Tobacco Association of Malawi
TAMA’S PRESIDENT’S WELCOME SPEECH TO THE GUEST OF HONOUR, HER EXCELLENCY THE STATE PRESIDENT OF THE REPUBLIC OF MALAWI, MRS. JOYCE BANDA.
The Guest of Honour, Your Excellency, the State President of the Republic of Malawi, Mrs. Joyce Banda.
His Excellency Chief Justice Richard Banda SC. (Retired).
Right Honourable Khumbo Hastings Kachali, Vice President of the Republic of Malawi.
Honourable Professor Peter Mwanza, MP, Minister of Agriculture and Food Security.
Honourable Jermoth Ulemu Chilapondwa, MP, Deputy Minister of Agriculture and Food Security.
Mrs Erica Maganga, Secretary for Agriculture and Food Security.
Mr. Gary Taylor, Our Distinguished Guest Speaker.
Members of the Board of Trustees of the Tobacco Association of Malawi.
Members of the Executive Committee of the Tobacco Association of Malawi.
Dr. Bruce Munthali, Chief Executive Officer of Tobacco Control Commission.
Mr. Kelvin M’mangisa, Chief Executive Officer, Lilongwe City Council.
Mr. P.K.C. Kalilombe, District Commissioner, Lilongwe District Council,
Honourable S. Jonasi, MP, Lilongwe City Centre.
Mr. Evance Matabwa, Chief Executive Officer of Auction Holdings.
Dr. Ibrahim Phiri, Director and Chief Executive Officer of Agriculture Research and Extension Trust (ARET).
Mr. Dyborn Chibonga, Chief Executive Officer of NASFAM.
Distinguished Managing Directors and Chief Executive Officers of the Tobacco Merchant Companies.
The President and Executive Director of Farmers Union of Malawi.
Councillors, Alternate Councillors and Delegates.
TAMA Management and Staff.
Members of the Press.
Ladies and Gentlemen.
This is our 24th Annual Congress and indeed this is the first time our Guest of Honour is interacting with all the tobacco stakeholders under one roof. It, therefore, gives me great pleasure to welcome you, Your Excellency to the 24th TAMA Annual Congress. Your acceptance to grace this occasion is a great honour to The Tobacco Association of Malawi (TAMA), the tobacco industry stakeholders, let alone the tobacco farmers. On my own behalf, and on behalf of my colleagues, I would like to take this opportunity to sincerely thank you for coming here, despite Your Excellency’s busy schedule.
For the ease of administration in our operations and policy making, the Tobacco Association of Malawi has divided the country’s tobacco growing areas into 21 areas that take care of representation for both smallholder and big commercial farmers for all tobacco types. Those gathered here, are three representatives from each area, i.e. a Councillor, Alternate Councillor and a Delegate and they all bring issues from the grassroots for discussion, and resolutions thereafter. Therefore, the Tobacco Association of Malawi’s Annual Congress gives an opportunity to the elected representatives of our farmer members to discuss issues of importance affecting our tobacco farming and marketing business.
Your Excellency, this year, we meet at a time when we have seen improved prices on all the auction floors with an insignificant rejection rate. This boils down to your Government’s good governance and for that; we sincerely thank you, Your Excellency. Your Excellency’s passion to see to it that the tobacco grower earns better prices was vividly shown during your surprise visit to Kanengo Auction Floors on 10th May, 2012 when you urged Buyers to do more. That was a great encouragement and motivation to us growers. We salute you for that.
To give a snap shot of how the market has faired since opening on 26th March, 2012 in comparison to last season, it is noted that there is a big marked improvement this season. As of 15th June, 2012, a volume of 42.4 million Kgs of Burley had been sold on all the floors averaging $1.94 as compared to last year’s 40.8 million Kgs of Burley sold at a meagre average of only $0.93 representing a marked increase of 108%. In terms of income the country has amassed a total of $82.3 million as compared to only $37.9 million same period last year.
This year’s Annual Congress’ Theme is “INTEGRATED TOBACCO PRODUCTION SYSTEMS (IPS) – FOR PROFITABILITY AND SUSTAINABILITY”. We have invited a Guest Speaker who is an authority on IPS matters from the Trade, an expert in this field who has followed the IPS issues from birth to now, when seemingly the FCTC is bearing its ‘UGLY HEAD”. IPS is one such big response to some of the negative articles being championed by the FCTC machinery. We thank Limbe Leaf Company for arranging that the Guest Speaker comes to Malawi to share the in-sights of IPS and interact with the tobacco farmers and stakeholders at large on such an important topic that touches on their livelihoods and future.
