Malawi: Tobacco Country

Malawi is dependent on tobacco. Dubbed ‘green gold’, the leaves bring foreign earnings to one of the world’s poorest countries – but also a lot of problems. Malawi’s government is struggling to kick the habit. But international players in the field of so called development assistance continue to support the tobacco industry

He doesn’t smoke but Erisa Chisenga will have absorbed as much nicotine as a chain-smoker by the end of the day. It is harvest season. The tobacco plants have grown shoulder-high on Mr Chisenga’s field. Leaf by leaf he plucks until nothing but the bare stems remain. Whether all the effort was worth it, is going to be decided only when the harvest will be on display at the auction floor. Until then, Erisa Chisenga keeps on hoping. He hopes for favourable climate and reasonable prices for his harvest. Everyday he roams his field of a hundret by a hundret meters. His hectare of hope. The tobacco plants, Erisa Chisenga hopes, would bring a brighter future for himself, his wife and their five children. That is why Mr Chisenga entered the tobacco business five years ago.

What is a pleasure and a drug for some, is hard work for Erisa Chisenga and almost 400,000 other tobacco farmers in Malawi. The small southeast African country is one of the world’s leading tobacco producing countries. In exports of Burley tobacco, a variety that is added to almost every cigarette, Malawi is even the world market leader. In 2014, cigarette manufacturers based in Germany – the world’s largest cigarette exporter – bought Burley leaves worth more than 100 Million Dollars from Malawi.

Malawi is desperately poor. Measured by gross domestic product per capita, the World Bank recently even ranked Malawi as the world’s poorest country. Half of the population lives on less than one dollar per day. Tobacco is Malawi’s most important export product. At the same time, the country is dependent on imports. For imports, the Malawi government needs foreign currency, of which about two thirds are generated by the tobacco exports. In other words: Malawi is dependent on tobacco. Without tobacco there are no foreign exchange earnings and without foreign exchange earning there will be no imports.

This dependency on tobacco took its toll in 2011 when tobacco prices on the world market collapsed. As a consequence, Malawi’s foreign exchange earnings dwindled. The government could no longer afford oil imports. For days, there were barely any cars on the streets. The prices for other basic commodities exploded. Protesters clashed with police in bloody street battles, at least 19 people died. Tobacco, hailed by many economists as a cash crop which would generate profitable exports for poor Malawi, proved to be a crash crop which was at least partly to be blamed for the crisis.

Smoking becomes increasingly uncool. More and more people quit smoking for health concerns, high taxes hamper the cigarette industry’s business. What will the future be for Malawi if the demand for tobacco leafs continues to decline? Looking for answers, we travel through a small country that finds itself in the middle of a big dilemma: How to get out of the dependency on tobacco, the crop which has so far been its main source of income?

We fly in with Air Malawi, one of the tax-subsidized luxury expenditures that the Malawi government allows itself. Hardly half of the 43 seats of the Bombardier Q400, a propeller-driven aircraft, are occupied. On board are a few Malawian business men, an American missionary and three young Germans on their way for some big-game hunting in Southern Africa. As the aircraft approaches the airport, the clouds reveal a mosaic of tiny farms. Smallholders determine Malawi’s agriculture which, according to the United Nations’ World Food Programme, employs about 80 percent of the population.

As soon as we leave the capital city of Lilongwe, the tobacco is everywhere. We pass a bar called „No Farming No Life“. On the countryside, most families sustain themselves with subsistence farming. Tobacco and maize, wherever you look. The rainy season spills its final drops of water and the landscape flourishes. Rainy season is the time of cultivation, rainy season is tobacco time. On the horizon, single mountains ascend like sugar loaves. From the main road departs a runway that leads us to Mr Chisenga and his tobacco field.

The deep potholes have turned into mud pits. Yellow-blossomed cassia trees line the way. Before entering the village, an ankle-deep stream meanders across the path. Between tall reeds, boys are washing their bikes, children in tattered clothes are dabbling and women are washing clothes. In the shallow waters along the stream, farmers breed their tobacco plants in nurseries for the upcoming season. Only a few meters further the red soil is as hard as rock even though the rain poured heavily just the night before.

