Breaking the tobacco cartel
A few days ago when President Mutharika returned from China, he took a swipe at opposition leaders for spreading lies that he is sick instead of talking about the good tobacco prices being offered at the auction floors. John Tembo hit back saying he does not need to stand at street corners signing praises to Bingu. He said he is happy with the prices but was surprised with the drop of prices two days into the auction.
Many people were more surprised with the extraordinarily high prices at the start of trading rather than with the drop of the prices. Tobacco fetched as high as $11 per kilogramme, a far cry from the highs of $2 last year for the same quality leaf. But fingers have again pointed to the tobacco cartel that Bingu has tried so hard to break up.
There is a worldwide shortage of tobacco despite strides made by the anti-smoking lobby. As such local tobacco buyers have large orders that they can’t meet. In the past there was enough tobacco to go around the two or three buyers who were there at the time. This time around not only are their more players, there is not enough of the green gold as recently farmers have shunned growing the crop because of poor prices in the past. Rumour has it the high prices were an attempt by the cartel to frustrate the new comers, whom don’t have the same financial muscle of the others, take them out and share the little leaf that’s available.
It would seem that breaking this cartel will be much harder than originally thought!