Malawi can relieve her tobacco puffing hiccups with pepper

Looking at their faces, one could easily tell that they were confused, impatient, angry and frustrated. Who could blame them? For it takes them about six months of toiling to produce high quality leaf in their fields before bringing it on the market for sale to solicit money for sustaining their bodies, souls and minds and those of dependents.

These were tobacco growers outside Kanengo Tobacco Auction Floors in Malawi’s capital, Lilongwe panting outside the tobacco market soon after the market for the leaf was recently forced to shut down following low prices of between K50 and K80 per Kg (or between 0.33 and 0.53 US Cents) offered by buyers.

“We are being offered these very low prices for a quality leaf. This is totally very unfair,” charged Wyson Chikhuthula as he leaned against an old model British Leyland Albion truck loaded with 72 bales of tobacco.

At another tobacco market in Limbe, tobacco growers were also angry with the same prices for the leaf to the extent that they demanded government to open Malawi’s borders to allow them to sell their leaf in neighbouring countries claiming that prices were better in such countries as compared to Malawi.

The poor prices forced the Chairman for regulator of Tobacco Industry in Malawi the Tobacco Control Commission (TCC) Bruce Munthali calling all stakeholders in the tobacco industry to a meeting.

“We hope a positive outcome will emerge from this meeting for the benefit of all players in the tobacco industry,” he said.

Malawi, with a liberalized economy where one is free to buy and sell since democratic transition, is one of Africa’s most densely populated countries, with more than 200 people per square kilometer, and with a national average family landholding of only one hectare.

The country is also one of the poorest countries, with a per capita Gross Domestic Product (GDP) at less than half the sub-Saharan African average, and with one of the highest income inequality in Africa.

Therefore, Malawian tobacco farmers’ anger can be understood because according to Price Water House, Agriculture plays a vital role in the economy, accounting for 85 percent of the labor force.
Even talk of employment, tobacco also employs 70 per 100 working people and contributes to over 60 percent of the National Budget for Malawi Government to provide social services to citizens including purchasing drugs in public hospitals.
The leaf also accounts for over 70 percent of Malawi’s foreign export earnings.

In fact it even costs over 1$ to produce 1Kg of tobacco in the field in Malawi hence offering the growers 0.33 and 0.53 US Cents puts the growers at a fix.

“With the prices on offer we are not only going to incur losses. But even get stuck into huge debts. We have after sales to pay back money for the inputs such as fertilizer for producing tobacco in the field, purchase inputs for the next tobacco growing season and sustain our lives with our dependents,” said Chikhuthula as he wiped sweat on his forehead with a discoloured yellow handkerchief.

The poor tobacco prices on offer on Malawi’s market comes after President Bingu wa Mutharika opened the Kanengo market on a slow note whereby unlike dating from 2007 set up minimum prices and threatened to deal with buyers who did not comply, but soften his heart this time with no set minimum prices.

Reports went rife that Malawi Government and tobacco buyers were still negotiating on minimum tobacco prices for this year’s sales season when the President went to open the markets.

However, Mutharika also charged at buyers when he went to open another tobacco market at Chinkhoma in Kasungu an agricultural activity centered town about 120 Km away to the north of Lilongwe.

“I know all the tricks you are playing of doing all you can to purchase our tobacco at very low prices but sell it at a huge profit abroad nd I will deal with you,” charged Mutharika among ululation and handclapping from the crowd at the gathering.

He said he could not just watch as his people (tobacco growers) are being cheated instead of reaping from their sweat.

The President also charged at tobacco growers accusing them of dishonesty through bringing poor quality leaf on the market.
“Some of you are deliberately provoking the buyers to offer low prices through inserting Non-Tobacco-Related-Materials in your tobacco bales this must stop,” said Mutharika.
He also accused some of his high ranking officials in his administration of not taking part in the fight for better tobacco prices through earning income from tobacco through contract marketing of the leaf.

Nationally, last year tobacco was bought at a good price of between $1.90 and $2.15 per Kg as compared to 2009 sales season in Malawi Africa’s biggest burley tobacco producer.
The prices were on average pegged at an average of 20 percent more than government set prices according to TCC.

At Limbe alone, the leaf sold for $2.40 per Kg against government’s set $2.

Tobacco, has since time immemorial been Malawi’s major traditional forex earner.

