Business and Finance

Is Malawi’s green gold diminishing?

Is Malawi’s green gold diminishing?

Malawi has a long history of tobacco production, which started in the colonial era.

Commercial tobacco farming in the country began in the early 1900s during British colonial rule.

And the introduction of tobacco as a commercial crop in Malawi is often traced to the 1920s, when the colonial authorities actively promoted it as a cash crop for European settlers.

By the 1930s, tobacco had become firmly established as an export crop in the country. After Malawi gained independence in 1964, the government further positioned tobacco as a strategic crop for economic growth. At the time, the country’s reliance on tobacco as its primary export crop intensified.

This trend persists. The crop remains Malawi’s major foreign exchange earner.

However, as years go by, Malawi is missing substantial export opportunities in the tobacco sector despite record-breaking foreign exchange earnings.

An analysis of five-year industry data reveals that while there is a steady increase in earnings from the crop and fluctuating production values, the country continues to miss demand volumes.

For example, industry projections for 2025 indicate that Malawi will produce an estimated 174.4 million kilogrammes 9km) of tobacco against demand at 213 million kg.

This signifies a shortfall of 39.4 million kg in the crop’s production.

Demand and production figures for the past five years illuminate similar trends.

For instance, in 2020, tobacco production was seen at 114 million kg against a demand of 140 million kg, recording a deficit of 26 million kg.

In 2021, production was at 123.6 million kg against a demand of 154 million kg.

Both production and demand took a sharp decline before 2023, recorded at 85 million kg against demand at 161 million kg, before a slight pick-up in 2023, when production reached 120.6 million kg against 170 million kg which buyers were looking for.

Last year, tobacco production was recorded at 133.4 million kg while demand for the green gold stood at 190 million kg protracting a staggering 56.6 million kg production deficit.

Meanwhile, the country’s tobacco earnings have paradoxically risen despite failure to meet demand, climbing from $174.97 million in 2020 to an impressive $396.28 million in 2024— representing a 126 percent increase over the five-year period.

This is evidence that increasing production while maintaining strong demand for the crop on the market could boost the country’s earnings from the crop.

Malawi does not need to match or surpass the demanded value but reducing the production deficit could go a long way in increasing earnings from the crop.

But why has the country failed to boost tobacco production?

SANDE—The cost of production is very high

Alice Sande is a tobacco farmer based at Mayaka 2 in Zomba District. She said the major problem has been the increased cost of inputs such as fertiliser.

“We cannot afford inputs that would cater for a large hectarage and that is the reason we are forced to produce only what we can afford. We are also forced to trim the labour force because we are responsible for the workers and the current high cost of living is making it almost impossible to provide maize to our workers. Therefore, reduced workforce results in reduced production,” Sande said.

Tobacco Association of Malawi Trust Vice President Rhodes Sulumba said changes in weather pattern had also affected production in recent years.

“Farmers plan to produce according to demand.

‘However, when you face dry spells or excessive windy rainfall, there is little one can do,” Sulumba said.

Authorities from the Tobacco Commission (TC) also acknowledge that there is a combination of factors affecting tobacco production in the country.

TC spokesperson Telephorus Chigwenembe said, in some years, farmers felt let down by prices.

Consequently, some farmers withdrew from the crop, which led to reduced tobacco hectarage.

“In some years, it is unfriendly weather conditions that are contributed to low production. For example, in the past two years, we experienced dry spells or late onset of rains, which affected production.

“Another reason is the increase in demand for Malawi tobacco. Malawi tobacco is highly preferred. So, the demand is growing almost each and every year. That also contributes to our failure to meet the required volumes,” Chigwenembe said.

What is clear is that there is a need for both farmers and the authorities to address chronic production shortfalls to capitalise on Malawi’s potential tobacco earnings.

For farmers, adopting climate-smart agricultural practices and efficient resource management could help mitigate weather challenges while the authorities need to provide more accessible financing options for inputs and consider subsidies targeted specifically at export-oriented tobacco production.

As global markets continue to demand more Malawi tobacco than the country can produce, the question remains whether farmers and the authorities will find common ground to bridge this gap and unlock the crop’s full economic potential.