Tobacco Asia

56 tobaccoasia / Issue 1, 2017 March / April Malawi in Figures • Total landmass of 118,484 km2 (of which 20.4% are water surface, most- ly made up of Malawi's portion of Lake Malawi) • GDP of $21.843 billion (2016 est.), or $1,172 per capita • 13% of national GDP is generated from tobacco • As of 2010, Malawi has been the world's largest burley leaf producer • Total population of about 16 million (2016 est.) • Up to 85% of populace live in rural areas • Approximately 1.5 million people are directly or indirectly engaged in the various tobacco industry areas • Around 150,000 to 200,000 people plus their dependents are actively involved in tobacco farming, mostly as smallholders • An estimated 35,000 individual smallholder tobacco farms as well as "clubs" dot the countryside • The average smallholder farm's plot size for tobacco growing is 10,000 m2 (1 hectare) • About 98% of all tobacco is exported • Tobacco exports provide 60% of foreign exchange earnings • The tobacco industry generates 25% of the government's tax income Sources: FAO, PTTL, TAMA, Wikipedia Young burley plants 50 individuals. Since the industry reform, TAMA's primarily competes against a slew of associations established post-2004, such as Phindu, Farm Pro- duce, and NASFAM, just to mention a few. And in terms of its Hessian Scheme and Tobacco Re- Handling, TAMA's main competitor is the Auction Holdings Group, a local outfit providing tobacco marketing services - and of which TAMA, ironi- cally, is part owner. Great burley quality for a penny TAMA claims to presently handle roughly 50% of Malawi's total annual tobacco crop at an ap- proximate ratio of about 88:10:2 for burley, FCV, and DFC, respectively. In concrete terms that translated to around 80 million kgs (mkg) of bur- ley, 12mkg of FCV, and 1.5mkg of DFC for the crop year 2016. TAMA's head of marketing and business development, Felix Thole, said that Ma- lawi was renowned worldwide for its high-quality, fluffy burley leaf, the dominating quality grades being grades 2 and 3. The country's FCV qualities, meanwhile, were comparable to those of Zimba- bwe, he added. But while total crop volume across all types in 2016 was up by 1% compared to 2015, overall value declined by 18%, largely because of a considerable price deterioration for burley - and despite price gains for FCV (for TAMA's 2016 bur- ley buying prices, see table 2). The association's current key export markets are (in random order) Japan, Egypt, China, Brazil, Canada, US, Germany, Italy, India, South Africa, Russia, Ukraine, Hong Kong, and the UK. Partic- ularly the Asian markets, but also Russia, have re- cently become increasingly important for TAMA, because, as Thole explained, "we need steady orders especially for burley, as burley demand is shrinking in the American brands." He added that his association would like to further expand and strengthen business ties with Asian countries be- cause the region's consumer markets are seen as having excellent growth potential. Production surpluses trigger quota system Diminishing burley demand of course lead to in- creasing crop surpluses; in plain words: Malawi's farmers produce more than the market can ab- sorb. To mitigate this problem and shore up prices Felix Thole, head of marketing and business Development, TAMA Courtesy of Premium Tama Tobacco Malawi Ltd. Courtesy of Tobacco Association of Malawi

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