Tobacco farmers pay up 28 per cent on good rain

BAT Kenya chairman George Maina
From left: BAT Kenya chairman George Maina, CEO Beverley Spencer-Obatoyinbo and finance director Sidney Wafula during the release of the first half of 2018 results. PHOTO | SALATON NJAU | NMG 

Tobacco farmers affiliated to BAT Kenya have thanks to good weather earned Sh1.49 billion from produce this year representing a 28 per cent rise from 2017.

BAT Sunday said the leaf delivered by 5,000 farmers, mainly in Migori, rose by 27 per cent to about 8.8 million tonnes during the season that ended in May, from 6.9 million tonnes delivered in 2017.

The rise in payments will come as a respite to the producers, a significant number of whom have been shifting to other crops citing lower earnings.

“It has been a very positive production year for the farmers. They met our forecasts for the crop with the good rains this year,” said BAT chief executive Beverley Spencer-Obatoyinbo.

Last year, the payments had fallen to a four-year low of Sh1.16 billion due to a combination of drought and floods that hit the quantity and quality of the tobacco.


BAT said as a result, up to 2,210 contracted farmers in western, Nyanza and eastern Kenya whose crop was affected by harsh weather received Sh79.5 million in compensation for crop losses.

The company did not disclose the per-kilogramme price breakdown for the different grades of tobacco. It on Friday announced improved profits as a result of the higher production.

Net profit for the half-year to June 2018 rose by 3.4 per cent to Sh2 billion compared to Sh1.94 billion a year earlier as sales jumped 1.93 per cent to Sh17.4 billion.

Shareholders have been paid an interim dividend of Sh3.50 per share, unchanged from the same period in 2017.

The firm has, however, been experiencing a tougher operating environment due to tighter regulatory controls and a rise in excise duty.

This has reflected in the performance of its share at the Nairobi Securities Exchange, where it has shed 21 per cent in price to Sh600, having opened 2018 at Sh760.

Part of the decline, analysts have said, is due to the apparent shift from a policy of paying 100 per cent of its net earnings as dividends. In the year ending December 2017, its total dividend payout stood at Sh26 a share or Sh2.6 billion total, equivalent to 79 per cent of net earnings of Sh3.3 billion.