Malawi tobacco pressured as US butts in over labor abuses

As tobacco, known locally as ‘green gold,’ is Malawi’s top crop in terms of employment, foreign exchange earnings and tax revenue, any trouble the sector runs into could quickly reverberate throughout the economy. (AFP/File)
Updated 01 December 2019

Malawi tobacco pressured as US butts in over labor abuses

  • As tobacco, known locally as “green gold,” is Malawi’s top crop in terms of employment

BLANTYRE: Malawi is being forced to confront child and forced labor practices after the US restricted tobacco imports from the impoverished southeastern African nation over allegations workers including children were being exploited.

Although exports to the US make up only a small part of Malawi’s total, the US move could make it harder selling its tobacco elsewhere and has sparked anxiety among farmers who fear they will be forced to accept lower prices.

As tobacco, known locally as “green gold,” is Malawi’s top crop in terms of employment, foreign exchange earnings (60 percent) and tax revenue (25 percent), any trouble the sector runs into could quickly reverberate throughout the economy.

The US decision piles even more pressure on the tobacco sector, already confronted with global anti-tobacco campaigns.

The trouble began in late October. British law firm Leigh Day announced it was preparing a landmark class action case against British American Tobacco (BAT) on behalf of 2,000 Malawian farmers, including hundreds of children, for forced labor and poverty wages.

BAT, which says it “takes the issue of child labor extremely seriously,” has denied any wrongdoing and noted that it buys tobacco from Malawi via international dealers who are required adhere to a code of conduct that does not tolerate child and forced labor.

The US suspended imports of tobacco from Malawi, saying it had information that reasonably indicated it was being produced using forced labor and forced child labor.

According to a survey conducted in 2017 by the country’s statistics agency the use of child labor in Malawi is extensive. It found that 38 percent of the country’s children aged between 5 and 17 were working.

Although the survey did not provide specific information about the tobacco sector, it is widely acknowledged that child labor is a problem.

Betty Chinyamunyamu, who heads an association of smallholder farmers, said incidents of child labor occur despite efforts to eliminate the practice.


Oil up on slowing pace of coronavirus, Venezuela sanctions

Updated 43 min 43 sec ago

Oil up on slowing pace of coronavirus, Venezuela sanctions

  • Financial analysts say epidemic is likely to deal a ‘short-term blow’ to global economy

LONDON: Benchmark Brent oil prices rose for a seventh consecutive day after demand worries eased with a slowing of new coronavirus cases in China and supply was curtailed by a US move to cut more Venezuelan crude from the market.

Brent was up 71 cents at $58.46 a barrel at 1510 GMT. The global benchmark has risen nearly 10 percent since falling last week to its lowest this year. US oil was up 53 cents at $52.58 a barrel.

“Those in doubt of the economic impact from the virus should take heed from Apple’s surprise sales warning ... Put simply, this is the surest sign yet of the coronavirus fallout on the global economy,” said PVM analysts in a note.

S&P Global Ratings said it expected coronavirus would deliver a “short-term blow” to economic growth in China in the first quarter, echoing findings by the International Energy Agency.

Official data showed new cases in China fell for a second straight day, although the World Health Organization said there was not enough data to know if the epidemic was being contained.

The oil market price structure is also showing signs that prompt demand for oil is picking up, as the front-month Brent futures market is moving deeper into backwardation, when near-term prices are higher than later-dated prices.

This week, oil prices were also buoyed by a US decision to blacklist a trading subsidiary of Russia’s Rosneft, which President Donald Trump’s administration said provided a financial lifeline to Venezuela’s government.

Hopes that the Organization of the Petroleum Exporting Countries (OPEC) and allied producers would deepen supply cuts also supported prices.

The grouping, known as OPEC+, has been withholding supply to support prices and meets next month to decide a response to the downturn in demand resulting from the coronavirus epidemic.

But in the US, which is not party to any supply cut agreements, oil production has been rising. US shale production is expected to rise to a record 9.2 million barrels a day next month, the Energy Information Administration said.