Alliance One Tobacco Tanzania Spends $61m Buying up Flue Cured Tobacco

Source from:  East African Business Week  09/22/2014

The Alliance One Tobacco Tanzania Limited (AOTTL) has spent Tsh101.81 billion (about $61 million) to buy up 28 million kilogrammes of flue cured tobacco this season.

The AOTTL's Managing Director, Mark Mason told East African Business Week recently, their firm buys between 35 and 40 million kgs of tobacco annually from over 35,000 farmers organized in 182 primary societies.

Mason said, AOTTL which presently has market share in the Tanzanian tobacco industry of 40%, wants to buy 35 million kgs of flue cured Virginia tobacco and 500,000 kgs of dark fire cured tobacco this season.

He said the 28 million kgs reported is the volume they had purchased by the third week of August 2014. "Buying is still continuing and we are optimistic that we will achieve the target," he said.

 "I am happy to report that analyzing the current buying trends it is likely that the targets will be met by the end of the buying season in October 2014 and quality has been as expected," he said.

The AOTTL processing factory which is a $50 million investment covers over five hectares under one roof.

 It has the capacity to process 60 million kgs within a seven month period.

"We are able to handle this season's 35 million kgs of our own farmer's tobacco as well as supplying services to other tobacco companies within Tanzania with the help of our 300 permanent staff and over 2,000 seasonal employees," he said.

He said, "Our total processing volumes will reach 50 million kilos this season inclusive of third parties.

The efficiency of the production line means we are able to meet our international customers' processing requirements."

The processing stage for the tobacco began in June 2014, and is scheduled to go up to December 2014.

Purchased tobacco is transported to Alliance One factory in Morogoro for processing and selling to domestic and export customers.

When asked by East African Business Week with regard to their relations with farmers, who produce tobacco for its factory, he said the farmers are an important part of the tobacco value chain in the industry.

"Accordingly our relationships with our farmers have sustainability at its core.

This is to say that to have a successful Tobacco industry; it must be managed in a way which is mutually beneficial to the farmer, the government, as well as Alliance One and our customers," he said.

Alliance One's relationship with the farmers is governed by a buying contract signed with Primary Societies. These are Farmers' Organizations formed to manage their affairs.

Through this contract farmers are assured of a market for their tobacco. Apart from buying the crop, Alliance One provides technical support to the farmers in form of extension services and afforestation.

The technical support not only ensures that farmers are producing a good quality crop every year, but it also ensures that the farmers produce a compliant crop such as they follow Good Agricultural Practices (GAP) and Agricultural Labour Practices (ALP).  

Alliance One also partners with communities to support their development initiatives especially in education, health and the environment.

The regulatory authority of the tobacco industry in Tanzania, estimates total production in the country this season to be 104 million kgs of flue cured tobacco valued at Tsh362 billion ($219 million) at an estimated average price of $2.11 per kg and 1.074 million kgs of dark fired tobacco valued at Tsh2.640 billion ($1.6 million) at an average price of $1.48 per kg.

Tobacco is the leading foreign exchange earner among Tanzania's traditional export crops earning the Country more than $300 million annually.

AOTTL is a subsidiary company of Alliance One International of the USA, with its headquarters in North Carolina.

It is one of the three tobacco buying companies in Tanzania buying more than 35 million kgs of tobacco from 182 Primary Cooperative Societies with more than 39,800 farmers in Tabora, Urambo, Kahama, Manyoni, Iringa, Kasulu, Songea and Mara. Enditem