Malawi: Contract Selling to Dominate Tobacco

Source from:  The Daily Times 09/19/2012

The Tobacco Control Commission (TCC) has unveiled a new tobacco trading arrangement that will see 80 percent of tobacco growers in the country moving to contract farming with buying companies starting from the next growing season. TCC Chief Executive Officer Bruce Munthali told The Daily Times on the sidelines of a 2012 Agriculture Research and Extension Trust (Aret) Technologies Symposium in Lilongwe that the move is aimed at controlling tobacco production in the country to ensure that there is no overproduction of the crop anymore. "Eighty percent of farmers are going to be on IPS [Integrated Tobacco System] and this already acts as a production control measure in the sense of quantity and quality," said Munthali. He said overproduction of tobacco negatively affects the pricing of the leaf "With IPS, growers would know the quantities needed by contracting companies plus the price they will be paid per kilogramme before venturing into production," said Munthali Under IPS or contract type of tobacco production, farmers sign contracts with tobacco buyers who supply them with farm inputs and improved technologies for their tobacco production in addition to linking them up with financial institutions Munthali said unlike auction trading, contracting companies under IPS indicate to their farmers how much and what quality of tobacco they want He said, however, the　government was yet to decide on the quantities of tobacco to be produced this growing season. However, industry reports indicated that buying companies will be looking for 181 million kilogramme of tobacco from Malawi next year, of which 160 million kg would be burley, 16 million kg would be flue cured and five million kg dark fired tobacco Minister of Agriculture and Food Security, Peter Mwanza, said in a separate interview at the same meeting that last year's improved prices of tobacco on the local market likely to lead into increased production for the crop next season Mwanza observed that last season's production was a bit lower due to the previous year's disappointing prices "There was under-production because during the previous years prices collapsed and small amount of income flowed. In the same way, farmers got good prices of tobacco this year," he said "We expect more tobacco this coming season," said Mwanza, adding "Farmers are not stupid. They have been following trends on the market after which they make their decisions about what and how to grow." Enditem