As we park the car in front of Erisa Chisenga’s home, he sits on a bamboo mat in the shade of his harvest. Under a roof made of plastic foil, covered with straw, the tobacco leafs have been hanged to dry. Thousands of leafs, like a colony of saggy, leathery bats.

Using a knitting needle, Mr Chisenga impales the fresh leaves, pulls blades of grass through the holes and ties them into bundles, which he then hangs to dry. So it goes for hours. In the meantime, Erisa Chisenga tells us his story. In Chichewa, the local language, the name of the village called Machokero means: The reason why you left. Instead of going to school, the boys herd goats and the girls help their mothers with the housework. Erisa Chisenga wanted to make something of himself, at least he wanted to send his children to a better school. Therefore, he also entered the tobacco business.

Mr Chisenga is under contract by Alliance One, one of the world’s largest raw tobacco merchants. The main customers are Philip Morris (with cigarette brands like Marlboro) and British American Tobacco (Lucky Strike). The farmers receive the ingredients for growing tobacco on credit. Alliance One provides the farmers with seeds and pesticides. A portion of the loan is paid in advance in cash. As most farmers in Malawi live from hand to mouth, this purportedly easily earned money is one of the biggest incentives that makes many people start growing tobacco.

The tricky part comes when the farmers have to pay back their loans. The loans are due when the tobacco is exported to outside Malawi. This is the time when a comparatively large amount of money flows into the country and thus the currency appreciates. In other words: the Malawi Kwacha increases in value against the Dollar. For the farmers, this means that they have to pay back more than they had originally borrowed. This way, they lose much of their expected profits while the tobacco companies benefit.

Mr Chisenga has to be very careful. If the tobacco merchant finds a shred of plastic between the tobacco leafs, he may well reject the whole harvest. In that case, the farmer remains with a pile of tobacco and an even bigger pile of debt. If Mr Chisenga would grow maize instead and would not be able to sell his harvest – at least he could still eat it himself.

Mr Chisenga would never smoke his own tobacco, though. Smoking is bad for the health, he says. Yet he suspects that working with tobacco is just as harmful, although, as a tobacco farmer, he has never heard of the word nicotine. All Mr Chisenga knows is that his skin itches after a long day in the tobacco field and that sometimes he returns home with heavy headaches. Other tobacco farmers suffer from rapid heartbeats, vomiting and diarrhea. Doctors call it Green Tobacco Sickness, a type of nicotine poisoning that occurs when farmers do not wear protective suits. Without gloves or suits, tobacco farmers can absorb as much nicotine via their skin per day equivalent to fifty cigarettes, according to a study by the College of Public Health at the University of Kentucky.

Most at risk are children. Malawi is considered the country with the highest rate of child labour in all Africa. The children’s rights organization PLAN estimates that almost 80.000 children work on Malawi’s tobacco fields. They have to help their parents because the tobacco farmers simply cannot afford to pay adult harvest hands.

The next day, Malawi’s Minister of Finance welcomes us in the Parliament, a magnificent building with an arcade and a massive dome on top. What is supposed to appear venerable is actually a super modern building, proudly sponsored by money from China. The interior is rather modest, though. Minister Goodall Gondwe awaits us in his sparsely furnished office. Tobacco, Gondwe says right away, was a „highly political crop“ in Malawi. A plant as a political issue. Traditionally, the President opens the annual tobacco auctions. When the auction halls open their gates, trucks loaded with tobacco block the streets of Lilongwe in a kilometre-long traffic jam. Yet, Minister Gondwe strengthens that all the hurly-burly during the sales season should not belie the fact that Malawi needs to quit its dependency on tobacco: „The times of tobacco are doomed“, he says.

Malawi needs to diversify its economy, it needs to export other products, the minster says. Soya beans, he suggests, would be a suitable complementary crop as it is highly demanded on the world market. Gondwe dreams of India as a destination market for Malawian soya. Hunger-stricken Malawi as a bread basket for the Indian boom economy? There are reasonable doubts that this would change anything about the fact that Malawi export raw products while most of the value is still added abroad.

