With the Lilongwe tobacco auction floors opening on Monday, Auction Holdings Limited (AHL) says it is well prepared for the new tobacco selling system in the country’s auction floors which will see contract trading dominating.
The company says, however, there are still outstanding issues to be resolved concerning the new system, called Integrated Production System (IPS), due to its abrupt introduction in the country.
AHL Chief Executive Officer, Evans Matabwa, said yesterday the company’s preparations for the 2013 marketing season have been almost successfully completed.
“There will be sales for both auction and contract systems, every day throughout the week,” said Matabwa, adding: “We have spent a lot of resources in the continuous upgrade of our ICT Systems in order to put them in tandem with the modern demands.”
He argued that despite contract marketing almost taking over from auction, AHL remains relevance in the marketing of tobacco as it is a highly professional institution which is structured to manage any tobacco marketing system.
“AHL has been the centre of tobacco marketing in the country for over 75 years.You may wish to note that through AHL, the country’s economic machinery is able to account for forex, taxes and other statutory levies which have contributed significantly to the economic development of Malawi,” said Matabwa.
He said the company’s operations are systematically structured and it is that order which gives stakeholders an opportunity to transact efficiently regardless of which marketing system is dominating.
Matabwa said no major changes should be expected at the floors in terms of operations.
“Deliveries will follow the booking – in arrangement on first come first served basis, just as in the past,” said Matabwa.
He said with this long established system, any truck congestion that may arise elsewhere within or outside the proximity of its marketing locations would have nothing to do with the company.
Asked if AHL staff required any special training for the new system, Matabwa said they did not as the company has been in this business long enough.
“It is the numbers [of staff] required that are proving to be challenging,” he said, adding: “IPS requires lesser people and we do not want to create unemployment.”
However, Matabwa said there have been mixed and misleading statements which have gone out to the public, in particular tobacco farmers, advising them that there will be no auction sales during this season.
“This deliberate distortion of information brought uncertainty among farmers to the extent that some of them planned to sell their leaf across the borders,” said Matabwa.
He said officials from his company have had to go round conducting field meetings to assure the farmers that the markets will run as normal.
“As an institution operating in Malawi, we very much realise the pain of allowing our tobacco to be smuggled out illegally because that is forex fleeing the country due to the careless misconduct of misinformation,” he said.
Matabwa said his company has prepared itself for the misunderstandings that might be apparent due to the abrupt adoption of the IPS system.
“This [misunderstanding] is mainly because there are a number of significant outstanding issues that have to be sorted out for the smooth running of the IPS contract arrangements,” said Matabwa.
He said one of the outstanding issues is the lack of legislation to regulate the IPS.
“We believe that farmers, buyers, and all other stakeholders should have an enabling law to guide and protect them under the new system, just like in the auction arrangement,” said Matabwa.
“In our opinion, when you speak of contracts, there ought to be some piece of legislation that becomes an instrument of reference should things go wrong,” he added.
He said since merchants have used their resources to sponsor farmers, their investments have to be duly safeguarded by the law while tobacco farmers, who enter into these agreements expecting certain promises like competitive prices to be fulfilled, need to understand their rights in this kind of arrangement.
“All that should be well articulated in the legislation we are talking about,” said Matabwa, adding: “So it has been our considered view that perhaps this should have been the first step.”
He said AHL’s observation is that there is still more work to be done.
“Nevertheless in the given circumstances, we have attempted to put in place mechanisms that will minimise confusion and hopefully allow the new arrangement to settle as quickly as possible,” he said.