COVID-19 drives tobacco farmers to the brink

Malawi President Arthur Peter Mutharika waves at supporters during a recent campaign rally. (AFP)
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Updated 22 June 2020

COVID-19 drives tobacco farmers to the brink

  • We are not operating normally as there is no interaction between the buyer and the grower

LILONGWE: During his 15 years as a Malawian tobacco farmer, Boniface Namate has had to overcome many difficulties growing the plant that is the country’s biggest export earner.

Namate had banked on a bumper crop this year and had hoped the proceeds would enable him to buy a new car and even build a new house.

However, the coronavirus pandemic has seen the 56-year-old’s dreams go up in smoke.

Due to restrictions imposed to control the spread of the virus in Malawi — one of the top 10 tobacco producers — growers were barred from physically attending the auctions where prices are set.

That has left farmers feeling cheated by buyers.

“We are not operating normally as there is no interaction between the buyer and the grower,” said Betty Chinyamunyamu of the National Smallholder Farmers’ Association of Malawi.

“Because of this, there are trust issues,” she said.

When the auction season opened in April, Namate and other small-scale farmers said their earnings had indeed evaporated.

“The prices that came from the auction are not what we expected. We are devastated,” said Namate.

Burley leaf from Malawi makes up 6.6 percent of the world’s tobacco exports.

Known locally as “green gold,” it is Malawi’s top crop in terms of employment.

It also accounts for over 50 percent of foreign exchange earnings and 23 percent of tax revenues.

So, when its 50,000 growers suffer, the country has every reason to be worried.

Last November, the US restricted tobacco imports from Malawi over allegations of worker exploitation and child labor.

And the coronavirus has turned up the heat on farmers even more.

Once he saw the prices being set in the first round of auctions, Namate immediately knew he was in trouble.

He had been expecting his first bales of 1,116 kg to fetch up to $1,500. Instead, he received a meagre $540.

And out of 3 tons overall from this year’s harvest, he had hoped to make around $6,000 in total. But now he says he will be lucky even to make $1,500.

“I was devastated because I had planned a lot of things with the money,” said the farmer from Ntcheu.

He is even contemplating abandoning the crop altogether.

“Even my family have threatened to stop helping me in the fields if I insist on tobacco farming,” Namate said.

Another farmer Alick Munthali, who has harvested eight tons of tobacco in Rumphi in northern Malawi, finds himself in a similar predicament.

“We don’t know how much the tobacco is fetching and we have no opportunity to negotiate the price with the buyer,” said Munthali, who has been farming the crop since 1989.

“It is difficult to sell your crop when you are not physically present,” he said.

Nevertheless, auctioneers and large-scale growers insist that the farmers are being short-changed by buyers.

“Farmers are not cheated on the sales,” said Felix Thole, chief executive of the Tobacco Association of Malawi Farmer’s Trust, which represents large-scale growers.

He pointed out that growers continue to be represented on the market by farmers’ associations.

“Auction sales bidding continues by the individual buyers, only this time around there is no chanting of the prices. Buyers continue competing and the highest bidder gets the bale,” Thole argued.

Nevertheless, Malawi’s main opposition leader Lazarus Chakwera believes farmers have been unfairly treated.

“The farmers basically have been abused,” he said.

“The government gets a lot of foreign earnings through this particular industry and yet the farmer is treated like a laborer that should not even prosper,” he said.


Lee’s death sparks hope for Samsung shake-up, dividends

Updated 26 October 2020

Lee’s death sparks hope for Samsung shake-up, dividends

  • Shares in the company and affiliates rise; around $9bn in tax estimated for stockholdings alone

SEOUL: Shares in Samsung Electronics Co. Ltd. and affiliates rose on Monday after the death a day earlier of Chairman Lee Kun-hee sparked hopes for stake sales, higher dividends and long-awaited restructuring, analysts said.

Investors are betting that the imperatives of maintaining Lee family control and paying inheritance tax — estimated at about 10 trillion won ($8.9 billion) for listed stockholdings alone — will be the catalyst for change, although analysts are divided on what form that change will take.

Shares in Samsung C&T and Samsung Life Insurance closed up 13.5 percent at a two-month high and 3.8 percent, respectively, while shares in Samsung SDS also rose. Samsung Electronics — the jewel in the group’s crown — finished 0.3 percent higher.

Son and heir apparent Jay Y. Lee has a 17.3 percent stake in Samsung C&T, the de facto holding firm, while the late Lee was the top shareholder of Samsung Life with 20.76 percent stake.

“The inheritance tax is outrageous, so family members might have no choice but to sell stakes in some non-core firms” such as Samsung Life, said NH Investment Securities analyst Kim Dong-yang.

“It may be likely for Samsung C&T to consider increasing dividends for the family to cover such a high inheritance tax,” KB Securities analyst Jeong Dong-ik said. Lee, 78, died on Sunday, six years after he was hospitalized due to heart attack in 2014. Since then, Samsung carried out a flurry of stake sales and restructuring to streamline the sprawling conglomerate and cement the junior Lee’s control.

Investors have long anticipated a further shake-up in the event of Lee’s death, hoping for gains from restructuring to strengthen de facto holding company Samsung C&T’s control of Samsung Electronics, such as Samsung C&T buying an affiliate’s stake in the tech giant.

“At this point, it is difficult to expect when Samsung Group will kick off with a restructuring process as Jay Y. Lee is still facing trials, making it difficult for the group’s management to begin organizational changes,” Jeong said.

Lee is in two trials for suspected accounting fraud and stock price manipulation, as well as for his role in a bribery scandal that triggered the impeachment of former South Korean President Park Geun-hye. The second trial resumed hearings on Monday.

Lee did not attend the trial on Monday, as Samsung executives joined other business and political leaders for the second day of funeral services for his father.