Achieving a bigger chunk of the creation of value in Malawi – and thus creating more income – is one of the biggest challenges in fostering Malawi’s economy. Thus, this challenge is also one of the core goals of so called development aid. Thousands of volunteers work in Malawi, which many aid agencies consider a „priority country“ for their efforts. The many aid agencies’ acronyms are hardly known to most people in their home countries: Dfid, Usaid, GIZ, BMGF – in Malawi, these letters are well-known dictums, as financial aid from foreign donors is Malawi’s second most important income earner after tobacco. In fact, the expat community already does enliven whole branches of Malawi’s economy: the real estate market, Western cuisine restaurants, the import market for vehicles – preferably brawny jeeps –, along with local drivers and translators. However, despite having been a darling of donors agencies for decades, economic development for Malawi as a whole has not really materialized.

Things will improve soon, though, at least according to some of the leading masterminds behind international development programmes. One of their most prominent initiatives is the New Alliance for Food Security and Nutrition (NAFSN). The programme was initiated in 2012 by the G8, the club of the world’s most influential industrial nations. Their goal: Lifting 50 Million people out of poverty in eleven African countries within ten years. Their recipe: public private partnerships, or PPPs, investments by public institutions together with private-owned companies. The NAFSN brings together the G8 member states with a who is who of multinational business: Nestlé, Heineken, Coca-Cola, Bayer, Syngenta, Monsanto or Standard Bank. They all plan to invest in some of the world’s poorest countries, according to their own statements more than 11 Billion Dollars up to 2022. NAFSN is supposed to kick-start a „green revolution“. In Malawi, the initiative is said to help 1.7 Million people, a tenth of the total population. That is roughly the number of people who suffer from chronic malnutrition. Almost every second child in Malawi is stunted due to malnourishment. And as the population continues to grow rapidly, Malawi’s food problem is further intensified.

Where tobacco is grown, there is no space for food crops. The non-governmental organization UnfairTobacco estimates that an additional 750.000 people could be fed, if food was grown on Malawi’s tobacco farms. However, despite claiming to fight for food security, the NAFSN cooperates with the tobacco industry. Among the companies aboard of the initiative in Malawi are the tobacco leaf merchants Alliance One – the company that our farmer Erisa Chisenga delivers his tobacco to – and Limbe Leaf, a subsidiary of Universal Corporation, the second giant on the world market for raw tobacco. Together these two companies buy and process up to 90 percent of Malawi’s annual tobacco harvest. In cooperation with the G8’s New Alliance initiative they want to expand their business.

Alliance One wants to found private tobacco research institutions and plans to acquire new land, tripling its estates from a current 61,000 hectares to 121,000 hectares. Isn’t Malawi too dependent on Malawi already? Ronald Ngwira, leaf production manager at Alliance One agrees. Yet, the solution, Ngwira says, is not to make the country completely quit tobacco farming. Instead, his key word is „diversification with tobacco.“ Does growing tobacco increase Malawi’s hunger problem? Ngwira is eloquent and charismatic. He replies by posing a counter question: „Are we a tobacco company or are we a food company?“ Alliance One gives the farmers seeds, fertilizers and pesticides, not only for tobacco but also for maize (all of these inputs are also granted as loans). This way, Ngwira argues, the company indirectly gives the farmers food as the farmers would harvest 2.5 kilogram of maize for each kilogram of tobacco. These inputs for maize are not to be mistaken for a charitable gift, though. If his company would not give out fertilizer for maize, the farmers would use the tobacco fertilizer on their maize crops, Ngwira explains. Cynically one could say: The reason for which the tobacco companies give inputs for maize is that they know very well that the small scale farmers primarily work in subsistence farming. Only second is the alleged cash crop tobacco. So giving inputs for maize makes sure the farmers do not starve – since someone has to grow the tobacco for the companies.

