BAT Kenya has raised its spending on a kilogramme of tobacco to nearly Sh200 amid the sustained drop in the number of contracted farmers, pointing to its latest strategy to sustain the raw material for cigarettes.
The latest disclosures show the cigarette maker raised the pay per kilogramme by five percent to Sh198.75 in the financial year ended December 2023 (compared to Sh189.2 the prior year), even as the number of contracted farmers fell below 2,000 for the first time in years.
The fall in the number of contracted farmers, mainly drawn from western Kenya, is from more than 5,700 a decade earlier and has coincided with a fall in the amount of tobacco 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 extra income without abandoning tobacco.
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 Homa Bay, have been transitioning from leaf farming to alternative high-yielding crops like beans and maize in recent years, helped by projects backed by anti-tobacco crusaders.
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, reflecting the impact of the reduced number of farmers despite the rise in payout per kilo. 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 kilogrammes 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.
The decline means BAT’s effort to compensate for the reduced acreage under tobacco with increased production per acre is lagging.
Farmers ditching the crop—whose end product has been linked to increased risk of contracting life-threatening diseases such as cancer and heart diseases—are usually provided with farm inputs such as seeds and fertilisers by financiers like the UN-led Tobacco-Free Farms project.
BAT, desperate for the tobacco leaf, 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.
Apart from increasing the pay per kilo, BAT has been trying to counter the fall in the number of tobacco farmers through ‘Thrive’, a global initiative that was rolled out by its parent, 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, in bid to cut costs and maximise returns for farmers.
BAT has also been supporting farmers to diversify into other crops, without abandoning tobacco. The company last year, for instance, issued over 15,500 avocado seedlings to the contracted farmers, adding to the over 15 tonnes of maize seeds.
“The company will also facilitate survival monitoring of the avocado trees and market linkage upon harvesting,” said Crispin Achola, BAT Kenya managing director, in the latest annual report.
BAT further launched a Sh10 million three-year Rural Women’s Development Programme in which it seeks to promote rights and welfare of contracted female farmers in Oyani and Malakisi as well as support them on sustainable agriculture and business management.
