Pay up or pack up, Malawian president warns tobacco Merchants

Inaugurating this year’s tobacco-selling season in the capital, Lilongwe, Mutharika announced minimum prices for tobacco, which earns about 70 percent of the country’s foreign exchange. He announced that his government would soon fix the prices of tea and cotton, two other exports. He said that for a long time “poor smallholder farmers” had been cheated by the international cartel that bought tobacco. “I am pleased to announce that this year the minimum price for low-quality tobacco is US$1.10 a kilogram, while for high-quality tobacco it is US$1.70,” he said. “This means you can negotiate any price but you must not allow the buyers to give you less than US$1.70 a kilogram for top-grade tobacco and US$1.10 for low-quality tobacco.” Mutharika said tobacco, tea and cotton had been designated as commodities of “national strategic importance”. Tobacco, dubbed green gold in Malawi, fetches as much as US$160 million a year and contributes about 30 percent of the country’s gross domestic product and 25 percent of tax earnings. More than 70 percent of Malawians are directly or indirectly employed by the industry. Tobacco companies and some economists warned that fixing prices went against the spirit of the free market and might scare off investors. But the president defied critics, saying: “If you call me a dictator, so be it. I would like to be a dictator to protect my people. I can’t be a chicken president in order to please other people.” Mutharika said to international buyers: “If any buyer does not want to play ball, they can pack up and go. I am not doing this for political reasons but because I am concerned with the welfare of my people.” Buyers should not threaten him, or “some of you will go back in handcuffs”. He added: “This is what you buyers do back in your countries ‘ You set prices.” Mutharika said poor farmers were being “cheated at the floors” and did not reap the rewards of their sweat. “I know farmers who have been growing tobacco for 30 years but cannot afford even a bicycle or food,” he said. “I feel pity for the poor farmers who get peanuts ‘ For God’s sake, give them a better price.” Mutharika said the new policy had been determined after lengthy talks with buyers, which started last week. He said buyers had been offering an average of 90 US cents a kilogram and selling the tobacco for US$4.30 outside the country. More than 30 000 smallholder farmers grow tobacco. The numbers expanded after the World Bank persuaded the government to deregulate the industry in the 1980s. Malawi is the world’s largest exporter of burley tobacco, a thin-leafed brand dried in the open air. According to the Tobacco Control Commission, Malawi expected to produce 156.5 million kilograms this year, up from 143.4 million in 2005. Farmers rioted last year and interrupted tobacco sales, demanding better prices. The tobacco price sometimes tumbled to as low as 60c a kilogram. Experts said a Malawian spent at least US$1.20 to produce one kilogram of tobacco. The average price in 2005 was 90c a kilogram, causing many farmers to post losses. ‘ Independent Foreign Service.

April 2006
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