Uganda: BAT Sets 21 New Leaf Tobacco Standards

Source from:  The Monitor (Kampala) January 24, 2007 01/26/2007

IN its effort to return to profitability, British American Tobacco Uganda has introduced 21 different buying grades so as to buy more tobacco from farmers this year. The tobacco giant has also disclosed that to capture large market and compete favourably with other competitors in the business, it has increased the number of tobacco farmers from 29,000 to 40,000, to drive output to 18,000 tonnes in the short term by the end 2007. "To achieve competitive advantage in the world export market, we should be focusing on three main areas; right quality, right quantity and right price. BAT Uganda's quality is already competitive and to gain the advantage the company needs to achieve higher volumes in order to offer the best prices to its export customers," BATU Leaf Director Serhat Eroglu said. He was speaking to a cross section of stock dealers, regulators and business journalists on January 18 at the Uganda Securities Exchange (USE). Sounding optimistic about the future amidst what BATU officials admit is a painful restructuring to return to profitability, he said one of Uganda's biggest competitive advantages on the global leaf export market is that Uganda produces high quality tobacco in both the Flue-Cured Virginia and Burley types. Mr Eroglu said BATU will make profit out of 18,000 tonnes of leaf export in the short term and 25,000 tonnes in the medium term in world market. "Our first seedbed audit, conducted at the end of December [2006] and start of January, indicates that the number of seedlings prepared will support an 18,000 tonne crop which will be a fantastic achievement for the direction of the business," he said. Mr Eroglu added: "All indications at the start of the year showed that the company was on track to achieve targeted volumes of more than 15,000 tonnes of tobacco grown this season." The cigarette business constitutes 20 per cent of gross turnover as BAT Uganda is largely a leaf-driven operation. The company paid approximately Shs20billion directly to contracted farmers in 2006. BATU suffered a setback three years ago when the world market cancelled orders following concerns over the quality of its leaf. The introduction of 21 buying grades is to ensure that quality issues are clearly controlled with each grade priced differently. The company has made substantial losses in the last two years with no dividends paid to its shareholders. BATU's share price has stagnated at its lowest since listing in 2000 at Shs470 from Shs750. USE CEO Simon Rutega commended the company for making its plans public. Enditem