BAT takes a hard line on debtor farmers (fwd)

[Robert Weissman <rob@essential.org>]

BAT takes a hard line on debtor farmers
by Robert Wafula
Source: Daily Nation, Tuesday, 9/7/99

Tobacco farmers countrywide who are contracted to British American Tobacco
(K) and have not serviced loans amounting to Sh120 million ($1,585,204)
will from next season be disqualified from the facility.

The firm says it plans to use means at its disposal, including legal
action, to recover the money, which was advanced to the farmers.

Some of the farmers have violated the regulations governing the
sub-sector, which BAT says has hampered its operations in recent years.

The regulations, which were gazetted in 1994 after the sector was
liberalised, prohibit other parties from buying tobacco from farmers they
did not sponsor under the Crop Production and Livestock Act.

The Act partly states that, prior to entering into a sponsorship
agreement, a sponsor shall ensure that the proposed farmer has no
outstanding debts secured on a crop grown or to be grown under a different
sponsorship agreement.

It adds that no person shall purchase any crop from a farmer with whom he
has no subsisting sponsorship agreement, or shall transport or cause to be
transported any other crop than grown under their sponsorship or that of
his employer.

Despite the Act being in force, BAT (K) has ended up incurring massive
losses through unscrupulous deals where some of its farmers have involved
themselves in deals with middlemen, who buy the crop from the fields at
night, according to BAT's leaf export and services manager, Mr Francis
Kimondiu.

Mr Kimondiu told BusinessWeek last week, after chairing a one-day seminar
of BAT leaf technicians that farmers who have defaulted on loans had hurt
BAT's operations.

The seminar was held to map out strategies for the next season and was
held at the Bungoma Tourist Hotel and attended by the divisional leaf
manager, Western region, Mr John Mudinyu, and the Eastern Africa regional
director, Mr Patrick Rose.

Mr Mudinyu, who is in charge of Bungoma, Tees, