IPS creating destitutes among Malawi tobacco growers as Mutharika dips in on trade vice

Malawi President Arthur Peter Mutharika’s warning to tobacco buying companies against discrimination of non-contract leaf growers was a timely take on a serious exploitative practice that is causing untold misery among many poor farmers in the country.

Tobacco auctioning in progress at Lilongwe Auction floors (C)Stanley Makuti

Tobacco in Lilongwe aution floors ready for sale (C) Stanley Makuti

President Peter Mutharika is led on a tour of Lilongwe Auction Floors and witness tobacco ayc …tioning in progress (C) Stanley Makuti

Speaking when he officially opened the 2017 tobacco marketing season at Kanengo Auction Floors in Lilongwe on Tuesday, April 11, 2017, Mutharika told the buyers to treat growers on both streams of the market equally.

“Both contract and non-contract tobacco farmers should be treated fairly,” said Mutharika.

The ill-treatment of ordinary tobacco growers by tobacco buying companies comes at a time some farmers are going through serious economic problems and are deep in debts after all their tobacco proceeds were retained by banks as settlement of loans imposed on them by tobacco buying companies under contract farming using the Integrated Production System (IPS).

Such is the despair among the growers that the Malawi Police last year recorded a suicide case in Dowa involving a man who decided to eliminate his life upon receiving a tobacco sale sheet with zero net proceeds after the bank kept everything from his earnings to service an input loan.

Apart from death, there is ample evidence now that IPS is creating destitute among some previously successful but now helpless tobacco growers.

While industry stakeholders seem lost on how they can save growers from ills of the IPS, Mutharika’s message on the treatment of non-contract tobacco growers could go a long way in protecting poor tobacco growers, and even save lives, if followed up with vigilance and action by tobacco regulatory bodies such as the Ministry of Agriculture and the Tobacco Control Commission (TCC) who seem to side with buyers, leaving growers with no one to protect them.

Following the adoption of the IPS in 2012, Malawi now runs a parallel tobacco selling systems at its auction floors – one for those contracted by buying companies and the other open to all other growers.

However, tobacco buying companies have clearly shown that they want nothing other than IPS and are doing everything to eliminate the auction market. No wonder, prices for contract growers have over the years been much higher than those on the auction side, even for leaf of similar or better quality.

The companies have since been accused of trying to force those not on contracts to join them through the low prices and high rejection rates on the auction side.

The weakness of the market regulators is manifested in the faulty allocation of selling time for the two systems where contract sales are provided 80 percent of the time while normal auction gets only 20 percent – although auction market growers still dominate tobacco production.

Consequently, buying companies struggle to meet the 80 percent allocated time for contract and go to an extent of recruiting auction growers to trade as contract farmers with a promise for better prices, even though they did not support them with inputs during production.

The recruitment of unsponsored tobacco growers into contract by buying companies is a clear element of cheating and goes against the spirit of IPS where cigarette manufacturers expect the companies to be able to trace growers with full records of how the leaf sold to them was grown.

One wonders how the companies can trace the growers’ farming location and farming methods, including how they addressed issues of child labour, deforestation and other matters of concern to the manufacturers, where contract farmers are recruited at the gates of the auction floors.

Despite the clear disadvantages of the IPS to Malawi’s tobacco growers, the tobacco buying companies have openly mounted a campaign against the auction tobacco marketing system in favour of IPS.

The companies want the IPS because, among other things, it gives them more control on the growing and pricing of the leaf while weakening the farmer and local authorities in the process.

However, farmers, through their groupings have taken positions against IPS, citing its exploitative nature.

While many growers have spoken against IPS after experiencing its consequences over the past four years, the merchants are hell bent on eliminating the auction market through strategies such as media campaigns based on staged stories about successful farmers under IPS.

Malawi experienced one of the worst tobacco seasons last year when rejection rates for auction tobacco went as high as 95 percent while prices dropped to around 50 cents as growers were forced to sell their leaf at give-away prices.

On the other hand, contract growers enjoyed good prices and had their tobacco bought in good time while those on auction had to wait till December for their tobacco to be bought, giving them little room to prepare for the just ended growing season.

Consequently, some growers have given up the production of tobacco and Malawi is this year expected to produce only 128 million kilogrammes of the leaf – down from over 165 million kg last year, despite good rainfall experienced by the country this season.

This comes at a time Malawi continues to register a dip in earnings from tobacco. The country realized only around US$275 million from the leaf last year, down from USS$337million earned in 2015 and US$357 million generated in 2014.

Experts have since called for diversification of Malawi’s exports to legume and grain in the short to medium term with high potential demonstrated by crops such as pigeon peas, soya, groundnuts, rice, beans and others although tobacco is expected to remain Malawi’s main export commodity for the years to come.

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Chaponda
Guest

Please export some maize so that new maize can have market and the farmers can earn a living from maize sale.Muziganizila anthu not just think of yourself how you get moneys.A Goodall make Malawi active.Your maize export will have good economic impact on wide business sections from waganyu to Transporters etc

Chisoni
Guest

Ndalama ya malawi imangwa kwambir nthawi. Ya fodya kwambiri pali anthu ena mwina ma bank maka central bank amapanga manupulate, ndalama kuli kubera alimi………..pamalawi anthu tidayipa ndi mkati momwe. Tilibe chisoni… koma the same fodya masamba 4 a process ku europe ndi 5euro kapena 6 pounds uk tobacco or amber leaf and (10 EUR ,7000 kwacha)alipo amawabera alimi mdziko muno.

Chaponda
Guest

A president mwakamba za nzeru koma .Mwalephera kuthandiza alimi achimanga,Tikagulisa kuti?Poti ADMARC yili kale ndi chimanga, onse alimi afodya chaka chino ali ndi Chimanga.Time yanu muona ma SUICIDE ambiri You are not flexible and mach with the needs of business community ask BAKILI and Phone your late brother ku mupumulo wa Bata.Try even bush politics to win voters count even smaller business people accept as contributors to economy of the country.

NGWAZI
Guest

WHAT CAN HAPPEN IF
FARMERS STOP
GROWING THIS USELESS
CROP ??

EVERY YEAR CRYING CTYING FOR WHAT ??

SOME OF YOU YOU ARE JUST USED TO CRYING I THINK

LEAVE IT TO THOSE WHO BENEFIT FULL STOP !!

Lundu
Guest

Ignorance has no defense….people speak from ignorance of the IPS…………..

Trendex
Guest

THE ONLY WAY FOR MALAWI TO FLOURISH IS TO LIBERALIZE THE LEAF SO THAT ANYONE CAN SELL WHEREVER S/HE WANTS LIKE IN ZAMBIA OR MOZAMBIQUE. HOW COME EVERY YEAR MALAWIANS ARE COMPLAINING ABOUT THE LEAF WHILST OUR NEIGHBORS ZAMBIA ARE ENJOYING THE SALES FROM THE SAME LEAF? WE NEED TO TAKE A FURTHER STEP. WE ARE FED UP WITH LIP SERVICE FROM THE HEAD OF STATE.

wpDiscuz

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