Fighting hunger hand in hand with the tobacco industry? Doing good by smoking for Malawi? The authority for implementing the New Alliance initiative in Malawi is the European Union. The German EU delegate Maria Heubuch from The Greens party is the rapporteur in charge of the New Alliance for the EU Parliament’s Committee for Development. In her recent report, Heubuch urges the European Union to „stop its current support to NAFSN“ since she „severely questions the ability of mega-PPPs such as NAFSN to contribute to poverty reduction and food security, as the poorest communities risk to bear the brunt of social and environmental risks associated with it.“ In an interview with this reporter, Heubuch said she regards the New Alliance „a door opener for multinationals“. Explicitly, her report criticizes the cooperation with tobacco companies in Malawi as one of the initiative’s worst failings. In general, the companies’ business practices are highly nontransparent, as their „letters of intent“ are not available for the public – and neither for the delegates of the European Parliament like Maria Heubuch herself. This way, it is impossible to keep track of the companies’ investments. In some rare cases, it has become apparent that the companies’ initial intentions – which allegedly profit the local population – can easily change later on. One such example is the company Mpatsa Farms, which became part of the New Alliance in Malawi with the intention to grow rice, cotton, soya and maize but later „stopped and channelled resources to tobacco farming“, according to the New Alliance’s 2014 Progress Report. 

However, the German government continues to support the New Alliance with 500 Million Euros. The money comes from the Ministry for Development and Economic Cooperation (BMZ). At the same time, the BMZ supports a project in Malawi that is supposed to help farmers quit growing tobacco. Two objectives that could not be more contradictory: On the one hand, within the G8 New Alliance, the German government works together with Big Tobacco. On the other, the same ministry finances a project designed to help Malawi exit tobacco. How does this go together?

That is what we would like to learn from the Association for International Cooperation (GIZ), the agency that has been assigned by the German ministry to run the cessation programme for Malawi’s tobacco farmers. The GIZ „country office“ is based in a shade-giving alley in one of Lilongwe’s richer suburbs. Next door, the US ambassador resides. We had asked the GIZ for an interview several times. Finally, we were offered a background talk from which we were later on allowed to quote certain statements as agreed upon with the GIZ press office. Aid workers used to perpetuate the stereotype of escapists in functional clothing or ethnic look with batik patterns, but today they resemble big business managers. Likewise, the GIZ‘s country director for Malawi, Matthias Rompel, drops phrases like this:Agriculture needs to become agribusiness.“ The GIZ regards itself as „a partner of the private sector“. Mr Rompel explains why: „We can help the economy without having to deal too much with the government.“ Economy, prosperity, growth – the holy trinity of the worshippers of the free market system.

In fact, the GIZ and Malawi’s government have the same goal: Quitting tobacco. The farmers are supposed to learn how to grow other crops, preferably oil seeds like soya beans, sunflowers or groundnuts. In order to achieve this goal, both the Malawi government as well as the GIZ partner with the same institutions. One of these institutions is ARET, the Agriculture Research and Extension Trust. While the GIZ is about to set up a „green innovation centre“ at one of ARET’s colleges, the Malawi government names ARET a core institution for implementing its new National Export Strategy, which calls on farmers to grow oil seed crops. The question is whether ARET is a suitable partner. ARET was founded by the Malawi government toeather with TAMA, the Tobacco Association of Malawi. ARET issues new tobacco breeds and teaches farmers how to grow tobacco. However, Mr Rompel, the GIZ’s country director, says: „GIZ does not cooperate with the tobacco industry.“ Yet, ARET is all about tobacco. This is until now. ARET has also committed itself to its new „Diversification Strategic Plan“. At least on paper. In line with the government’s goals, ARET’s „Diversification Strategic Plan“ aims at fostering alternatives to growing tobacco. And the GIZ wants to help ARET in fulfilling this goal..

Yet, doubts remain. According to its on papers, in preparing it’s alledged diversification strategy, ARET held „key consultations“ with representatives from different industries – most notebly, with Japan Tobacco International as well as market leaders Limbe Leaf and Alliance One, which was represented by its Leaf Production Manager Ronald Ngwira, according to a protocol. Ngwira’s credo of „diversification with tobacco“ can be found in the second sentence of ARET’s „Diversification Strategic Plan“. It is against this background that Laura Graen from the NGO UnfairTobacco criticizes that „the tobacco industry has hijacked the term ‘diversification’ and re-coined it for their own purposes.“ Indeed ARET’s definition of diversification is not about completely substitution tobacco with other crops. Instead, it calls on farmers to grow oil seeds next to their tobacco fields. For instance, ARET’s so-called diversification strategy states that „ARET will have to use its existing extension and specialist services, currently focused on tobacco, to promote the inclusion of sunflower in tobacco farming systems.“ After all, ARET regards oil seeds as suitable crops that could give farmers a stable income all year long – for the time, after the tobacco has been harvested. The seems to be little doubt that ARET wants to stick to tobacco. Among the „weaknesses“ in fulfilling its diversification efforts, ARET itself has listed the following: „A bias towards tobacco will negatively affect the efforts to actively engage itself on other high value crops.“

