Malawi Tobacco Prices Hit Record $11/Kg Vs $2/Kg Year Ago - AFP

Source from:  nasdaq.com BLANTYRE, Malawi (AFP) 03/19/2008

Malawi opened this year's auction season for its chief export crop tobacco with prices hitting a record high at a fivefold increase over last year's average, officials said Tuesday. Godfrey Chapola, general manager of the Tobacco Control Commission watchdog, told AFP burley tobacco, a light air-cured variety used primarily for cigarettes, was fetching $11 a kilogram. "This is really unbelievable and unheard of," Chapola said, adding tobacco prices last year averaged $2/kg in the poor southern African country. Malawian farmers are expected to produce 121 million kilograms of the burley variety alone, while total tobacco production is pegged at 147 million kilograms, according to the commission. Production last year was 110 million kilograms. Chapola ascribed the price hike to "a general shortage of tobacco in the world" and stiff competition among buyers. Malawian farmers have in the past rioted and shut down auction floors over falling prices, which tumbled to a low of 60 cents/kg a few years ago. President Bingu wa Mutharika, in office since 2004, recently ordered minimum prices be set for the country's three main crops and foreign exchange earners: tobacco, tea and cotton. The minimum price for tobacco, which contributes about 70% of the country's foreign exchange earnings, has been set at $1.61/kg this year, up from $1.21/kg in 2007. Over 30,000 smallholder farmers are involved in tobacco production in Malawi, the world's biggest exporter of burley. The sector employs more than 500,000 people. Enditem