Category: Leaf

Kenyan workers seek dues
Former employees of Alliance One Tobacco (Kenya) have accused the company of withholding their severance pay, according to a story in The Standard.
They were quoted as saying that the company had agreed to pay them after talks brokered by the Ministry of Labour.
The 258 workers were said to have been laid off in 2015 when Alliance, part of US-based Alliance One International, scaled down its operations in Kenya.
The downsizing affected staff at the company’s plants in Thika, Murang’a, Homa Bay and Migori counties.
In an affidavit filed in court, the workers’ representative, Dick Ochieng, said they had been condemned to a life of poverty and suffering after losing their jobs.
“Even worse, the company has not paid us as promised,” he said.
Alliance was quoted as saying that it had paid severance dues to 17 of the claimants and that another seven were due for payment.
Paulette Kankhwende, Alliance’s regional human resources director, reportedly wants the suit thrown out until all claimants prove they worked for the company.
June 6, 2017
India’s auctions opened
The Indian government has said that global companies will no longer have to depend on a local partner or agent to buy leaf tobacco from the country’s farmers, according to a story in the Business Standard relayed by the TMA.
The story suggested that allowing global players to participate directly in flue-cured tobacco auctions would increase competition and help improve farmer prices.
Global buyers were said to buy 70 percent of the country’s flue-cured tobacco, while the remainder was bought by local cigarette manufactures.
In 2016, the country’s exports of flue-cured tobacco amounted to 230 million kg and were worth Rs59.5 billion (US$921.1 million).
But exports declined by four percent this year, primarily due a decline in production, according to R Subba Rao Chowdary, a Tobacco Board official responsible for marketing and exports.
May 24, 2017
Flue-cured output to rise
The chairman, president, and CEO of Universal Corporation, George C. Freeman, III, has predicted that global flue-cured tobacco production outside China will increase by about nine percent in the fiscal year to the end of March 2018.
This increase would largely stem from the recovery of the Brazilian crop due to better weather conditions, he said.
At the same time, Burley production would decrease by about eight percent, primarily due to reductions in Africa.
In presenting Universal’s annual results to the end of March, Freeman said it was too early to determine whether additional purchases made by customers in fiscal year 2017 might impact their requirements in fiscal year 2018.
Net income for the fiscal year ended March 31 was $106.3 million, down from $109.0 million in fiscal year 2016, while operating income of $178.4 million was down $3.3 million.
Segment operating income, which excludes non-recurring items, was $188.5 million in fiscal year 2017, up $2.4 million from that of the previous year; a rise that was primarily attributable to improved results for the company’s North America segment, partly offset by a decline for the Other Tobacco Operations segment.
Revenues of $2.1 billion for fiscal year 2017 were said to have been ‘relatively flat’ as slightly higher volumes and a benefit from earlier receipt of distributions from unconsolidated subsidiaries were offset by lower green leaf costs and lower processing revenues.
“I am pleased to announce that Universal delivered solid results again this year despite supply headwinds, most notably from the weather-reduced crop sizes in Brazil and ongoing challenging market conditions in Tanzania,” said Freeman.
“Although we had anticipated ending the year with slightly lower volumes, earlier shipment timing as well as attractive green prices in some origins resulting in some additional purchases by our customers boosted shipments later in our fiscal year, allowing us to improve our market share and achieve lamina sales volumes that were slightly above those of the prior fiscal year.”
May 24, 2017
Same low prices
While it has been more than six months since Vietnam agreed to waive import duties on 3,000 tons of Cambodian exports of unmanufactured tobacco, smallholder tobacco growers claim the agreement has done little to improve their incomes, according to a story in The Phnom Penh Post
Some growers have accused big tobacco companies of hoarding all the profits from these transactions.
The tobacco-duty exemption came as part of a bilateral trade agreement signed in October that gave preferential treatment to 39 export items from Cambodia and 29 items from Vietnam. Under the deal, Cambodian tobacco producers could apply for licenses to export up to 3,000 tons of unmanufactured tobacco a year to Vietnam duty-free in 2016 and 2017.
The agreement was widely expected to stimulate exports, with smallholder farmers benefiting from higher prices created by the demand from traders looking to fill the quota.
However, Som Ra, head of the Krouch Chhmar district agricultural office in Tbong Khmum province, said tobacco prices had remained stable since the quota deal, and he questioned whether anybody had actually benefitted from it.
“If a deal for 3,000 tons to Vietnam existed, I would expect prices to rise and more competition in the market, but so far nothing has changed from the Vietnamese side,” he said.
He added that most tobacco farmers in his district were selling their tobacco to British American Tobacco (BAT) or Chinese dealers.
