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Tobacco industry in Malawi

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Tobacco production in Malawi is one of the nation's largest sources of income. As of 2005, Malawi was the 12th largest producer of tobacco leaves and the 7th largest global supporter of tobacco leaves. As of 2010, Malawi was the world's leading producer of burley leaf tobacco. With the decline of tobacco farms in the West, interest in Malawi's low-grade, high-nicotine tobacco has increased. Today, Malawian tobacco is found in blends of nearly every cigarette smoked in industrialized nations including the popular and ubiquitous Camel and Marlboro brands. It is the world's most tobacco dependent economy.

Contents

History

Malawi began exporting tobacco in 1893, just two years after the British set up a colonial government in the landlocked territory known then as Nyasaland. Malawi gained independence in 1964 and Hastings Banda took control of the nation as President in 1966 and President for Life in 1970 until international pressures lead to the 1994 election that Banda lost. Banda was directly responsible for the creation of the Agricultural Development and Marketing Corporation (ADMARC) in 1971 with the new power to assist any public or private organization with capital, credit or other resources in any projects relating to the economic development of Malawi. ADMARC, gave priority to a policy of the development of estates growing Burley tobacco, many controlled by Banda and senior officials and politicians. Smallholders had to support ADMARC’s high operating costs and much of its profits came from underpaying them. It only re-invested 5% of funds in smallholder farms but subsidised estates: by the mid-1980s, ADMARC diverted two-thirds of its income into estates.

During Banda's presidency, Malawi was one of the poorest nations in Africa. During the 1970s, tobacco production shifted globally from the developed world to the developing world. The volatile economic state in Malawi made the government look favorably to the intensification of tobacco production. In Malawi, tobacco cultivation garnered 15,000 tons in 1961-1963. By the early 1970s, this number was up 90 percent to 29,000 tons.

The 1970s marked several changes for the tobacco industry in Malawi that would have a lasting effect on the industry today. International tobacco manufacturing companies identified Malawi in the 1970s as possible ally for fighting against tobacco control. In 1972, the government enacted the Special Crops Act that limited the production of tobacco, tea, and sugarcane to estate owners with no exceptions for small landholders. This restriction remained in effect until 1990.

Starting in 1989, labor and human rights activists began calling attention to the use of children in Malawian tobacco production. The Malawian Constitution, adopted in 1994, has provisions protecting children from interference with their education and economic exploitation. Malawi's Employment Act of 2000 states that the minimum age of employment is 14 years of age. British American Tobacco and Philip Morris, two of the largest purchasers of Malawian tobacco, issued labor policy statements in the early 2000s which stated their position against child labor. However, violations still occur in the country due to the lack of infrastructure and ability to enforce these regulations in the rural areas.

In 2002, Malawi experienced heavy flooding, causing President Bakili Muluzi to declare a state of national emergency. The agricultural sector was devastated including cash crops and food crops. Since a large amount of Malawi's agricultural sector is devoted to producing tobacco, the country experienced extreme food shortages resulting in famine and starvation. In 2010, the rainfall patterns were not favorable to tobacco growing. While the quality of tobacco leaves improved, the quantity of Malawian crop dropped 6.5 percent in 2010.

Economic impact

Malawi relies heavily on tobacco production and sales to support its economy. Its reliance has contributed to Malawi's vulnerable economic position on the global level. Malawi is one of 7 countries that derive at least 1 percent of export earnings from tobacco. Burley leaf from Malawi makes up 6.6 percent of the worlds tobacco exports and accounts for over 70 percent of Malawi's foreign earnings. Tobacco sales generate 165 million dollars per year for Malawi, with tobacco making up 53 percent of Malawi's exports.

Liberalization of tobacco

The liberalization of tobacco farming in Malawi in the early 1990s reversed the laws that had restricted growing burley tobacco to estates and prohibited small landowners from growing. After liberalization in 1990, Malawi reverted to a pre-liberalization allowance system that limited tobacco farmers' production to a certain productivity quota. The allowance system was abolished in 1996. In 1997, 22 percent of households produced burley leaf. By 2004, however, only 13 percent of growers did. The costs of owning land and having the labor to work the land are restrictive to small landowners.

Growing and selling tobacco

Tobacco is produced in both large estates, concentrated in the central plateaus of the country, and in small landholdings throughout the country. These smaller farms average about 2.5 acres (10,000 m2), about a third of the size of small tobacco producing farms in the United States. For small farms with less than 1-acre (4,000 m2) in tobacco cultivation, four out of five farms have a negative income. The other farms average an agricultural income of MK 3,000 or about 20 US dollars.

Most of Malawi's tobacco is sold through global leaf processing companies Universal Leaf Corporation and Alliance One International. The primary buyers of Malawian tobacco are Philip Morris International and British American Tobacco. Tobacco growers in Malawi have three options to sell their product. Tobacco growers can sell their product on auction floors through tobacco clubs. The unit price is high when sold at auction, but producers must have at least 100 kilogram. Growers can also sell directly to ADMARC, the Agricultural Development and Marketing Corporation. This practice fell out of favor after liberalization in the early 1990s.

Myths of the tobacco industry

The perception of the tobacco industry is more positive in Malawi then in many parts of the world because of the belief that the tobacco industries presence has a positive impact on Malawi's finances. The industry has supported and encouraged these beliefs. Compared to other industries, tobacco has one of the more developed infrastructures in Malawi with established market systems, research, and processing companies. The tobacco industry promotes the idea that tobacco brings wealth to the small landowners and Malawians, when in actuality it captures these farmers in a cycle of debts.

One of the major myths is that tobacco reduction is not a problem for developing nations. Tobacco reduction or increased regulation of the industry would result in loss of jobs. While this may be true, the extent to which it is so is contestable. The perception is also that higher taxes would result to smuggling and ultimately hurt the poor.

As of 2014, newly elected President Peter Mutharika was supporting diversification of Malawi's agriculture into other crops besides tobacco.

Regulation

Malawi has very little formal regulation of the tobacco industry and advertisement of tobacco in the country. There are no regulations on smoking in government buildings, educational facilities, health care facilities, transportation, restaurants and bars. While Malawi has one of the lowest incidences of smoking worldwide, annual cigarette consumption has increased steadily since the 1970s and more rapidly since the 1990s. The higher incidences of youth smoking than adults indicate that attempts, if any, to regulate youth smoking have not been successful.

Cigarette packages are well labelled with clear warnings in both English and Chichewa (Kusuta kukhoza kuwononga Moyo) which in English translates to "Smoking is hazardous to health". Notwithstanding the health warnings, there is still a huge increase on smoking in Malawi. The smoker may not even get the package as the sale of loose cigarettes is encouraged, a venture often undertaken by young children. Malawi has not signed onto the World Health Organization Framework Convention on Tobacco Control despite pressure from tobacco control and anti-child labor advocates.

Environmental impact

The tobacco industry has contributed to rapid deforestation of land — approximately 26% of deforestation in Malawi is attributed to tobacco production, one of the highest rates in the world. For each pound of tobacco produced, the farmer needs 20 pounds (9.1 kg) of wood. About 15% of Malawian tobacco is flue cured, a process that uses an intensive amount of wood Crop diversification has stalled because of the impact of the tobacco industry on the Malawian government.

References

Tobacco industry in Malawi Wikipedia


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