Malawi: Challenges for Malawi's Tobacco Industry

Source from:  The Chronicle Newspaper (Lilongwe) November 6, 2006 11/08/2006

The Tobacco Auction Floors have shut down with record plummeting so far as sales go. This is a disaster for Malawi and, no matter whom you eventually blame, the need is there to find long lasting solutions to the annual problems faced that often pits the subsistence producer with the large processing industries and buyers. When you see large commercial growers withdrawing from a sector that is mandated to drive the economy of a country like Malawi, there's need for heads to roll. When institutions and companies meant to develop the crop such as KFTA, Press Agriculture, Press Farming, Chamwavi are closing the business, it shows things are falling apart. For the past few years entry and survival in the sector by large companies has been restricted to government supported institutions such as ADMARC, ARET, TCC and TAMA. The diversification of business from buying to production by all major commercial tobacco buyers such as Limbe Leaf Malawi Limited, Alliance One clearly indicate that some thing somewhere is wrong and our economic policies on the crop have reached a saturation point. The above withdrawal, merger, scaling down of operations and diversification has resulted in loss of hundreds of jobs, closing of auxiliary businesses, destruction of estate infrastructure and reduction in tobacco output from Malawi at global level. This situation has given economic advantage to several countries that were several points below Malawi in terms of total tobacco production per year. The situation has also affected the quality of tobacco presented at the auction floors, the buying price, the improvement of working conditions, loss of revenue and much-required foreign exchange for the nation. Of all is the rise in the poverty levels of Malawians who benefited from the crop, a decrease in social security, underutilization of arable land and infrastructure invested in the 1980s. The local farmer is still responsible for salaries, posh cars, housing scheme, external travels and conferences of large companies that were supposed to stand on their own. The levies and commissions that our tobacco farmer is subjected to have chocked the him economically, socially and ecologically. In actual fact, the potential for tobacco to be used as a lever for social and economic development is constrained by internal inefficiencies in Malawi's economy pioneered by the same institutions that are mandated to promote the sector. Companies that have been relying on the tobacco farmer should also shoulder the blame on the current chaos in the tobacco industry. The other disturbing observation that has been overlooked is the usage of the monies deducted from our farmers. These organizations that have failed to generate a single idea of survival and market penetration have now realized the need to assemble behind the farmer albeit too late. There is urgent need for such institutions to start initiating viable strategies that will give our farmer breathing space. These organizations should expand their activities into manufacturing such that jobs lost due to their negligence can be regained. These companies should invest in banking and finance such that externalization of money by deceitful traders is completely stopped. Some of the banks that are performing better on the stock exchange today came into the country years after tobacco institutions; they have taken advantage of our ignorance to surpass the traditional financial institutions. The nation was expecting these institutions to diversity into other sectors of economic growth such as science and technology, sports and tourism. The public was expecting these institutions to give back to the farmer through subsidized inputs, soft loans, and practicable extension messages. Institutions that are part and parcel of national economy should diversify in their strategies especially when it comes to revenue sources. These should be the pioneers to realize that institutional funding from the soil that depend on natural weather and simple technologies are very temporal in nature and scale and can cause economical traffic jam if solutions can not be identified. Today the farmer is tired, the buyer is exhausted, and the market is shrinking what will become of the staff and foreign exchange? Only and only if the relevant stakeholders iron out their differences, and the truth about production, marketing, processing and exporting this crop are publicly known, then we can divert our attention from this bizarre condition. Only when organizations are paid on services delivered and farmers are being assisted and promoted then we shall close the chapter of accusing the buyers, the promoters and the regulators. Today, we feel time has come that our farmer should be given what he has suffered for. Today we feel companies should find other alternatives of generating their revenues, today we ask effective management of statutory companies that are mandated to defend the tobacco farmer. Enditem