The Minister of Agriculture Lobin Lowe has disclosed that tobacco remains irreplaceable despite calls from the anti-smoking advocates to find alternative crops.
Lowe made the sentiments on Thursday when he toured the refurbished Japanese International Tobacco (JTI) tobacco processing plant at Kanengo, Lilongwe.
JTI spent US$1 million to refurbish the facility.
Lowe said the future of the crop remains brighter and that Malawi cannot easily manage to diversify away from it.
“Malawi is the only country that grows more burley tobacco than any country, but the problem are the prices. What we are doing now is discussions with Tobacco buyers on how prices can be adjusted upwards,” said Lowe.
“If we say diversifying tobacco, it is as if that crop can replace tobacco. That is not the case. Tobacco cannot be replaced, but other crops can just complement the revenue, which tobacco is fetching so far,” he said.
Lowe said Malawi would continue relying on tobacco in the long term and urged tobacco buyers and other stakeholders to ensure that farmers do not lose interest in the crop.
He said it is pleasing to note that companies consider Malawi as the main processing country and the investment JTI has made is evidence enough that tobacco has a bright future in Malawi.
“If we talk of other crops, we are talking of complementing tobacco and not getting away from tobacco. This alone shows that we are still relying on tobacco in the short, medium and long term,” said Lowe.
He, however, said the ministry has observed that farmers are not getting much take-home money after selling tobacco, as they use the proceeds to pay back for the inputs they got from tobacco companies.
Lowe also lamented that the ministry did not get enough forex from this year’s tobacco sales.
On the other hand, the minister complained that the tobacco buying companies dictate prices and farmers in contract farming, which disadvantages the farmers.
JTI Managing Director John Gauna called on government to remove non-value costs such as MBS tax and the Tobacco Commission levy on processing of the leaf in order to make Malawi’s processing facilities financially appealing.
Gauna said a number of tobacco processing factories have closed down in the neighbouring countries and this has created an opportunity for Malawi to position itself as a competitive alternative.
Gauna noted that taxes and levies in commodity processing are making the country unattractive.
“We boast of capacity to process up to 240 million kilograms of tobacco leaf here in Malawi. But at the moment, we aren’t achieving anywhere near this,” said Gauna.
He gave an example of the JTI factory, which can process up to 50 million kilograms of leaf, but is currently processing around 40 million kilograms, up from 28 million last year.
He said the company was massively underutilizing its facility despite processing tobacco for other parties.
“Non-value costs such as MBS Cess and the TC levy make our processing facilities less financially appealing. The knock-on effect on this is fewer jobs,” he said.
Malawi economy has been relying on tobacco since the time of colonial masters.Follow and Subscribe Nyasa TV :