Meanwhile, Chhin Buntheourn, a smallholder tobacco farmer in the Kong Meas district of Kampong Cham province, said he was disappointed that the quota deal had done little to improve his income.
“I initially expected that the price of tobacco would increase, but until now we continue to struggle with the same low price,” he said, adding that the market rate for tobacco had remained unchanged at between 300 and 400 riel per kg.
Buntheourn said he suspected that large tobacco firms had obtained the export permits but were not passing along any of the profits to smallholder farmers.
“The bilateral agreement only benefits the big companies and has not offered any better price for us,” he said.
Chhay Sokhon, who cultivates tobacco on his 2.5 ha farm in Krouch Chhmar district in Tbong Khmum province, expressed a similar sentiment, adding that market prices were dictated by “smooth-talking traders”.
“When I heard the news I expected that I would receive a good price this year for my crop, but nothing has changed,” he said. “Any fluctuation in the price is the result of bargaining.”
Kim Sarourn, director of Kampong Cham’s Provincial Agriculture Department, said farmers saw better yields this year, but that the agreement had done little to open new markets.
“I haven’t heard of any new markets,” he said. “Demand from the Vietnamese side remains the same and there is really only BAT contracting with farmers.”
Almost all tobacco grown in Cambodia is cultivated in the adjacent provinces of Kampong Cham and Tbong Khmum.
The provinces have about 5,000 ha and 1,000 ha of tobacco under cultivation, respectively, yielding on average 1.5 tons per ha.
May 22, 2017
Sales open on good note
Malawi’s Mzuzu Auction Floors opened on a good note with the highest price paid for flue-cured tobacco reaching US$4.35 per kg and that for Burley reaching US$2.20 per kg, according to a story in The Nyasa Times.
Opening the floors, the Deputy Minister of Agriculture, Irrigation and Water Development Aggrey Masi said this year’s leaf was of high quality because of good rains, the increased use of certified seed from improved tobacco varieties, and good crop management.
He said the importance of tobacco to Malawi’s economy could not be over-emphasized because it contributed significantly to the country’s foreign exchange earnings.
This was the reason why the government still promoted tobacco production. It was a crop of strategic importance that economically empowered farmers.
Masi said the government was prioritizing key tobacco policy reforms, including the introduction of the Integrated Production System, the review of the Tobacco Act, the new tobacco grower registration system, and investment in value addition.
According to Masi, tobacco-industry reforms were intended ‘to support the establishment of a transformative framework that will help address systemic bottlenecks in the industry, thereby stimulating increase in productive capacity and enhancing linkages to the market’.
He assured farmers that the government would continue with the reforms in order to create a win-win situation for buyers and farmers.
“My expectation is that you should be matching quality with reasonable prices,” Masi said in a statement directed at buyers. “These farmers deserve better prices for them to re-invest in the tobacco enterprise this coming growing season.”
The chairperson of Tobacco Control Commission Inkosi Ya Makhosi M’mbelwa V said that this year’s selling season had started on a good note because of the government’s control measures. “As a result of controlled production, forces of demand and supply are at play and good prices are coming up; we are hoping for better prices this year,” he was quoted as saying.
May 18, 2017
Cutting out the middlemen
The Philippines’ National Tobacco Administration (NTA) is urging tobacco farmers to take part in the contract growing system (CGS) to strengthen their relationship with, and receive more assistance from, the national government, according to a story in The Manila Bulletin.
The CGS is said to have been developed to protect the farmer’s livelihood from the abusive practices of middlemen.
Under the CGS, farmers need not go through middlemen or brokers, and are guaranteed a ‘fair, good price’ for their tobacco.
‘Through the CGS, the NTA will directly link farmers to buyers who shall pay the farmers based on the prevailing tobacco market value,’ the Bulletin reported.
‘In addition, there will also be grants, assistance, programs and projects available to the specific needs of the farmers which the new administration of the NTA is preparing for them.’
The NTA Deputy Administrator Mel John Verzosa said the CGS provided direct assistance to the sector from the time farmers planted their seeds to harvesting and marketing.
He said the new administration was focused on strengthening the tobacco industry, which provided a big slice of the national government’s revenue through cigarette excise taxes.
“We are urging all our tobacco farmers to avail of the contract growing system because it is very important that they receive the assistance from the NTA,” said Verzosa.
“We see better production after 2017 with the new programs that the government is laying down for farmers. We also know that farmers would opt to go for tobacco production being a sure source of income compared to other agricultural products,” he added.
May 18, 2017
Anti-tobacco bill passed
The Azerbaijani parliament has passed a bill restricting tobacco use, according to a story on News.az quoting AzVision.
Few details of the bill were given, though the story said that it comprised three chapters and 17 articles setting out a number of anti-tobacco measures, including a list of those places where tobacco smoking was to be banned.
