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Malawi’s tobacco crop continued to increase over recent years, recovering from a production low in 2022. Photo credit: Papphase, CC3.0.
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In 2024, tobacco made up 57.6% of Malawi’s total exports—well above the World Bank’s historical average of 45%. Photo credit: Joachim Huber, CC2.0.
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Nixon Lita, c.e.o., TAMA Farmers Trust.
Malawi’s difficult path to crop diversification.
Although Malawi’s 2025 tobacco season opened in early April with notably lower average prices than the previous year, the overall direction is clear: with an expected 175 million kg, this year’s crop will be 31% above the 133 million kg recorded at the close of the 2024 sales, which had already increased from 120.5 million kg sold in 2023. The country, one of the world’s leading producers of burley, appears to have recovered from a production low of 85 million kg in 2022 and is slowly approaching the production levels seen during the early 2010s.
“The market has started on a good note as buyers are offering prices well above the set floor prices per grade,” says Nixon Lita, c.e.o. of the TAMA Farmers Trust, an organization in Malawi that works with farmers of all sizes to promote the sustainability of the Malawi economy. “However, 2024 closed with US$2.98/kg as average price, which is way above the prevailing prices so far this season.”
According to the government’s annual economic report, tobacco exports surged to US$545 million in 2024, up from US$389.3 million in 2023. They continued to dwarf other critical export commodities for the country: legumes, Malawi’s second-largest export goods, accounted for US$81 million, compared to US$62.8 million in 2023, whereas tea exports increased from US$62.6 million in 2023 to US$68.7 million last year.
The goods balance, however, deteriorated by 4.9% in 2024, the report indicates—while goods exports declined by 1.9% from US$965 million to US$946 million, goods imports increased by 2.8%, rising from US$3.145 billion in 2023 to US$3.234 billion in 2024, widening Malawi’s trade deficit from close to US$2.2 billion in 2023 to nearly US$2.3 billion in 2024. The country needs hard currency to import foreign-made goods such as food, fertilizer, or gasoline.
Constituting 57.6% of Malawi’s total merchandise exports in 2024, tobacco once again exceeded the World Bank’s estimate that sees historical averages at 45%. According to Global Action to End Smoking, tobacco continues to comprise 12-15% of the country’s gross domestic product. With global buyer demand for burley expected to increase to 213 million kg this year, up from 190 million kg in 2023, there’s hardly an end in sight to the crop’s popularity among Malawi’s tobacco growers.
This season’s record numbers for tobacco sales are likely to once more revive what seems to be the country’s eternal cycle of tobacco reliance. The number of active licensed entities, which are required to cultivate tobacco, is an indicator of this—it has risen from 30,498 in 2022 and 34,548 in 2023 to 50,258 in the 2025 season. “The number of active farmers varies each year depending on interest in tobacco production at the time, which in turn is influenced by selling prices of the year before,” Lita explains. “Interest to grow more is being driven by good prices on the market and poor performance of the alternative cash crops like legumes. Recently, legumes—especially soya—haven’t been doing well in terms of pricing on the market. Weather has also worsened the situation, especially El Niño, which brought dry spells in the January–February periods of 2024 and 2025, when these crops needed more water, thus leading to crop failure in the field, with tobacco being relatively resilient. Farmers look for a crop that will provide good profits and has an assured market—factors that have been missing with alternative crops.” According to the Tobacco Commission, which regulates the trade, cultivation alone employs almost half a million people.
Structural economic weakness
Malawi’s heavy dependency on a single commodity has become a structural weakness in its economy, as it brings major economic vulnerabilities. For more than a decade, global tobacco consumption has been falling, especially in high-income countries, which are the country’s key buyers. As demand shrinks, so do global prices—earnings per ton have dropped over the years, forcing farmers to grow more to make the same income, which is unsustainable over time. Moreover, tobacco prices fluctuate wildly with global demand and weather conditions, leading to foreign exchange shortfalls, import restrictions, and currency devaluation in bad seasons such as drought or global oversupply. As Malawi exports mostly raw leaf, there is only low value added. As tobacco dominates public policy, land use, and research budgets, it stalls broader economic transformation.
Around 70% of tobacco is produced by smallholder farmers, many of whom are trapped in cycles of debt and poverty—borrowing input costs for seed or fertilizer is common, while prices in auctions and contract-growing, which accounts for 80% of sales, are unpredictable, and farmers lack bargaining power against buyers. A 2021 MwAPATA Working Paper found that poverty rates among tobacco farmers have been rising, indicating that tobacco production is not able to serve as a pathway out of poverty.
In light of these factors, diversifying away from tobacco is no longer an option but a strategic necessity for building resilience, food security, and long-term prosperity for a country that ranks among the ten poorest nations in the world. The need for a turnaround is even more relevant after Malawi ratified the World Health Organization’s (WHO) Framework Convention on Tobacco Control (FCTC) in November 2023, by which it committed itself not only to tobacco control but also to the well-being of its population.
Active efforts to transition to other crops Malawi is making active efforts to reduce its dependence on tobacco, but they are slow and often fragmented. In January 2021, the government launched Malawi 2063, a long-term national vision aiming to transform Malawi into a wealthy and self-reliant upper-middle-income country by 2063. The vision is implemented through a series of 10-year implementation plans, with the first 10-year plan (MIP-1) covering the period 2021–2030 and promoting a shift towards high-value crops, agro-processing, and industrialization.
