IPS enslaving Malawi tobacco farmers to poverty

Tobacco, dubbed Malawi’s green gold has been a major cash crop for decades. Not surprising, that some prominent farmers made fortunes from it consequently setting up huge investments ranging from haulage to hospitality services during the crop’s peak period.

Tobbaco farmers complain of IPS
Tobbaco farmers complain of IPS
 Women like these are have mostly been affected by IPS because their sweat is not translating into profit
Women like these are have mostly been affected by IPS because their sweat is not translating into profit

But today, farmers tell different poignant stories when they sell their crop at the Auction Floors. Prices are never predictable and in many cases they do not reflect their costs of production.

This leaves them with unsustainable meagre earnings not enough to procure inputs for the next season.

A TCC 2014 assessment report exposed huge price disparities between auctionand contract tobacco, with tobacco on contract fetching higher prices than tobacco on auction farming.

“The traditional tobacco system seems to be losing its allure. According to the market analysis reviewing the past 21 weeks of tobacco sales, the average price for flue-cured tobacco on contract was $2.60 (K988) per kilogram (kg) compared to an average price for auction tobacco at $2.18 (K828) per kg.

This represents a price difference of 16 percent, according to TCC.

Thus thousands of subsistencefarmers in Malawiarenow waging an unsuccessful battle with government and multinationals to abandonthe Integrated Production System (IPS) where corporations provide inputs for tobacco production and they then recoup their costs plus interests during trading.

They argue that the system is benefiting tobacco multinationals corporations at the expense of them.

Hence their appeal to authorities to revert to old system of open auctioning.

Malawian economy is largely dependent on agriculture which contributes 80 percent of the labour force and represents 37 percent of the National Gross Domestic Product, with70 percent of export revenues.

However, evidence gathered during visits to farmers in selected districts in central Malawi in 2015 namely; Dowa, Kasungu, Lilongwe and Mchinji unearthed that tobacco farmerswere living miserable lives because the prices they got under IPS.

Samalani Bintoni Tembo, a member of Tadala Club in Kasungu district in the central region narrated how he used to fetch better returns before he was lured into IPS.

“That is why I managed to buy Kakwale farm in Kasungu.  I even owned a fleet of Mercy Ferguson tractors and articulated Trucks,” he told Nyasa Times in an exclusive interview.

Tembo suggested that the Malawi government should help in bailing out farmers from the jaws of IPS saying they are failing to withstand the exorbitant tariffs and charges that the IPS attach to their loans.

Another irate farmer ElnestoChimgondaNkhoma blamed theintroduction of tobacco associations which he claimed enforces stringent IPS regulations among the poor farmers many of whom barely survive on less than a dollar a day.

For instance, Nkhoma said a farmer is not allowed to use a personal vehicle to ferry his own Tobacco to the Auction Floors, but only those from associations.

“These people are enriching themselves with these arrangements because it is exploitative,” lamented Nkhoma.

Solomon Jackson another farmerin Mchinji district accused the tobacco companies of reaping off farmers’ year in and year out.

“They deduct from us US$1,600 per hectare in loan repayments and yet a farmer only manages to harvest fifteen bales of tobacco per hectare, this is an outright loss because on average a farmer realizes US$1,100per hectare,” Jackson said.

Member of Parliament for Lilongwe City Centre David Bisnowathy alsoqueried government during the 2015 parliamentary session to explain why it was allowing the system to continue when there was enough evidence that it was reaping Malawians.

“These companies do not have the welfare of farmers at heart,” said Rabson Matemba Jere another tobacco farmer on contract with Japanese Tobacco International (JTI) from Dowa District.

Minister of Agriculture, Irrigation and Water Development Allan Chiyembekeza down played the allegations saying they were not true because his ministry has never received complaints to that effect. .

AHL Group’s Corporate Affairs Manager Mark Ndipita confirmed on the price disparities betweenTobacco sold on IPS and the one sold onthe auctionsystem. Ndipita failed to explain why the disparity.

Associate Professor of law and administrative studies at the Chancellor College the Constituent College of the University of Malawi, Mustapha Hussein called for political will in order to address the challenges which the farmers are complaining about on the IPS.

“Failure to address them might anger farmerswho may not vote in the present government in the next elections,” Hussein said.

Ndipita says AHL Group sympathises with the farmers over what they were going through.Let me commend farmers who have been loyal to the Auction system that they should not get worried as we are discussing all the issues that they have raised and soon things will change,” Ndipita said.

Tobacco Association of Malawi (Tama) Chief Executive Officer, Graham Kunimba admitted receiving complaints on the system, however,Kunimba was quick to point out that the system has some advantages.

