Uganda: Batu Doubles Its Tobacco Exports

Source from:  The Monitor (Kampala) 25 October 2007 10/25/2007

Tobacco giants British American Tobacco Uganda will double their export earnings this financial year following a dramatic increase in their export volumes to 19 million kilogrammes. Top officials told Daily Monitor in an interview that the company will have achieved earnings worth $58 million (Shs101.5 billion) by the end of the financial year, up from $29 million (Shs50.7 billion) last year - spurred by a more competitive price of its leaf. The company reduced the price of a kilogramme of tobacco leaf from $3.10 (Shs5,425) to less than $2.4 (Shs4,200), in the last 10 months according the company's fourth quarter statistics. Mr Serhat Eroglu, the managing director, said the reduction in price has been as result of increased efficiency, and reduction in operating costs by $2 million (Shs3.5 billion). He said this has made BATU the preferred source of flavoured tobacco for the Group. The price change now puts BATU in the number one spot of the most affordable source of tobacco in the BAT global family. Uganda now ranks higher than other key strategic suppliers for the BAT group including Zimbabwe, Indonesia and Brazil. The trio sell a kilogramme of cured tobacco at between $2.76 and $2.6. "This price means that Uganda is now the most efficient country in terms of productivity in the BAT Group," Mr Eroglu said. It also implies that the company will have a more competitive advantage and be able attract more customers to buy its tobacco. Ms Cathy Adengo, the corporate and regulatory affairs manager said: "Given the fact that the price is now more competitive, global customers prefer to buy more tobacco volumes from BAT and this will automatically translate into higher export volumes. The government will subsequently earn more export revenue as a result of the increased sales of our tobacco to the global market." Tax payments Despite making losses in the past three years, BATU was among the top 10 tax payers with a remittance of more than Shs49.8 billion to the government Treasury, up from Shs45.4 billion the previous year. She said the revenue growth was a result of increased sales of cigarettes, which saw a 4 per cent growth in contributions to government revenues in excise and VAT in 2006. She said as demand for Uganda's tobacco shoots up, farmers would be encouraged to grow more because this they will earn more income. She said this makes a review farmer prices as possibility. Enditem