Finally, there is the crucial question that arises in the context of many so-called development projects: What next? Often enough such projects fizzle out as soon as the donors stop providing the funds. So far, all tobacco farmers in Malawi have to deduct one percent of their income to ARET. This is known as the „ARET levy“. In its „Diversification Strategic Plan“, ARET itself names „over dependence on tobacco levy“ as another „weakness“. Should ARET actually deprive itself from its financial basis by guiding farmers away from tobacco? The GIZ does not seem to bother about this too much. In a document that summarizes the GIZ’s cooperation with ARET it reads that „ARET is financed by tobacco sales. This way, ARET is a solidly financed partner which is a good prerequisite for the sustainability of our project.“ However ARET itself seems somewhat more worried about the financial future. One paragraph of its diversification paper reads: „Fund raising deserves a special mention. […] Sourcing funds for research and extension in tobacco from most traditional funding agencies is almost impossible. The NES [National Export Strategy] however has opened a window for ARET to tap into resources that are a no-go zone for tobacco related research and extension.“

Does this also apply to the funding from Germany? The GIZ states that is plans to support ARET with more than 200,000 Euros this year alone. The programme is also supposed to be extended up to 2019 (initially, it was said to end in 2017). However, there is little achievement so far. Last year, GIZ invested about 140,000 Euros in ARET. A good portion of that money, according to GIZ statistics, has been used to train ARET’s staff in how to grow oil seed crops. Yet, only five percent of ARET’s personal have been trained in this so far. ARET itself criticizes that „there is real need for ARET management to orient or communicate to the rest of the staff the DSP [Diversification Strategic Plan] so that there is buy in of the DSP by everyone.“

Marketing remains one of the biggest obstacles. It is not sufficient to teach farmers how to grow alternative crops. In this point, ARET and GIZ agree. Farmers who grow sunflowers instead of tobacco need to be assured that they can sell their harvest. However demand, clients and the corresponding commercial chains are practically non-existent for most products in Malawi. The only really functional export market is the tobacco market. As a land-locked country, all goods from Malawi have to be exported via borders and bad roads to the ocean in Mozambique or as far as South Africa. Yet, even if alternative cash crops should prevail against tobacco, they remain destined for export. Will this change anything about Malawi’s food security problem? In this regard the argument by GIZ and the G8’s New Alliance is the same: A farmer who sells cash crops will have more income – and a farmer who earns more can afford to buy more food.

Reality check with our tobacco farmer Erisa Chisenga. He agrees that it would be better for him to grow something else than tobacco. „What we need is cash. Agriculture has become a business“, he sighs. Only once within the five years of growing tobacco Mr Chisenga has made some little profit. Although, to be correct, his calculation is only profitable if he does not include the costs of labour which is enormous with the labour-intensive tobacco crops. What counts for Mr Chisenga, though, is that he will have some cash in his hands at the end of the season after having paid all the loans and deductions. The other years, Mr Chisenga has slogged on his tobacco field for nothing while putting his health at risk. The tobacco was supposed to bring about a better future for his with and their five kids. Yet, the family still lives in two tiny houses made of red bricks. They cook on a coal-fired furnace. And their toilet is a whole in the ground behind a privacy shield made of clay. This year, Alliance One has bought Erisa Chisenga’s tobacco harvest at one Dollar per kilogram. With this little amount, he has again not made any profit. On the contrary: Mr Chisenga has failed to repay the loan. His hope called tobacco has put him in debt. He will have to keep up his hope, the hope for better times next season.

The German version of this story was first published in correctiv and fluter. An English version was published at South Africa’s Mail & Guardian.

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