“This matter is subjective. There is need for you to balance up and get a bigger sample in terms of those involved in supplyingthis information. In brief the system is rewarding and voluntary as well” Kunimba explained.

He said it is the Malawi government policy toallow both IPS and Auction System to run concurrently so that farmers are able to choose which system is rewarding.

Civil Society Agriculture Network (CISANET) Executive Director TamaniNkhono Mvula said IPS is operating illegally because it is not recognised by the current Tobacco Act saying that is why IPS is prone to abusethere is no legal framework to cover it.

He noted that under IPSfarmers sign complicated contracts.

“Most of our farmers have not gone very far with education and it is unfair for the Tobacco Companies to give farmers very difficult contracts with fully explaining and or interpreting them,”Mvula said.

President of Farmers Union of MalawiAlfred Kapichira Banda gave a clear position of his organization on IPS.

“IPS cannot assist farmers in anyway. IPS is just there to reap off farmers,” observed Banda.

“We have tried in vain to engage government on the matter, I totally agree with your findings IPS is not good, a farmer suffers from two fronts. One, he has to pay loans and interests and on top of that the farmer has to pay more taxation to institutions such as Agriculture Research and Extension Trust (ARET), Malawi Revenue Authority (MRA),” Banda said.

NyasaTimes went further to prove if indeed farmers were being deducted heavily at the tobacco markets.

These were some of the deductions according to AHL Group seller’s sheet.

AHL Group selling commission – USD81.78


ARET – USD 32.71
Ngala Levy – USD 22.36

Farmers in the sampled districts told our reporter that they weresurprised with ARET deductions becausethey have never seen an official from the institution coming totheir farms to offer technical advice.

President Peter Mutharika has always reiterated tha it is his government’s commitment in ensuring that farmers are benefiting from their tobacco.

But the reality on the ground far outweighs his podium rhetoric.

  • The Centre for Investigative Journalism Malawi (CIJM) –http://www.investigative-malawi.com – supported this story

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8 years ago

Tobacco companies are looting Malawi, they are hoarding the forex couretsy of Reserve bank ruling allowing last year then to keep 100% of there export proceeds. This tobacco is for the farmers of malawi they pay peanuts to farmers and sell at high price around usd6 per kg and then they dont change the dollars they send them to there countries. This tobacco company should change there dollars immediately then kwacha can stabilise chifukwa ndalama za dollars akutumiza ku kwawo

8 years ago

Umbuli ndi matenda. IPS mwati ndi yoipa? loipa ndi Boma la Malawi. Why? Tobacco companies do not give farm inputs to farmers. The companies only stand as witnesses between farmers and banks. Commercial banks give loans to farmers through companies. On the seller sheet, have you seen a deduction going to any tobacco company? The Malawi government cannot ask banks to give farm inputs to the farmers. Banks operate on interests. Umbuli ndi matendadi. kafukufuku muzifunsanso athu ozindikirako. Alimi ambiri akhala mumugwirizanio ndi ma company a fodya kwazaka 8 ngati amawabera bwanji sakuchoka?….. Nduna, MPs Akulu akulu a mboma, TCC,… Read more »

8 years ago

Abolish IPS .Let farmers be producers and buyers be buyers. The price which they offer doesnt tally we are losing out natural resources .They are not giving back.They are taking our treasures to there home countries.Warning if they see that we have no capacity to produce tob they will leave us and go to other countries shame to matherland.

8 years ago

Ndifuna ndivomerezane nawo alimi azanga amene adandaulawa. Ndizowona IPS inabwera kudzatisaukitsa ife alimi afodya, ndipo panopa tiri paukapolo zedi. Zimene akunena abwana aku TAMA ndi bodza la mkunkhuniza, chifukwa chimene chimachitka ndichoti ogula fodya amabweza kwambiri fodya wa ku chipandepande ndi cholinga chofuna kuumiriza mlimi kuti alowe pa contract. Inu mudamvapo kuti ngongole amachita chokakamiza? Ife olimi omatikakamiza kusaina(contract) ngongole zawozo, pozindikira kuti sititha kuwerengetsa bwino bwino. Pambuyo pake tindalama tonse tomwe m’limi amapeza pachaka timathera ngongole ndipo ngongoleyo imawolokera chaka chotsatira. Alimi amene adachitako mwayi mbuyomo, nagulako magalimoto kuti azinyamulira fodya wao amakakamizidwa kudzera ku timabungwe tosadziwika bwinobwino tomwe… Read more »

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