Leaf Purchasing

Tobacco is sold (by the grower) on the floors by using one of two selling methods –the first being the traditional auction method and the other being a direct marketing method. The Malawi market consists of four main floors that are used for buying and selling tobacco namely: Lilongwe, Limbe, Mzuzu and Chinkhoma floors. All the tobacco is sold in Hessian bales at an average bale weight of approximately 90 kilos.

Three types of tobacco are grown and sold in Malawi. The average total volumes over the last three years for these three types were; Burley: 110 million kilos, Flue-Cured: 26 million kilos and Dark Fire-Cured: 0.7 million kilos. The short term trend expected for the 2007/2008 season is that the Burley crop will increase considerably and the Flue-Cured crop will decrease marginally while Dark Fire-Cured crop will increase marginally.

The Lilongwe floor facilitates trade of 50% of the national crop, while the Limbe floor accommodates 17%. The Mzuzu and Chinkhoma floors make up the remainder of the national crop at 25% and 8% respectively. Future patterns indicate that Lilongwe floor’s capacity will remain much the same while Mzuzu’s and Chinkhoma’s will increase slightly to the detriment of the Limbe floor.

The tobacco markets normally open from mid March and close down towards the end of September. A total of 20,000 bales are sold daily amongst the four auction floors of which ±70% is traded using the traditional auction system and 30% through direct marketing system.



LLTC Leaf Buying Team in Lilongwe
Tobacco purchasing at the Chinkhoma auction floorsClick to listen to the Auction Process
Auction Method






Leaf quality analysis  at the Auction Floors.

The traditional auction system has four national sales daily: two in Lilongwe and one each in Limbe and Mzuzu. The Chinkhoma floor trades twice weekly on which days Lilongwe only has one auction sale. The sale of tobacco by auction is concluded to the highest bidder.

Click on the link to listen to Tobacco Auction in Malawi.

Direct Purchasing

This system was introduced 5 years ago for Flue-Cured tobacco and 2 years ago for Burley tobacco. The system entails that each company trades directly with the grower based on a grading and price matrix-system. The price and grades are negotiable should there be discrepancies between parties.

Tobacco Control Commission(TCC) is the regulatory body in Malawi . They control all aspects of tobacco trade at the markets. Their main functions are to grade each bale for statistical purposes, ensure good marketing practices and arbitrate on any sale disputes between farmer and buyer.


 
© 2010 Limbe Leaf Tobacco Company Kanengo, Lilongwe, Malawi