(NYASATIMES, BLOOMBERG) Tobacco traded 2% above government-set price at auction

Tobacco traded 2% above government-set price at auction
By Nyasa Times
Published: June 28, 2010

The average price of tobacco in Malawi, the world’s largest producer of burley tobacco, traded 2 percent above the government-set price of $2 last week, Auction Holdings Ltd. said.

The leaf sold at $2.04 per kilogram (2.2 pounds) in the week through June 25, compared with $2.10 a week earlier, the Lilongwe-based manager of Malawi’s auction floors said in a statement published in the Daily Times newspaper today. During the week, 8.9 million kilograms of tobacco worth $18.4 million was sold, it said.

Malawi began setting minimum prices for the various grades of tobacco in 2007, after accusing merchants of putting growers out of business by offering them lower prices. Last year, President Bingu wa Mutharika deported four officials at three tobacco-buying companies, accusing them of sabotaging his economic agenda.

Tobacco is Malawi’s biggest foreign-exchange earner, accounting for 60 percent of all revenue earned from abroad. Limbe Leaf Tobacco Co., a unit of Universal Corp., Alliance One Inc., Africa Leaf Malawi Ltd., Premium Tama Tobacco Ltd., Malawi Leaf Co., RWJ Wallace Ltd. and Japan Tobacco Inc. are among the biggest buyers of tobacco in Malawi. They export the leaves to countries in Europe, Asia and North America.

Since sales began on March 15, 121.2 million kilograms of tobacco has been sold, generating revenue of $240.5 million. The leaf has sold at an average of $1.98 per kilogram. –Bloomberg