BAT offers farmers Sh200 per kilo to stem mass exit
British American Tobacco (BAT) Kenya Industrial Area plant.
BAT Kenya has raised tobacco leaf prices to nearly Sh200 a kilo in a bid to rein in a sustained drop in the number of contracted farmers.
Latest disclosures show the cigarette maker raised the pay per kilo by five percent to Sh198.75 in the financial year ended December 2023 (compared to Sh189.2 the prior year) even as grower numbers fell below 2,000 for the first time in years.
The fall in the number of contracted producers, mainly in western Kenya and who numbered over 5,700 a decade earlier, has coincided with a fall in the amount of tobacco being supplied to BAT, putting the company under pressure.
The firm has been responding to this decline through different initiatives such as offering free tobacco seedlings, fertiliser and personal protective equipment as well as encouraging crop diversification by issuing farmers free or subsidised maize and avocado seeds to plant and earn an extra income without abandoning tobacco.
1,672 farmers
BAT closed last year with 1,672 farmers, a 19.7 percent drop from 2,083 in the previous year, meaning that it has lost about 67 percent of the 5,000 farmers it had five years earlier.
Many tobacco farmers, mainly drawn from Bungoma, Busia, Migori and Homabay, have been transitioning to alternative high yielding crops like beans and maize with help from anti-tobacco lobbies.
BAT’s Sh198.75 per kilo paid to farmers last year amounted to Sh954 million, marking the second straight year that the payout is below Sh1 billion. Total pay in 2022 was Sh946 million.
The amount of tobacco leaf delivered to BAT has declined for the fourth straight year, coming from 8.9 million kilos in 2019 to 4.8 million last year to mark the first time in about a decade that the number has dropped below five million kilos.
Hybrid tobacco seed varieties
BAT has been increasing the prices per leaf, hitting Sh198.75 last year, having crossed the Sh170 mark in 2022. The price per kilogramme was Sh118.70 in 2017.
It has also introduced ‘Thrive’, a global initiative that was rolled out by its parent company, BAT Group, in 2016 to make tobacco farming attractive.
BAT Kenya used the programme to introduce hybrid tobacco seed varieties to enhance crop yield and disease resistance. The firm has also introduced low-cost technology, including the use of mechanised ploughing and ridgers, as part of efforts to cut costs and maximise returns for farmers.
