The golden leaf has, however, been hit by falling prices in recent years, resulting in the fall of the Malawi kwacha by 48 percent and a deficit of two billion kwacha in the economy last year. One US Dollar is equal to 47 Malawi kwacha. The Lilongwe auction floors, like the other two in the commercial capital of Blantyre and Mzuzu, in the north, were closed at least once last year following price disputes between growers and buyers. Pricing is critical to the success of the Malawi tobacco industry which is being threatened by increasing costs of farming inputs. For the past three years, farmers have failed to produce enough and meet the buyers' demands due to increases in the price of agricultural inputs.
Commercial banks are also reluctant to provide loans because of low repayment rates.
Last season, for example, although buyers wanted 127 million kilogrammes of burley, only 114 million kilogrammes were on offer on the market. Shortfalls were also experienced with flue cured and dark fire cured tobacco. According to TCC, burley will drop from last year's 114 million kilogrammes to 90 million kilogrammes this year. It is only good prices that can encourage us to grow more. We hope the pricing trend we saw this week will continue and possibly improve,'' says Sostain Kamunga, one of the country's small-holder farmers who between them produce 50 percent of Malawi's tobacco.