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Malawi Sells Tobacco at 32% Below Government-Mandated Price

May 1 (Bloomberg) -- The average price of tobacco in Malawi, the world’s largest producer of the burley variety of the leaves, was 32 percent below the government-set price at an auction last week, Auction Holdings Ltd. said.

Tobacco sold at an average $1.23 per kilogram (2.2 pounds) in the week through April 27, compared with 81 cents in the same period a year earlier, the Lilongwe-based agency said in a report published in the Nation newspaper today. The government-set price is $1.82 per kilogram.

Since the market opened on March 26, 5.9 million kilograms of the leaf have been sold, fetching the southern African nation $7.2 million, Auction Holdings said. Tobacco production in Malawi dropped to 151,500 metric tons last year from 237,171 tons a year earlier because of lower prices, according to the Agriculture Ministry.

Tobacco is Malawi’s biggest foreign-exchange earner, accounting for 60 percent of all revenue earned from abroad. Limbe Leaf Tobacco Co., a unit of Universal Corp., Alliance One Inc., Africa Leaf Malawi Ltd., Premium Tama Tobacco Ltd., Malawi Leaf Co., RWJ Wallace Ltd. and Japan Tobacco Inc. are among the biggest buyers of tobacco in Malawi. They export the leaves to countries in Europe, Asia and North America.

To contact the reporter on this story: Frank Jomo in Blantyre via Nairobi at pmrichardson@bloomberg.net.

To contact the editor responsible for this story: Paul Richardson in Nairobi at pmrichardson@bloomberg.net.

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