Contractual Buyers Worry Tobacco Growers

Source from:  Daily Times (mw) 05/15/2009

SOME tobacco growers selling their leaf on contract arrangement with tobacco companies in the country have bitterly complained that they are getting low prices as compared to their counterparts selling on the open floors at the Mzuzu Auction Floors. The growers on Friday pleaded with Deputy Agriculture Minister Frank Mwenifumbo to intervene and bring sanity in the arranged tobacco marketing. "As growers we feel it is time that contract buying should end because it is reaping us off. These companies come to us and seduce us that when we sign contracts with them they will give us good prices, which is not the case especially this year," said Green Chavula, a grower from Rumphi. He said what makes the farmers more bitter was the fact that their colleagues who send their tobacco to auction floors were making more money obviously from competition. Some of the contractual growers allege that this year they never signed contractual obligations with the buying companies but only got surprised that the tobacco they sent was not being sold on the open market with the buyers using last year's agreement. The contractual tobacco sales are conducted within the premises of Auction Holdings Limited Floors but the contractual company just buys the tobacco using prices they feel befits the tobacco. This is unlike the auctioning system where buyers compete for tobacco and outdoes each other in bidding. Getrude Mhone, another grower, said she was so disappointed that the two consignments of tobacco bales she had sent for selling to the buyers had yielded prices down the average set by government unlike those of her colleagues sold on the open auction market. "Most of the tobacco was being bought at 90 cents by Limbe Leaf when the same type of tobacco is fetching 220 cents on the auction market. I really regret entering into this contractual agreement with this company," said Mhone. His sentiments were echoed by Mulanje Mkandawire from Rumphi and other angry growers who told the deputy minister that government should not just watch the companies rip farmers off. However, representatives of the buying companies on the floors on Friday refused to grant an interview to The Daily Times and other media houses, saying their company policy bars them from doing so. Mwenifumbo assured the growers President Bingu wa Mutharika was still fighting for better prices. "Government will not tire until farmers get more deserving prices. We have seen there is foul play and as we have always said; we have evidence that some top opposition leaders are behind this but we will not allow farmers to be cheated," said Mwenifumbo. He challenged sentiments that the poor prices was as a result of low demand of the crop on international market saying, Malawi's burley tobacco has always been on high demand. Observers have also attributed the current low tobacco prices to over production especially of the Malawi leaf. Malawi has this year produced 250 million kilogrammes of tobacco, up from 194 million kg produced last year in a situation where buyers are looking for only 200 million kilogrammes. "Americans are protecting prices for their products and so is the European Union protecting its steel industry. Why can't we protect our tobacco here?" said Mwenifumbo. He said his tour to the Mzuzu Auction Floors was a directive from Mutharika to monitor the prices at the floors and see if farmers were being treated fairly. Government this year proposed minimum tobacco prices of US $2.15 per kg for burley and US$3.90 per kg for flue cured tobacco. Buyers are buyers have ignored the prices and are buying at lower rates. Enditem