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.
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.Follow and Subscribe Nyasa TV :