Minimum Prices in Malawi Prove Unenforceable

Source from:  Tobacco Reporter 05/12/2011

Malawi's President, Bingu wa Mutharika, has suggested that tobacco buyers are trying to sabotage his country's economy by rejecting good-quality tobacco and offering low prices, according to a story by Frank Jomo for Bloomberg News. Tobacco exports account for 60 per cent of the country's foreign exchange earnings. The government would keep pushing for buyers to meet its minimum prices for tobacco, Mutharika said in a speech at the opening of an auction in Mzuzu broadcast on state television. But Mutharika backed down from a March 15 threat to deport buyers for offering low prices, suggesting that the government is powerless to maintain prices and that growers are at the mercy of the buyers. The average price of Burley in Malawi fell 57 per cent below the government set price of $1.80 per kg in the week to March 25, the country's central bank said on April 11. And according to a Daily Times story quoting the Tobacco Control Commission, sales during the first five weeks of this season were 80 per cent lower than they were during the first five weeks of last season. Enditem