Your Excellency, allow me to bring to your attention just a few topical issues, just nine in number, before you can address us.
1. INTEGRATION OF AGRICULTURE RESEARCH AND EXTENSION TRUST (ARET) INTO LILONGWE UNIVERSITY OF AGRICULTURE AND NATURAL RESOURCES (LUANAR)
Your Excellency, ARET, was created in 1995 by two Donors - Government and TAMA. Government provided two technical staff whilst TAMA provided all the start-up capital and working capital. From the humble beginnings of a 30-foot container Office, ARET, has from 1995 grown to its present stature to become a world re-known “Centre of Excellence” in dedicated tobacco research and extension. In all these years, it has been wholly funded and supported by a levy on tobacco farmers without any single Government subvention.
For Government last year in 2011 to suddenly announce that ARET would be integrated into LUANAR without even consulting its co-donor, TAMA, we thought, that was regrettably a serious error of judgement. We immediately engaged Government in closed door discussions and pointed out that it was the wish of the two Donors at that time in 1995 that ARET as a Trust shall be in perpetuity and to this effect, this was duly provided for in Clause 21.1 of the Trust Deed of ARET. The Board of ARET is composed of eight members where four are from TAMA, two are from Government, one from NASFAM and the other one is from Tobacco Exporters Association of Malawi (TEAM). The Board Chairperson as per the Trust Deed is always from TAMA being the major donor. Therefore, ARET could not be dissolved without the consent of TAMA. TAMA, having solicited the views of the grass-root tobacco farmers all over the country, the position of the tobacco farmers is that ARET should not be integrated into LUANAR. TAMA however is in full support of and applaud Government’s initiative to create more Universities.
TAMA therefore noted with sadness and dismay in the passing of a Bill by the Malawi Parliament which was initiated by the former regime that incorporated ARET into LUANAR despite the on-going closed door discussions. The conclusion that was sadly made was that, we were, perhaps, talking to a regime that was not willing to listen to alternative views and we almost resorted to seeking a court injunction and going for arbitration. With your ascendancy to the Presidency, Your Excellency, we halted all the legal options and we are humbly coming to you to seek your Government’s intervention. Your Excellency, in our view, the integration of ARET into LUANAR is another example of a bad law which needs to be amended by your Government. It sadly reminds us of the old Forfeiture Act during the one-party era. ARET is a private institution, wholly funded by tobacco farmers, that should be de-linked from LUANAR. Let ARET continue on its own in its task of providing dedicated tobacco research and extension to tobacco farmers.
2. THE FRAMEWORK CONVENTION ON TOBACCO CONTROL (FCTC)
As the ‘War’ on tobacco continues through the FCTC, the FCTC through their working committees circulated measures, recommendations and guidelines on articles 17 and 18 which relate to alternative crops and sustainable environmental management. These measures will be discussed during the forth coming CoP 5 meeting in South Korea, in November 2012.
In brief, the measures seek to:
Abolish tobacco growing by Year 2025.
Abolish contract growing since it encourages tobacco farming
Stop financial institutions from providing finance to tobacco farmers
Abolish tobacco bodies/grower associations by Year 2025.
We were delighted that the Government of Malawi sent a highly powered and highly charged Delegation to a similar meeting in Uruguay in 2010, although as Observers since Malawi is not yet party to the conference. As part of the Malawi Delegation, TAMA was represented by our late Chief Executive, Felix Mkumba as well as the President of TAMA himself. However, TAMA was further represented by the office of The International Tobacco Growers Association (ITGA), headquartered in Portugal and co-founded by TAMA in 1984. The Malawi Delegation and ITGA Delegation were always in constant touch and kept sharing strategies to counter whatever was coming from inside the Conference Room. It is pleasing to report that as Observers, the Malawi Delegation together with the ITGA Delegation made an indelible and significant mark to the outcome of the Uruguay discussions to the extent that the banning of burley tobacco never materialized. This shows how serious the Government of Malawi ponders on the welfare of its citizens, more so the tobacco farmers, and let alone the economy of the country. However the battle against the FCTC continues.
