China to Invest in Malawi Tobacco Processing; Crop to Increase

China is expected to invest in Malawi's tobacco industry this year to add value to a crop that generates 60 percent of the southern African nation's export income, said Trade Minister Henry Mussa.

``The Chinese have assured us that they'll be investing in tobacco-processing companies so that we add value to our crop instead of exporting raw tobacco,'' Mussa said in an interview today from the capital, Lilongwe.

China established diplomatic ties last month with the nation, Africa's biggest producer of the burley variety of tobacco, after Malawi severed links with long-time ally Taiwan.

Production this year is expected to increase 32 percent to 145 million kilograms (320 million pounds), four-fifths of which will be made up of burley, the state-run Tobacco Control Commission said. The balance will comprise flue-cured tobacco, Southern Dark-Fired and Northern Dark-Fired varieties, it added.

No new merchants have registered to buy tobacco this year, Derrick Jefta, an executive with the commission, said in an interview from Lilongwe.

Malawi's President Bingu wa Mutharika last year set a minimum price of $1.10 a kilogram for the lowest grades of tobacco after farmers boycotted sales over low prices in 2006.

``No new minimum price has yet been announced and talks are still under way on the issue,'' Jefta said, adding that press reports about higher prices were ``completely incorrect.''

Last year Malawi earned $194.6 million from the sale of tobacco. Richmond, Virginia-based Universal Corp. and Morrisville, North Carolina-based Alliance One International Inc. are traditionally the biggest buyers of Malawian tobacco.

Tobacco auctions are expected to begin next month, the commission said, without specifying a date.