Tobacco Farmers Seek Greener Grass: Tobacco Is Malawi's Main Foreign Exchange Earner but Every Year Almost 10% of the Crop Is Smuggled out of the Country Instead of Being Sold on the Auction Floors as Required by Law. Why Do Farmers Prefer to Sell Abroad, Even at Lower Prices, Than at Home? Lameck Masina Has Been Finding Out

By Masina, Lameck | African Business, May 2013 | Go to article overview

Tobacco Farmers Seek Greener Grass: Tobacco Is Malawi's Main Foreign Exchange Earner but Every Year Almost 10% of the Crop Is Smuggled out of the Country Instead of Being Sold on the Auction Floors as Required by Law. Why Do Farmers Prefer to Sell Abroad, Even at Lower Prices, Than at Home? Lameck Masina Has Been Finding Out


Masina, Lameck, African Business


MALAWI'S OVERW HELMing expectations of boosting its foreign exchange coffers with this year's earnings from the country's main forex earner, tobacco, are being dashed by the continuing incidents of tobacco smuggling to neighbouring countries despite the government's introduction of the anti-smuggling campaign which seeks to put the practice to a halt.

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Tobacco contributes about 70% to the country's exchange earnings. The crop which is referred to as 'green gold' in Malawi, also contributes about 13% to the country's GDP. It earns 23% of total national revenue with about 80% of the population directly or indirectly employed in the tobacco-related activities. With the current acute shortage of forex, there were high expectations that revenues from tobacco sales would help boost the country's foreign exchange reserves. But since the opening of the marketing season in March by President Joyce Banda, numerous reports have been circulating that farmers are yet again smuggling the crop out to neighbouring countries such as Zambia and Mozambique where it is fetching better prices.

Farmers who are involved in illegally bypassing the auction floors contend that they get double the profits from cross-border trading compared to selling in Malawi. This year tobacco prices at the country's auction floors averaged $2.20/kg for the highest-quality leaf while the cheapest was $0.90/kg.

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Alex Mbewe (not real name), a farmer in the central district of Mchinji, which borders Zambia, told African Business that in Zambia tobacco is selling at an average of $4.5/kg compared to Malawi, where the same quality of crops averaged $1.90. "We earn more in Zambia than what Malawi markets offer and there is no convincing reason from government which can stop us from selling our crops across the border," he said.

Deputy Agriculture Minister Ulemu Chilapondwa said that government has engaged in an anti-smuggling campaign in which it has tightened security in border districts. The campaign has resulted in the police seizure of over 32,000 kilograms of tobacco and the arrests of five traders in the central district of Kasungu early March.

Despite the campaign, recent statistics show that about 5% of Malawi's tobacco has so far been smuggled abroad, slashing official receipts from the country's main foreign exchange earner by $10m.

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Tobacco Farmers Seek Greener Grass: Tobacco Is Malawi's Main Foreign Exchange Earner but Every Year Almost 10% of the Crop Is Smuggled out of the Country Instead of Being Sold on the Auction Floors as Required by Law. Why Do Farmers Prefer to Sell Abroad, Even at Lower Prices, Than at Home? Lameck Masina Has Been Finding Out
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