With the good news that Burley tobacco may be not banned as an ingredient in cigarette manufacturing, this presents the best opportunity for us as a country to start analyzing the implications of FCTC and to start living within the confines of the implications so that we are not overly affected. Certainly, this calls for some policy changes within the tobacco industry sector for which the Ministry of Agriculture, as the sector Ministry, must champion with due diligence and rationality, as it is good to be forewarned in order to be forearmed, and it is much better to be prudent by taking heed of the forewarnings. One such big step towards dealing with the FCTC is to venture into Integrated Tobacco Production Systems which encompasses measures that deal away with the vices the anti tobacco lobbyists are capitalizing on, like Child Labour, Traceability Issues, Good Agricultural Practices (GAP) etc hence this year’s timely theme of “INTEGRATED TOBACCO PRODUCTION SYSTEMS – FOR PROFITABILITY AND SUSTAINABILITY”
3. TOBACCO GROWER ASSOCIATIONS AND REGISTRATION OF MEMBERS TO TOBACCO GROWER BODY ASSOCIATIONS
Your Excellency, of late, there has been a proliferation of “supposedly” tobacco grower body associations that are fronted/headed or owned by clearly businessmen whose interests may not be to genuinely assist the vulnerable tobacco farmer but rather to reap from him/her. This mushrooming of grower body associations is a direct result of a protracted legal battle that TAMA successfully fought in the High Court in 2009 by way of Judicial Review whereby it was decided that the off-loading quota at the auction floor belongs not to a Transporter but to a tobacco grower and his/her grower association. With the passing of that landmark judgment, the tobacco industry has seen this proliferation of grower associations fronted by transporter/cum businessmen who are motivated by securing an off-loading quota at the auction floor and not necessarily with an interest to help the farmer.
We applaud the initiative that the Ministry of Agriculture took two years ago in vetting the Grower Associations through the Farmers Union of Malawi whereby only a few grower body associations passed the litmus test. However lack of transparency and operational code of conduct are some areas that obviously lead to one not hiding discontent on the impression created that there might be discord on such matters between the Ministry of Agriculture and the Tobacco Control Commission. There is need for concerted efforts on working for a common good and understanding for the benefit of the tobacco farmers.
We say so, because, we have for a long time desired as an industry to have a Strategic Plan which will guide us in certain strategic approaches of national concern for our common good. We are happy now that the process of formulating one is underway. Obviously, the Strategic Plan may be our blue print but it does not give us full proof confidence, as one part of the Stakeholders, when trivial issues like the Grower Associations are dealt with some looseness thereby giving doubts that big issues like the Strategic Plan could ever be implemented with rationality. We have witnessed dubious registrations of these ‘brief case’ Grower Associations in collusion with some elements within the authorising structures.
The proliferation of these grower body associations lends itself as a fertile ground for the perpetration of fraudulent and corrupt practices whereby “compliant” officers tap members from genuine associations to these brief case associations for the sake of achieving “numbers’. A case in point is where some of our reputable Councillors were registered as members of some of these dubious Grower Associations without their knowledge through forged forms when at the initial outset, the Councillors had registered themselves for TAMA. We have documentary evidence in support of this. Now if this is happening to our Councillors, what more with other farmers who are not opinion leaders and are not able to challenge their legal right of voluntary association – this may just be a tip of the iceberg. Worse still, some of our Councillors are sometimes classified as non-affiliated and are not deducted the appropriate association levy until they raise a protest and records are then belatedly updated but with loss of levy. Each year a countless number of growers complain of such irregularities when we deny them service for not being our members. Just this 2012 marketing season, TAMA has had to literally force for the inclusion of some big growers who voluntarily signed for TAMA membership into our database before they could sell their tobacco so that the appropriate association levy could be deducted. How much levy is lost each year due to such an indifferent approach to work? It is therefore sad to note that the right to association levy may rest in the hands of officers who may not be objective and professional in their duties and it becomes even more scary if such officers have personal interests in the dubious brief-case associations to the detriment of the genuine associations like TAMA or NASFAM. We hope with the Ministry’s co-ordination, these practices will be put to a stop to instil the confidence of farmers in some of the tobacco industry stakeholders. We as farmers, keep wondering why growers are bothered each year to renew their association membership. We hope that Government will come in and ensure only new entrants are subjected to this yearly registration and allow those that have been in the system maintain their status unless they voluntarily opt out through a formal letter of revocation. Under normal and ideal situations, if people have no sinister motives or even personal interests in any association’s membership, that membership is supposed to be permanent but with the option to revoke through formal communication and this is what we are advocating in all fairness, Your Excellency. We hope this Annual Congress will be guided by the Ministry of Agriculture on this matter to bring back sanity in the industry.
4. INTEGRATED TOBACCO PRODUCTION SYSTEMS (IPS)
We are pleased to inform you, Your Excellency that since 2007, TAMA has been championing new structures within its member establishment, these are called Cooperatives. We have a total of 48 Cooperatives to-date and we are still in the process of coming up with more Cooperatives, dependent on demand from our grass roots. In a nut shell, Cooperatives are empowering structures where the farmers can access economic empowerment facilitation as they are imparted with skills to think and take farming as a business enterprise.
