Second Round Estimates Reduced Tobacco Production

Executive Director for Tobacco Control Commission (TCC), Kaisi Sadala said the country’s crop production has dropped by 6.62 per cent of total production of tobacco this year.

In comparison with last year’s output, this year’s second consolidated report for total estimates of tobacco production shows that the country will produce 154.7 million kilogrammes against last year’s 165.6 million kilogrammes representing 6.62 per cent decrease.

The statement made available to Malawi News Agency (Mana) has revealed an estimated 4.4 per cent decline of the trade demand for 2020 adding that there are several attributing factors to the a decrease of production this year.

“First of all, the decrease comes following impact from excessive rainfall that leads to leaching of crop nutrients thereby negatively affecting the crop potential and yields.

“The other reason is decrease in area under tobacco cultivation due to grower withdraw influenced by low prices experienced in 2019 tobacco market season”, the statement reads.

According to TCC, there was an expectation that the tobacco leaves would fetch higher and attractive competitive prices as demand for tobacco stands at 161.4 million kilogrammes against the estimated output of 154.7 million kilogrammes.

“The 2020 estimated production is expected to attract competitive pricing as companies will out compete each other to satisfy their requirements,” the statement stated.

Chancellor College-based Economics, Prof. Ben Kalua observed that reduction in export earnings can affect the foreign exchange rate and the cost of imports which in turn could affect the cost of production and hence triggering the cost-push inflation.

“Reduction in tobacco production can reduce export earnings but this does not have to be case in the export prices turnout to be good. But if food inflation turns out to be good, the 5% inflation forecast could be achievable,” he said.

Meanwhile, neighbouring countries such as Zambia, Tanzania, Mozambique and Zimbabwe have projected a reduced output due to erratic rainfall.

Globally, major tobacco producing countries, namely Brazil, India, China, East Asia region project a decline arising from unfavorable weather effects.- By Glory Msowoya