Newly-appointed Minister of Agriculture James Munthali has said lack of innovativeness by players in the industry is retarding development of the sector.
He said there are players who are promoting bad practices like failure to bring the tobacco market closer to farmers. He said this contributes to smuggling of the leaf across the borders.
“Where do you expect a tobacco farmer at Sindemisale in Mchinji to take his two bales of tobacco to, all the way to Auction Floors at Kanengo or smuggle it across the border which he can easily do?” he said, adding:
“This is why I think that taking the tobacco market closer to the people would be one of the solutions to smuggling tobacco to neighbouring countries.”
The agriculture economist was speaking in Lilongwe on Thursday when he met with stakeholders in the tobacco industry. He said even commercial banks are not being innovative to an extent where one finds farmers crammed in the bank trying to collect their tobacco proceeds.
On the same point Munthali said Auction Holdings Limited (AHL) delay payment of farmers makes it difficult for the sector to grow.
AHL Chief Executive Officer Evance Matabwa said his institution has been trying to solve the problem of delays in payment but tobacco buyers are not helping matters because there is too much delay in remitting payment.
“Some buyers can take up to three weeks to pay us and this forces us to use our funds to pay the farmers which has been difficult so far,” he said.
He further said that AHL proposed an advance payment system a couple of years ago which the tobacco buyers rejected. Alliance One Regional Managing Director for Africa Graham Kayes said it is not possible to make advance payments for tobacco to AHL. He, however, said it is possible to pay in time.
“It is our legal mandate to pay in time and I think that we can agree on a penalty to be paid by those buyers who delay payment,” he said.
Tobacco is Malawi’s chief cash crop which contributes up to 40 per cent of the country’s Gross Domestic Payment (GDP) as well as 60 per cent of foreign exchange earnings. At least 80 per cent of Malawians are directly or indirectly employed by the industry which also contributes 23 per cent in taxes. – by Jacob Nankhonya