The other benefit with these structures is the opportunity to link-up with other stakeholders for integrated tobacco production systems and for crop diversification. This is diversification (Integrated Production System) in a true sense, or diversification alongside tobacco, not away from tobacco - the way we want to approach the future.
Whilst on the same subject, we would like to extend our thanks and appreciation to the Ministry of Agriculture for allowing the continuation of selling Burley under contract marketing this year. We are discussing this subject here because under contract marketing, farmers are enabled access to bank loans through the sponsored crops and the contract marketing arrangement crops, which in a way integrates the farmers to the trade requirements rather than the speculative production which leads to uncontrolled crop size. Could this be one model of managing crop size? In the ultimate direction, we will certainly be guided by the Ministry.
Finally under this topic, allow me, Your Excellency to thank you and Government for approving the IPS. We hope that the regulatory framework will soon be put in place whereby the roles of all stakeholders will be clearly spelt out in terms of the “do’s” and “don’t’s”.
5. EXPORT MARKET
I would like to appraise you, Your Excellency, that TAMA’s long time quest to acquire Equity in a processing plant for value addition purposes has been achieved. This has been achieved in Kanengo Tobacco Processors Limited, a 100% subsidiary of Premium Tama Tobacco Limited. Now that we have made strides to secure the equity, it is our wish that we empower and uplift the primary producers to the next level of the tobacco value chain. We believe that it is in our best interests that we integrate our farmers to the international markets through value addition. In this vein, we look up to you, Your Excellency that the TAMA Concept Paper on Export Markets that was submitted to the Ministry of Agriculture on 31st March, 2010 is put into practice since Your Excellency’s Government policy is to ensure that the rural masses are integrated into the higher value chain where primary products are processed for value addition. This venture will definitely help retain the forex in the country since the direct exports will generate more forex and that forex earned directly by the locals will come back to Malawi for the benefit and use of all Malawians. This is one sure way of improving forex availability in Malawi.
6. RURAL TOBACCO MARKETS
We thank Government for putting up a policy in pursuit of rural tobacco markets. We as TAMA are still looking forward to a day when we shall see many rural tobacco markets being opened across the length and breadth of the country even if it means bringing other players into the market as this will effectively reduce the growers’ logistical costs. If allowed, it will mean improved take home pay for the farmers which will improve their livelihood as a result of the economic empowerment.
7. COST OF PRODUCTION
Tobacco growers have time immemorial complained of poor prices but thanks this year there is an improved trend in the prices being offered on the markets. However one reason why the growers complain is because of the high cost of production which is as a result of multifaceted variables which we request Your Excellency’s Government to consider working on them.
Some of the variables that contribute to high cost of production are the imposition of excise duty on imported Hessian meant for tobacco production which was not the case three seasons ago. The tobacco farmers were exempted from this tax which we request that it be considered for removal so that farmers can reduce the production cost. We also request for consideration in extending targeted fertilizer and seed subsidy to smallholder tobacco farmers. This will boost the quality and quantity of production resulting in high forex returns.
8. DOLLAR/KWACHA VERSUS AUCTION/BANK RATE VARIATIONS
Tobacco farmers this season are very appreciative of Your Excellency’s decision to devalue the Malawi Kwacha whilst the selling season has just started as this will mean more kwachas in our pockets. However we would like to further request your consideration that growers are paid what is the day’s ruling exchange rate in the commercial banks as opposed to a predetermined rate offered at the auction floors of which basis we are not very clear of. The current practice is making growers lose a bit since the predetermined rate is always far below the day’s ruling rates displayed at the commercial banks and we are left with the question, who is benefiting from the variations in the exchange rates?
9. NEW DRAFT TOBACCO INDUSTRY ACT
We applaud Government for initiating a consultative approach through the Ministry of Agriculture in coming up with an accommodating Act for the Tobacco Industry. It is our wish that the Ministry will soon call for a workshop to discuss the Act with all relevant stakeholders as the current Act is not in tune with the current complexities and developments in this dynamic Industry.
Finally, Your Excellency let me take this opportunity in Congratulating you for the well articulated State of the Nation Address during the opening of 2012/13 Budget Session of Parliament which was very robust and encompassing such that some of the fruits of the same are already being enjoyed now.
Your Excellency, Guest Speaker, Distinguished Guests, Ladies and Gentlemen, it is now my singular pleasure and privilege to request the Honorable Minister of Agriculture and Food Security to make a few remarks and thereafter request Your Excellency to address the TAMA Annual Congress and officially declare the 24th TAMA Annual Congress open.
I thank you.
Request the State President for her permission to present to her a gift that is depicting what we are as tobacco farmers.