Malawi Tobacco Income May Fall 17% in 2009, Bank Says

Source from:  Bloomberg 08/25/2009

Malawi, the world's largest producer of burley tobacco, may earn 17 percent less from sales of the leaf this year because of weaker prices, the Reserve Bank of Malawi said. Income from tobacco sales may decline to $392.7 million from $472.4 million in 2008, the Lilongwe-based Central Bank said today in an e-mailed copy of its latest Monetary Policy report. "Tobacco proceeds totaled $213.4 million as of July 10, representing a 25.7 percent decrease on the $287.4 million realized in the same period of 2008," the report said. While Malawi set a minimum price of $2.15 a kilogram (2.2 pounds), the leaf has sold for an average of $1.82 a kilogram in the season to Aug. 3, Auction Holdings Ltd., which manages the country's auction floors, said on Aug. 17. The southern African nation started setting minimum prices for the various grades of tobacco two years ago after it accused merchants of putting farmers out of business. Dealers denied that they underpaid farmers. President Bingu wa Mutharika on April 6 threatened to deport buyers of the leaf if prices don't improve. Malawi has produced 224.3 million kilograms of tobacco so far this year, compared with the 194.9 million kilograms harvested last year. A total of 154.4 million kilograms has already been sold, according to the Tobacco Control Commission. Tobacco is Malawi's largest foreign exchange earner, accounting for 60 percent of the nation's export earnings. Enditem