Malawi Tobacco Trades 19% Below Government-Set Price

Source from:  Bloomberg 04/20/2010

Tobacco prices in Malawi, Africa's largest producer of the burley variety of the crop, fetched an average of 19 percent less than government-set prices during the fourth week of sales, the industry regulator said. The leaf sold for an average of $1.62 per kilogram (2.2 pounds), compared with the $2 set by government, the Tobacco Control Commission said in a report handed to reporters today on the auction floor at Limbe. It didn't say how much the leaf fetched during the same period last year. Farmers are selling lower-grade tobacco at the moment, meaning prices are "good" even though they are below the suggested price, Chief Executive Officer Bruce Munthali said. The price is a guide for buyers, he said on March 31. The government started setting minimum prices for the country's various grades of tobacco in 2007 after accusing merchants of putting growers out of business by offering farmers lower prices. Last year, President Bingu wa Mutharika deported four officials at three tobacco-buying companies, accusing them of sabotaging his economic agenda. 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 southern African nation sold 16.5 million kilograms between March 15 and April 7, earning $26.7 million, according to the commission's report. It didn't provide comparable figures. Limbe Leaf Tobacco Co., a unit of Universal Corp., Alliance One Inc., Africa Leaf Malawi Ltd., Premium Tama Tobacco Ltd., Malawi Leaf Co., RWJ Wallace Ltd. and Japan Tobacco Inc. are some of the biggest buyers of tobacco in Malawi. They export the leaves to countries in Europe, Asia and North America. Enditem