Uganda: BAT Kicks Off Buying

Source from:  East African Business Week (Kampala) June 12, 2006 06/14/2006

Farmers across the country start cashing in on tobacco sales this week for the 2006 season after a long and hard toil. The British American Tobacco Uganda (BATU) will through the month of June into July procure tobacco from the 28,000 farmers at its four Centralised Purchasing Points (CPP) located in the tobacco growing areas. BATU, eyeing to buy over 12 million kilos of tobacco, increased tobacco buying prices for the 2006 season again, by 42% for the top-grade of Flue-Cured Tobacco (FCV) and 23% for the top-grade of Burley Tobacco. The highest grade of FCV tobacco with 19 farmer grades is now priced at Ush3,000 (US$1.64) per kilo up from Ush2,100 ($1.15) last year, and the next grade is Ush2,600 ($1.42) up from Ush1,900 ($1.04) With 17 farmer grades, the highest grade of Burley tobacco grown predominantly in Bunyoro and Mubende in the west and central respectively, is now priced at Ush2,400 ($1.31) per kilo, up from Ush1,950 (1.07) last year. The next grade is now Ush2,000 ($1.09) up from Ush1,700 ($0.93). "The farmers who produce the best quality tobacco will obviously get paid much more and get better returns on their yield. Our emphasis is on high quality tobacco if Uganda is to live up to its position as a Strategic Source of quality tobacco for the BAT Group," Mr. Pedro Seambelar, the BAT Area Leaf Growing Manager said last week in Kampala. This is the second price increase British American Tobacco (BAT) has announced this year, following on from a pre-season price announcement that brought prices up to encourage farmers concentrate on quality during the growing process. Though BATU says that the crop in the field looks promising, an indication that the farmers will earn a much higher average price, the firm is weary of unethical operators who steal tobacco by offering farmers dubious prices without investing in the growing of the crop. "We hope the Tobacco Act is followed to the letter so that companies that don't invest in tobacco growing do not buy tobacco from otherwise serious farmers," Seambelar warned. During the company's April annual general meeting at the Sheraton Kampala Hotel, Mr., Glenn Shepard, the managing director announced a Ush12 billion ($6.56 million) investment in the sector this year. The company has further invested Ush7 billion ($3.8m) in interest free farming inputs to farmers for tobacco leaf growing, and Ush5.2 billion ($2.9m) in capital investments for leaf buying and processing. For better value to both the farmers and BATU, the tobacco firm in 2005 modernised the procedure for procuring its tobacco. Before 2005, the over 150 buying points were in a derelict state; grass thatched, unreliable weighing scales among others that allowed for lack of transparency and gross inefficiencies. Worse still, the farmers were paid their monies several weeks after. This scenario is no more. Starting last year, BATU invested handsomely to ease the process by constructing four CPPs to replace the 152 buying points, one in each of the tobacco growing areas. The new facilities were fitted with conveyer belts and computerised weighing scales among others to ensure transparency, better grading methods and value for money. For the West Nile region, Pajullu CPP was built in Arua district and Lira CPP in Lira district for the middle north region. The other two are Kibati CPP in Hoima district for Bunyoro - Mubende region and Kanungu CPP in Kanungu district for the west and North Kigezi, south western Uganda, respectively. During this marketing season, BATU will transport the farmers to and from the CPPs at no cost. Farmers will also be instantly paid for their tobacco. Mr. Simon Kaheru, BATU's corporate social responsibility manager told Business Week last week, that their operations were unique. "The farmers already know what prices we are offering even before planting," he said. Enditem