Malawi: We Buy All Tobacco Under Our Contract - JTI

Source from:  Malawi News Agency 08/26/2016

The Japanese Tobacco International (JTI), one of the tobacco buyers in the country, says the company buys all the tobacco under its contract, and that it offers farmers better prices.

This comes a week after the Auction Holdings Limited (AHL) and farmers at the Lilongwe Auction Floors complained that buyers were rejecting more tobacco even from their contract growers.

AHL Corporate Affairs Manager, Mark Ndipita, had bemoaned high rejection rate at the floors and low prices on the leaf whose quality he said was unquestionably good.

"We feel the buyers are deliberately frustrating the sales by rejecting more tobacco of good quality so that they later buy the same at a low price," Ndipita had told journalists during a media tour on august 16.

He had observed that although there were low rejection rate on fully-funded contract tobacco, most growers under semi, or none-funded contract were having their tobacco rejected by their contract buyers.

The growers, according to Ndipita, are pushed to auction sales where there is already high rejection rate, thereby chocking the Floors' storage system.

Growers also complained of being used by the buyers to make gains from which the former benefit nothing.

"What happens in contract farming is that we get all the required farm inputs from the buyer on loan to be settled upon sales," explained one grower, Rhino Bakayawo. "Now what the buyers are doing is that once they buy from you enough tobacco to settle your inputs loan with them they reject the rest of your tobacco leaving you with literally nothing."

Like Ndipita had said before, Bakayawo said the grower is forced to shift the rejected tobacco to auction sale where the same buyers either reject or offer very little for the tobacco.

But during a media interface JTI organized on Wednesday the tobacco buyer said the company buys all the tobacco under their contract with the growers, and at a competitive price.

"When we go into contract with the grower we give them the specific quota we would expect them to produce given the specific inputs, hybrid seed, nursery and field expertise," explained JTI Director of Corporate Affairs and Communications, Antonio Vencesla.

He added: "There is no way we can turn back a consignment of tobacco which is under contract. However, in the event that the leaf has not been properly handled, like any buyer would do, we send it back for re-handling and buy it later upon our satisfaction with the new condition and grade.

"But if the farmer has produced according to the quota, with the leaf properly handled, we buy it all because we are obliged to under the contract."

Vancesla said although the industry had been badly affected by drought during the 2015-2016 growing season, the quality of tobacco JTI contract growers had produced was of average quality.

Most growers under full contract farming with JTI that Mana talked to boasted of a fruitful year in their tobacco growing and that their leaf had fetched a good price.

Among the farmers are Trywell Yobe Chazama of Chilunga Village, TA Chiseka, Lilongwe, and Shadrick Zinga Kabwinja of Zindo Village TA Malili, in Lilongwe.

Chazama has, from this year's tobacco proceeds, settled his loan with JTI and bought a saloon car of Honda make, a 7-ton Fuso Fighter, and an AG100 Motor cycle.

On the other hand, Kabwinja is a proud owner of a D4D Toyota Hilux which he has bought at a staggering K4m after selling his tobacco to JTI.

A tour of JTI's Direct Sale at the Lilongwe Auction Floors on Wednesday reflected a relatively competitive price of the leaf at as high as US$2.35 per kg for hybrid leaf and US$1.80 per kg for the local leaf. Enditem