One of the country’s major tobacco buyers, the 2016/2017 season was the most successful year since entering the market in 2009, with a recorded contract market share of 31 percent against an average of 17 to 18 percent in previous years.
Addressing journalists in Lilongwe, JTI Leaf Malawi Managing Director, Fries Vanneste said: “While the overall national crop volume was down by 54 percent, JTI managed to deliver all of its committed volumes. This is a milestone for the company. It shows how close collaboration between farmers, leaf technicians and Grower Associations, combined with our ongoing support to growers is bearing fruits”.
In June this year, the company launched a Grower Incentive program called Mlimi Wozitsata (meaning “model farmer”), recognizing and rewarding top performing growers. “JTI contracted growers have been very receptive to this program and we noticed clear improvements in both the quality and yield of our growers’ tobacco”, Vanneste added.
The high quality tobacco delivered by JTI contracted growers was reflected in this year’s national average price of USD 1.77/kg for burley tobacco. This was 10 percent higher than the government minimum price and represents a 37 percent increase against the 2015/2016 national average price for burley. When comparing tobacco prices between contracted and auction farmers, the price for contracted tobacco was 20 percent higher per kilogram.
JTI’s support to growers in terms of good agricultural practices with leaf technicians, as well as the use of certified seeds, resulted in improved productivity, with a 60 percent yield increase (just over 1, 000 kg per hectare in 2011 versus more than 1, 600 kg per hectare in 2017).
“The increased quality and higher yield has had a direct and positive impact on growers’ revenues and profitability. As a result, all growers successfully paid off their financing loans this year,” said Vanneste. “And through the Mlimi Wozitsata program, top performing growers were even awarded prizes such as solar panels and flexi pumps for irrigation.” Increased productivity also has the added benefit of freeing up land enabling the grower to use it for crop diversification.
Explaining how JTI sustains the financial and social welfare of farmers through improved quality and yield, Vanneste said: “It’s all about creating a win-win situation. While this approach offers a better investment guarantee for JTI, the interests of our growers are protected too. This is key as growers are the cornerstone of our business.”
To further optimize the support to growers, Vanneste also stated that JTI would like to see the Integrated Production System (IPS) recognized in Malawi’s legislation: “The country’s tobacco act was last amended in the 1970s and dates from an era when sustainability, traceability or contract growing were not as high on the agenda yet. An updated tobacco act would provide an improved legal framework that supports the IPS implementation. This would protect the interests of the farmers as well as our investments, and eventually create greater stability for the future of tobacco farming in Malawi overall.”
On a separate note, the company is also committed to continue reducing its energy demand in the country. “By having invested more than USD 2 million in our factory infrastructure over the past 2 years, we have significantly reduced our energy consumption by 53 percent from 2015 to 2017, enough to light an additional 1 365 households.” Vanneste concluded.