Government Abolishes Hessian Levy on Tobacco

Source from:  by Tadala Makata Kakwesa, 15 September 2005 - 09:59:29  09/16/2005

Government has removed the hessian levy imposed on tobacco farmers registered with the Tobacco Association of Malawi (Tama) following an approval of the Cabinet paper on tobacco. The removal of the hessian levy means that farmers will have to purchase hessian cloth on their own unlike in the past when Tama was purchasing it on their behalf and delivering it to them in their respective growing areas. Tobacco Control Commission (TCC) General Manager Godfrey Chapola said in an interview that his office has received instructions from the Ministry of Agriculture to abolish the levy. "I have just got the instructions from the Ministry of Agriculture to abolish it as one of the conditions recommended by the World Bank, but about why it has been abolished, I don't know," said Chapola The World Bank recommended in its report from the research findings conducted by government with its (World Bank) support that distribution of hessian cloth should be liberalised so that importers can set up private internal distribution network and satellite depots and that National Smallholder Farmers Association of Malawi (Nasfam) centre can buy the cloth from importers and sell it to farmers. The development has, however, not pleased Tama, describing it as a set back for farmers. Tama Executive Secretary Felix Mkumba said in an interview the move will negatively affect farmers because they will be expected to travel from rural to urban areas to purchase the cloth on their own instead of concentrating on farming activities. On the hessian scheme, farmers were being deducted 30 cents for every bale which Tama was using to purchase the cloth on their behalf. According to Mkumba, this system, started in 1982, relieved farmers of transport problems and risks of robbery. "The hessian scheme prevented farmers from unscrupulous traders who take advantage [of the situation] to sell the cloth at high prices and also problems of theft were reduced. But now, it means farmers have to face all these problems," said Mkumba. This means the tobacco industry remains with 12 levies which include the withholding, Auction Holdings Limited (AHL) commission, TCC Cess and Classification, Aret levy, transport to AHL, AHL stop order and bank exchange. Apart from the abolishment of the levy, the authorities have also approved an action plan on implementation of tobacco reforms which, among others, will require TCC to replace quota system with registration of planned production as well as to carry out performance audits on TCC and AHL. Deputy Minister of Agriculture Henry Mumba said in an interview earlier that there is going to be a lot of reformations taking place in the tobacco industry following recommendations and findings by individuals and institutions on the way tobacco is being handled in Malawi. Enditem