Malawi - how can this country survive without tobacco??

July 13, 2009 - Landlocked Malawi, one of the poorest in the world, derives up to 70 percent of its foreign exchange earnings from tobacco and 80 percent of the country's labor force works in the tobacco industry. Tobacco accounts for 13 percent of the country's gross domestic product and makes up 23 percent of the tax base. Historically, the leaf has been regarded as an economic lifeline in a country without rich mineral endowments.

For 2009 tobacco earnings in Malawi, the world’s largest producer of the burley variety, have fallen 31 percent after 14 weeks of trading compared with a year earlier, according to Auction Holdings Ltd., a buyer. Earnings from tobacco fetched $161.2 million by June 23, 2009 compared with $233.9 million during the same period a year earlier, Auction said in a statement handed to reporters in Blantyre today.

During the period, farmers sold 99.5 million kilograms (219 million pounds) of tobacco at an average price of $2.08 per kilogram, compared with 98.7 million kilograms at an average price of $2.24 last year.

While the government has set a minimum price of $2.15 per kilogram, buyers are offering farmers less than that because the leaf is of a poorer quality than last year and as the global recession curbs demand.

This Sub-Saharan Africa country is a major tobacco exporter in the world, accounting for five percent of the world's total exports and two percent of world's total production. In terms of burley tobacco, Malawi produces about 20 percent of the world's total, according to the World Bank.

From Tobacco Journal International (JTL) - Malawi, one of the smallest countries in Africa as far as land surface goes, has largely expanded its production of filler-style Burley over recent years. The tobacco industry fears a flooding of the world market and the impact on leaf price.

Teen smoking up in Malawi by Kondwani Munthali, December 2008.

Related news brief: BAT using illegal tactics to get African youths to start smoking..; British American Tobacco (BAT) - 100 years in Africa...

References: Malawi’s Tobacco Earnings Down 31% After 14 Weeks of Trading Share, /storiesonmalawi.blogspot.com, 7/6/2009; Malawi’s Tobacco Earnings Down 31% After 14 Weeks of Trading by Frank Jomo, Bloomberg.com, 7/6/2009; Malawi tobacco output undershoots target, Reuters News, 7/12/2009.