Malawi Tobacco Prices Climb 20% Above Government-Mandated Level

Source from:  Bloomberg 03/18/2010

Tobacco prices in Malawi, Africa's biggest producer of the burley variety of the crop, fetched an average of 20 percent more than government set prices at the first auction of the season, the industry regulator said. The leaf sold for $2.40 per kilogram (2.2 pounds) at Limbe Auction Floors, compared with the $2 set by the government, Tobacco Control Commission Chairman Bruce Munthali told reporters today in Blantyre, the commercial capital. "I am impressed with the quality of the leaf and the buyers should be commended for offering above government set prices," Munthali said. "We hope this trend will go on." Malawi's government started setting minimum prices for the various grades of tobacco in 2007, after accusing merchants of putting growers out of business by offering farmers lower prices than the government-mandated level. Last year, President Bingu wa Mutharika deported four officials at three tobacco-buying companies, accusing them of sabotaging his economic agenda. The commission this year won't tolerate any disruptions such as the disagreements that occurred between buyers and growers in 2009, Munthali said. "We, as TCC, want a smooth market," he said. "I would also like to appeal to all grower associations to assist in educating our farmers on procedures in raising concerns on tobacco prices. Stopping markets or sales unilaterally is not acceptable." Malawi, a nation of 15 million people that the United Nations ranks as one of the world's least developed, relies on tobacco to generate 60 percent of its export earnings. The country produced 215.3 million kilograms this season, down 7.2 percent from a year earlier, Hudson Mleme, a director at the commission, told reporters at the briefing. Output was curbed by dry spells and difficulties in sourcing fertilizers, he said. Enditem