brought with it a basket of problems as the drizzle that accompanied it left most of his tobacco wet, thus less attractive to buyers. Yes, Bauleni is a sad, angry man. When The Nation visited Maone Park in Limbe a day before the auction floors opened, several truck-loads of tobacco snaked into long lines, waiting for the market to open. One of the transporters, Jailosi Biliati, believes the postponement of sales is not their problem. Thus, farmers have to pay them for every day the trucks wait. Tabacco Association of Malawi (Tama) Executive Secretary Felix Mkumba says his office has not yet received complaints from farmers on how the suspensions are affecting them. He, however, notes that the frequent stoppages will affect farmers' preparations for next growing season since the farmers will get their money late and, consequently, may fail to buy inputs or acquire them late Contributing more than half of Malawi's total export revenue and accounting for around 10 percent of Gross Domestic Product, the costs of the suspensions to the national economy could be as crippling as those at household level. Tax revenue from the leaf may also take a knock. Godfrey Chapola, General Manager of Tobacco Control Commission (TCC), a government agency that regulates the industry, says it is hard to compute revenue government lost because, he says, it is difficult to calculate the average number of bales that could have been sold during the suspensions. Economic analyst Kondwani Mlilima says frequent tobacco suspensions put the country in a difficult position, especially coming at a time when the country receives and stores foreign currencies for use during the lean period between December and March. "The recent suspension meant that there was a break in the supply chain of dollars in the country and I can't imagine what another suspension would bring. I just hope a solution to the problem would be found soon and before things turn from bad to worse," says Mlilima. With Malawi Government and International Monetary Fund agreeing not to save any tobacco forex until import backlogs is cleared, suspensions could prolong the pay back period. Thus, the kwacha may slide further and inflation currently falling due to food availability starts galloping again, especially when possible fuel hikes exerts cost pusher pressures. Enditem