Malawi - deports leaf tobacco merchants for paying low prices..

September 10, 2009 - Malawi, the world’s largest burley tobacco producer, said it will deport officials of Alliance One Inc. and the local unit of Universal Corp. for paying below government-mandated prices for the leaf.

“This is the action I have taken,” President Bingu wa Mutharika, the head of state for Malawi, said in a speech broadcast live on the state-owned Malawi Broadcasting Corp. radio station today. “They have been defying my orders to pay better prices and I have decided to chase them.”

The government yesterday revoked temporary work permits for officials of Alliance One, Universal-unit Limbe Leaf Tobacco, and Premium Tama Tobacco Co., and issued them with 24-hour deportation orders.

Karen Whelan, spokeswoman for Richmond, Virginia-based Universal, didn’t immediately return a message left on her office phone. Henry Babb, a spokesman for Morrisville, North Carolina-based Alliance One, didn’t return a message left at his office. A receptionist at Premium Tama’s Lilongwe office said Managing Director Tom Malata isn’t available to comment.

Malawi started setting minimum prices for the various grades of tobacco two years ago after it accused merchants of putting farmers out of business. While dealers denied that they underpaid farmers, Wa Mutharika on April 6 threatened to deport buyers if prices didn’t improve. ‘Can’t Allow It’

“They have been telling our farmers to grow better quality leaf and yet what they are buying at the auction floors is the low quality tobacco,” he said today. “They have been doing this deliberately to accuse the farmers of producing low quality leaf and paying them less. I can’t allow that.”

This season Malawi set a price of $2.15 a kilogram (2.2 pounds) for burley tobacco and $3.09 a kilogram for flue-cured tobacco. Tobacco Control Commission Chief Executive Officer Bruce Munthali on Sept. 4 reported to the government that buyers were ignoring these prices, the president said today.

The southern African nation relies on sales of the leaf for 60 percent of its export earnings. Burley tobacco is a lower-grade variety of the leaf used to fill cigarettes flavored with higher-grade flue-cured tobacco.

Malawi is forecast to produce 245 million kilograms (539 million pounds) of burley this year, according to the Web site of Universal. That’s more than double its closest rivals, Brazil and the U.S., and more than a quarter of global output. Flue- cured production of 25 million kilograms is about 0.6 percent of the projected world crop.

Universal, the world’s largest tobacco merchant, owns 58 percent of Limbe Leaf through its Continental unit, with the remainder owned by Press Corp. Ltd. of Malawi, according to Limbe’s Web site.

Calls to the local office of Alliance One in Lilongwe were not answered. A person who answered the phone at Limbe Leaf in the city said Chairman Mathews Chikaonda is the only official authorized to speak to the press and he is unavailable because he’s in China.

Reference: Malawi Deports Universal, Alliance Tobacco Officials (Update3) by Frank Jomo, Bloomberg.com, 9/9/2009. (Frank Jomo in Blantyre via Johannesburg at pmrichardson@bloomberg.net)

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Click on image to enlarge, the coat-of-arms of Malawi..