However, in recent years some economic commentators have attributed the country’s low tobacco prices on the market on tobacco’s negative publicity by the World Health Organization (WHO)’s anti-tobacco global campaign with support from rich developed countries like Canada.
The campaign aims at saving over eight people dying per minute due to tobacco related illnesses worldwide hence urging Malawi to diversify in its economy instead of just relying on tobacco.

The World Bank agrees with calls for diversification saying that tobacco, sugar, coffee are important cash crops for Malawi, though indeed opportunities are available for sectoral growth.

Diversifying can indeed turn Malawi’s economic clock for the better and eradicate poverty for instance, following the country’s economy’s continued on-going struggles to puff tobacco, there is a potential that increasing chillies and paprika production can spice the economy to eradicate poverty.

From 1990 to 2000 John and Paulina Kakule and their five children from Balaka over 200 Km from Lilongwe used to grow tobacco as tenants at a tobacco estate.

“Around 2001 we took another journey. We are now members of Balaka Area Smallholder Farmers’ Association (BASFA) where we grow chillies and paprika which is under National Association of Smallholder Farmers of Malawi (NASFAM),” said John.

He disclosed that since then they have never looked back because they are able to feed themselves, sleep in a good house that does not leak when it is raining.

“Unlike when we were growing tobacco for nothing we are also presently able to buy decent clothes including send our children to school and provide them with all their needs,” said John.

He disclosed that BASFA members discovered gold in chillies after learning on how to produce chillies and paprika for sale from Zikometso Smallholder Farmers also under NASFAM an organization representing over 100,000 farm families in Malawi.
Likewise, irked by the ever unpredictable prices of tobacco in Malawi, many farmers in Lilongwe especially in Tradition Authority (T/A) Njewa have also formed clubs that have abandoned tobacco to grow paprika.
“About 1, 000 farmers in Njewa alone have so far abandoned tobacco to grow paprika. We are encouraging farmers to grow paprika in large quantities to offset the revenue losses they had incurred from tobacco,” said Morris Matambula also leader of Titukule Club.
Meanwhile, according to data collected in a study by Professor Nicholas Derera an agronomist from Hungary but based in Australia reveals that Malawi produced 8,123 metric tonnes of paprika in a period of five years (on average 1624.6 metric tonnes per year).

Derera further discloses that within the same period South America produced 15,600 metric tonnes, Europe 498,379 metric tonnes, North America 569,645 metric tonnes, Africa 1,993,858 metric tonnes and Asia 7,216,776 metric tonnes of paprika.
On paprika market Derera revealed in his study that Europe led in consumption followed by North America, South East Asia, Japan and Australia.

“The market for high condiment paprika for the spice and cosmetic industry is rapidly increasing worldwide,” said Derera.