The bill was discussed at the plenary session of Azerbaijan’s Milli Majlis (parliament), put to the vote and adopted at its first reading.
The chairman of the parliament’s Labor and Social Policy Committee Hadi Rajabli was said to have provided information on the bill, which he described as being in line with ‘social demands’.
He told parliament that 67.5 percent of men and 52.5 percent of women suffered from tobacco dependence.
“It is intolerable that this all leads to drug addiction, which causes discontent in society” he said.
“I am glad that the draft law has also been discussed in the press and the society appreciated it,” he added.
However, the mood wasn’t totally anti-tobacco. The committee chairman noted that interest in Azerbaijani tobacco had increased abroad, and that the adoption of the new bill did not mean that less tobacco would be produced in the country.
May 17, 2017
Local grievances in Zambia
A local cigarette manufacturer in Zambia says the government needs to stop the smuggling of cigarettes into the country so as to promote local industry, according to a story in the Zambia Daily Mail.
Roland Imperial Tobacco Company’s (RITCO) general manager Aliport Ngoma said the prevalence of smuggled cigarettes on the Zambian market was very high, which meant that local producers were robbed of market share and the government was robbed of revenue.
Ngoma said that about 15 percent of cigarettes on the Zambian market were smuggled into the country.
“There is need for all stakeholders, including the Zambia Revenue Authority and Zambia Police, to tackle this matter seriously,” he said.
“As RITCO, we are ready to co-operate with all stakeholders in curtailing this matter, which poses a great danger to industrial growth and economic growth,” he said.
Ngoma urged the government also to come up with policies to support Zambian-owned companies “that have to play catch-up with multinationals”.
RITCO, which is said to have invested more than US$20 million at its facility in Makeni, now plans to invest up to US$80 million and create 2,000 jobs in the Lusaka South Multi-Facility Zone.
“It is our hope that government will provide incentives for local processing of tobacco and discourage export of Zambian tobacco without value addition, once these facilities become available in Zambia,” he said.
Meanwhile, Ngoma complained that some chain stores were biased against locally-produced cigarettes. “It is very difficult to get shelf space in these stores, let alone have locally produced cigarettes accepted for sale in these chain stores, for whatever reason,” he said.
May 16, 2017
Good prices in Andhra
Flue-cured leaf tobacco prices at auctions in the Indian state of Andhra Pradesh have been running high so far this year and sales have been progressing briskly, according to a story in the latest issue of the BBM Bommidala Group newsletter
After about 40 days of marketing, the story said, 21.57 million kg of tobacco had been sold for an average of Rs145.53 a kg.
The top price had been Rs174 per kg.
Bright grades were fetching Rs158.38 per kg while medium grades were selling for Rs138 per kg.
Earlier this year, growers told the Tobacco Board that the average price should not go below Rs135 per kg if they were to ‘scrape through this year after two successive years of heavy losses’.
The Board was urged to ensure that growers received Rs160-170 per kg for bright-grade leaf and at least Rs120 per kg for low grades.
The Farmers’ Association said that the Board should take into consideration the challenging conditions under which the crop was raised – conditions that included a prolonged dry spell.
Andhra’s crop is expected to total about 105 million kg this year, well short of the 130 million kg that were authorised.
According to the Indian Tobacco Association, the total crop is expected to comprise 40 percent bright grades, 25 percent medium grades, with low grades making up the remainder.
May 15, 2017
Zimbabwe prices down
Flue-cured tobacco prices in Zimbabwe are so far running at two percent below those of 2016, according to a story by Michael Tome for the Zimbabwe Daily.
The Tobacco Industry Marketing Board (TIMB) reported that after 36 days of sales, ‘at least’ 104 million kg of tobacco had been sold through both the contract and auction systems for US$293 million.
The average price of US$2.81 was down from US$2.87 in 2016.
Meanwhile, the TIMB said that daily deliveries of tobacco had increased to four million kg from three million kg earlier in the sales season.
In February, the Zimbabwe Farmers’ Union said it expected flue-cured tobacco prices to be ‘favorable’ this year.
The quality of the crop was said to be excellent and so grower prices, which were said by buyers to be based on quality, should be excellent also.
At that time, growers believed that prices ranging between $4.00 and $5.00 per kg would be favorable.
Such prices, they said, would allow them to break even and to continue producing flue-cured tobacco next season.
In 2015 and 2016, the average price paid to Zimbabwe’s flue-cured tobacco growers was about $2.93 per kg.
So far this year, Zimbabwe has earned US$214.7 million exporting 45.6 million kg of flue-cured tobacco at an average price of about US4.70.
May 12, 2017