High rejection rate at auction floors
High rejection rate at auction floors

The country’s tobacco industry is at risk of dying a natural death if concerns and challenges being faced by farmers are not addressed amicably by all stakeholders involved.If what is happening at the Tabaco market is anything to go by, then the country should brace for tougher times as the main forex earner will soon be history to Malawi.

A visit to the Auction floors at Kanengo in Lilongwe would leave one in tears looking at the huddles farmers are going through just to have their products sold to the somewhat tight fisted buyers.

It has been revealed that farmer’s registration to have their tobacco sold at the Auction floors is free but some staff at the registration office are demanding money up to 5 thousand kwacha just to have their names registered.

At the same time some transporters are said to be cashing in on farmers by registering long distances at the auction floors than where the tobacco is originally emanating from.

Meanwhile, tobacco farmers have revealed that some buyers are forcing them to migrate from contract selling to auction upon having their loan paid a development which is contrary to the initial agreements based on contracts with their buyers.

As if that is not enough, sales at auction are moving at a snail’s pace due to high rejection rate, as of the eighteenth week of tobacco sales, the rejection rate was at 94% a development that has worsened matters at the floors.

“Am worried with the way buyers are conducting business here, these people are manipulating the market so that everything goes their way” Lamented Charles kachitsa from Dowa District.

He added,” as I am speaking my bales have been turned down 3 times and the prices offered here leaves a lot to be desired.  I have a family to take care of, there are loans I need to pay back and tenants are waiting for their pay yet nothing is happening here”

Currently about 15% of auction sales are registered while the contract sales are somewhat prioritized with the highest selling price pegged at 1 Dollar 20 cents per kilogram while tobacco selling on contract is fetching about 1 dollar 95 cents.

So far, 124, 186, 578 million kilograms of tobacco have been sold which is lower as compared to last selling season where about 158, 778, 338 million kilograms were sold at the same period representing a difference of about 34, 595 in volume.

195, 417,754 million Dollars has been realized which is less compared to 282,973,249 dollars which was realized  same period last selling season which translates to 87, 565 dollars difference in revenue presenting a 31% short fall in.

When asked to comment on these developments, corporate affairs manager for Auction Holdings, Mark Ndipita cast doubt if the market would close any time soon.

He observed, “With the current market trend the market will take long before closing because there is still more tobacco coming to the floors to be sold but the major challenges are low prices and high rejection”

Regardless of continued pleas by the state president to buyers to offer good prices, the situation is slowly but surely worsening each and every season prompting some farmers to abandon the so called green gold for other cash crops.

Should these farmers turn their backs on tobacco, how will the country’s economy survive as it is largely dependent on tobacco sales complemented by tax collections by the Malawi Revenue authority?

Should we conclude that buyers have more powers than the government?

 

 

 

 

 

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