Malawi tobacco prices ‘pathetic’

| April 18, 2016

The Reserve Bank of Malawi (RBM) is being asked to devalue the kwacha during the current tobacco selling season so as to prop up the ‘dwindling leaf prices’ that are hurting tobacco growers, according to a story in The Nyasa Times.

Professor of economics at Chancellor College Ben Kalua said the government, through the RBM, should consider devaluing the kwacha so as to help tobacco farmers realize better tobacco prices.

He said the tobacco industry was the backbone of the agriculture industry; therefore, hurting it through unfavorable tobacco prices would further cripple an already sick economy.

Meanwhile, the chairman of the parliament’s agriculture committee, Felix Jumbe, said his committee had been granted a meeting with the RBM’s governor Charles Tchuka and his officials on the same issue.

“We have been seeking a meeting with the governor and finally we have been granted [one]; probably we will meet him next week,” Jumbe said. “We want them to consider a devaluation to raise the tobacco prices which are now pathetic. I hope they will understand our point,”

As of Thursday, two days into the selling season, the highest price paid for leaf was US$1.54 per kg, while the lowest was at 80 ¢ per kg.

The president of the Farmers’ Union of Malawi said farmers had had to take huge bank loans when the kwacha was trading at K1000 against the dollar, but that it had appreciated to K600 against the dollar, which meant that farmers were making huge losses.

Central bank officials were said not to be available for comment, but in earlier interviews Finance Minister Goodall Gondwe ruled out devaluation of the kwacha.

He said devaluation would affect other sectors of the economy and would make all efforts to fix the economy worthless.

Devaluation of the kwacha was not the only solution to the low tobacco prices, he suggested.

Category: Breaking News

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