He disclosed that historically, Hungary produced the high quality condiment paprika.
“However, exports declined significantly,” said Derera adding that this was partly due to the result of heavy metal contamination caused by air pollution with paprika in that country and bad publicity because of some Hungarian companies who were selling adulterated paprika.
He went on to disclose that Hungarian authorities had to destroy approximately 25,000 tonnes of adulterated paprika.
“Exports decreased significantly, with the Hungarian exporting virtually no condiment paprika to their traditional customers Czechoslovakia, Japan and Germany,” said Derera.
In Malawi one of the country’s buyers of paprika, Arise and Shine Company Ltd says Malawi is producing low quantities of the crop against a high demand for the produce.
“Paprika has a big market of about 2.7metric tonnes yet farmers in Malawi are producing just 1.3 metric tonnes of paprika,” said Arise and Shine Company Ltd’s Chairman, Tenson Makombo.
In Malawi, in their research, titled ‘Value chain analysis of Paprika and Bird’s Eye Chillies ’ Malawian researchers Donald Makoka, Rollins Chitika, and Franklin Simtowe also reveal that Malawi under produces Chillies and Paprika yet the two crops have a potential market on the international scene.
Appreciating that Chillies and Paprika can contribute to Malawi’s economic growth, Total Land Care Malawi (TLC) is even implementing a three-year USAID- funded Spice Promotion in Commercial Enterprises (SPICE) project in collaboration with Nali Ltd and ASSNAP.
The main objective of the project is linking small-scale spice producers to high-value markets and developing the competitiveness of bird’s eye chillies and paprika through commercial upgrading of the major players in their respective value chains.
Under the SPICE project, TLC commissioned the paprika and bird’s eye chillies’ value chain study in February 2010 with the overall aim of providing technical guidance, professional expertise and knowledge on the current status of the paprika and bird’s eye chillies sector in Malawi and the prospects for value addition of the two crops in the country.
The research covered Dowa, Dedza, Ntcheu, Salima, Nkhotakota, Nkhatabay, Mzimba and Thyolo.
In the study a value chain approach was used to identify key players in paprika and bird’s eye chillies sub-sectors, the governance of the respective value chains, the vertical and horizontal linkages along the value chains and opportunities for value chain upgrading.
A review of the different policies that relate to agriculture was also done to highlight the extent to which different policies promote or inhibit paprika and bird’s eye chillies production and marketing in Malawi.
An analysis of the institutional framework was also conducted to determine the degree of coordination between different institutions in the paprika and bird’s eye chillies sub-sector.
Among the major findings of the study, male farmers dominate the production of both paprika and bird’s eye chillies in Malawi and the two crops are largely sold to large-scale traders, most of whom are also exporters of the commodities.
The smallholder farmers allocated relatively less land (18 percent) to paprika production in 2009/2010 season, compared to 40 percent of land to bird’s eye chillies. Although production is dominated by small-scale farmers, a number of commercial producers are also involved, such as Africa Invest Malawi.
Some of the commercial producers are also engaged in out-grower schemes with the smallholder farmers. It was also observed that a large proportion of the farmers of both paprika and chillies access their seed through market-based sources.
“Among the major constraints facing the smallholder farmers is access to market information, especially as it relates to prices. Gross margins for bird’s eye chillies were found to be significantly higher (K79, 057[$527.05] per hectare) than that of paprika in the study areas (K11, 553 [$77.02]per [Hectare),”reads in part Makoka, Chitipa and Simtowe’s findings.
The Malawi paprika value chain has a number of actors. Paprika is mostly grown by smallholder producers, with Africa Invest Malawi being the only commercial producer. Apart from Nali Ltd that buys fresh paprika as an ingredient into its Mango achar, most of the paprika is sold to large-scale traders/players as de-seeded pods.
Most of the Malawi paprika is exported to spice manufacturing companies and brokers in South Africa. The brokers then export the product to Europe and USA, among other markets. The governance of the Malawi paprika value chain rests with the final buyers.
In this buyer-driven chain, the quality demanded by the international buyers is enforced through prices. Similarly, the bird’s eye chilli value chain also has few players.
The producers are mostly smallholder farmers, who sell their dry chillies to large-scale traders (Nali Ltd, Africa Invest Malawi, Cheetah Malawi LTD, and Duconti Produce, among others).
The large-scale traders export the commodity mostly to brokers in South Africa, and to end-users in Europe, the United Kingdom and others parts of the developed world. In this buyer-driven chain, prices are dictated by the final consumers.
“In order to improve the paprika and bird’s eye chillies sector in Malawi, there is an urgent need to substantially increase the production levels and the productivity of the two crops. Specifically, there is need to improve the paprika and bird’s eye chillies seed system; improve farmer’s agronomic practices through the provision of quality agricultural extension services and also improve the organization of farmers into groups,” reads in part the three researchers paper.

They further said in order to improve marketing of the two commodities there is need to promote legally-binding contracts between producers and buyers.
Further the three researchers claim promoting value-adding activities and processes so that different players experience value chain upgrading, promote domestic demand for chillies and paprika, promote vertical linkages among the buyers of paprika and chillies, and also improve the quality, timeliness and utilization of market information are also all important.

On the policy front, the researchers say there is also an urgent need to develop a horticultural policy, as the sector is operating without one, including an institutional framework or a legislative framework.

The three further say it is expected that the three-year SPICE project will help the targeted farmers to address the major constraints and challenges highlighted in their research report.

And it is if solutions for the raised issues will be identified to enable the farmers increase paprika and chillies production for the available export market on the globe that then Malawi can relieve its on going rampant tobacco puffing hiccups with these pepper products to spice ther economy and eradicate poverty outweighing majority Malawians over 60 per 100 mainly in the rural areas in the country’s over 13 million population according the 2009 Human Development Report.

By Frazer Potani, Lilongwe, Malawi

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