Malawi tobacco earnings jump to near $500 million

By Mabvuto Banda

LILONGWE, Oct 3 (Reuters) - Malawi has earned close to $500 million from tobacco sales so far this year, a huge jump from $185 million in full-year 2007, an industry official said on Friday.

"This year the country has made $457 million from tobacco, more than the projected 88 percent increase from last year's earnings," Godfrey Chapola, general manager for the Tobacco Control Commission told Reuters.

Earnings had initially been projected at about $348 million.

Tobacco, Malawi's main foreign currency earner, accounts for more than 70 percent of its exports and 15 percent of its gross domestic product (GDP).

About 2 million of the southern African country's 13 million people depend on tobacco and related industries for their livelihood.

Chapola said tobacco volumes had increased from the final estimate of about 170,000 tonnes to about 188,000 tonnes, pushing up revenues for this year.

Higher prices on Malawi's auction floors in the last two years have encouraged higher tobacco output, raising production from 140,000 tonnes in 2006.

On the biggest auction floors in the capital Lilongwe, which closed sales last week, farmers sold their crop at an average of $2 per kg, after President Bingu wa Mutharika ordered buyers to offer better prices or leave the country.

For many years tobacco prices had hovered around 70-90 U.S. cents per kg, far lower than the $1 farmers say it costs to produce 1 kg of the golden leaf.