In line with its agriculture diversification strategy, the Ministry of Agriculture is encouraging farmers to grow legumes, such as soybeans, pigeon peas, or groundnuts; horticultural crops such as macadamia and avocado; and industrial crops like cotton and sugarcane. For farmers interested in alternative crops, government-led programs distribute starter packs, inputs, and training.
In March 2025, the finance department announced the relaunch of the Malawi Development Corporation (MDC) to spearhead strategic investments in manufacturing and industry, marking a shift toward a more proactive, state-led industrial approach. The ministry also said it would invest MWK95 billion in irrigation infrastructure that would service over 50,000 hectares of irrigable land and yield 337,000 tons of crops.
In addition to government efforts, diversification has been supported by NGOs and private donors. A major program focused on promoting smallholder agricultural productivity, diversification, and increased incomes through science, technology, innovation, entrepreneurship, and commercialization is the Centre for Agricultural Transformation (CAT), made possible through five-year (2019–2024) support from Global Action to End Smoking, with technical support from its affiliate, the Agricultural Transformation Initiative (ATI). ATI aims to diversify tobacco-dependent economies into other value chains, increase agricultural productivity, and boost smallholder farmer incomes to achieve economic success.
As of 2024, the organization stated in its most recent newsletter that it had directly impacted over 300,000 smallholder farmers and achieved an 83% adoption rate of new technologies for productivity-enhancing practices among target primary producers in its first project phase, CAT I. Smallholder farmers supported by CAT experienced nearly a 40% increase in yields within alternative value chains, the center said. In addition, CAT facilitated the establishment of new buyer–seller relationships for 63% of its smallholder farmers in non-tobacco markets.
Working with two main streams—one focused on science, technology, and innovation, and the other on incubation, acceleration, and commercialization—CAT established three so-called smart farms, which are used to explore and showcase, among other things, improved varieties of crops, crop nutrition and protection technologies, farm mechanization, and irrigation technologies. The center also offers innovation and entrepreneurship academies, hackathons, and AgTech challenges.
In March this year, CAT launched the banana project, which is meant to revitalize banana production through modern agricultural technologies and knowledge transfer. According to CAT, the MWK90 million pilot project, which will benefit over 600 banana farmers, seeks to enhance productivity, improve market access, and introduce climate-smart farming practices.
In November 2024, the project entered its second phase, CAT II, which will last until October 2025. According to the organization, all activities will build on lessons learned from CAT I. The center will leverage its network of three smart farms, 300 remote agri-clinic sites, and over 80 trusted implementing partners. As of June 2025, information about future funding of the initiative was not available.
Promoting diversification alongside tobacco
TAMA has also introduced programs to help farmers diversify. “TAMA has been working with like-minded institutions to promote diversification alongside tobacco, and not away from tobacco,” Lita clarifies. “In the short to medium term, we believe tobacco will remain the main export crop for Malawi until attractive competitors are identified.” Perhaps a more realistic approach, given the role tobacco has played for Malawi over the past decades.
He adds that soya and other legumes like groundnuts have been promoted for diversification with mixed results, but the main challenge has been unreliable markets or off-takers and fluctuating prices, making the business difficult to plan. “Farmers with large landholding estates have been diversifying with macadamia nuts, a crop that is not attractive to smallholder farmers due to the long waiting period before the first harvest. Other parties tried to promote cannabis, but it hasn’t been a success due to lack of markets. So far, the road towards diversification has been bumpy, and tobacco remains the most preferred cash crop due to pricing certainties and assurance of buyer availability.”
In contrast to other crops, tobacco has an established, structured market system, Lita explains. “A farmer knows where to sell and who will buy at a minimum of how much in US dollars, thus easier to plan with, whilst with the other crops a well-structured market is yet to be established and price volatility has been a discouragement for farmers. Tobacco, unlike the competing crops, is well supported by policy and regulations as it has an act of law specifically to promote the production and trade.”
He expects a significant impact from the loss of USAID funding. In February, the US government froze USAID funding to Malawi, which according to the US State Department had been providing more than US$350 million annually, with many of these funds supporting farmers in transitioning away from tobacco. “USAID has been an active partner assisting many sectors that work with rural communities such that most of the projects were interlinked. For example, one program involved tobacco farmers producing groundnuts as a means of diversification, supplying another food nutrition program that needed the groundnuts to address a protein deficiency problem for lower primary school pupils. So the withdrawal of USAID funding has meant these farmers are no longer assured of a market for their groundnuts. This is an example of how big the development has impacted negatively on diversification efforts and also rural livelihoods.”
Now being a party to the FCTC, which encourages countries to promote economically viable alternatives for tobacco farmers, Malawi can expect support from the WHO to develop and implement such alternatives in the future. In February this year, the country began assessing its needs for effective implementation of the FCTC.
“With pressure mounting on tobacco trade, Malawian farmers are aware that there is a need to identify an alternative and as such would welcome any crop enterprise that will assure them of equally good profits,” concludes Lita. “Support institutions need to continue working with the farmers to explore such alternatives and ensure the business will be supported by government policy, just as it is with tobacco.”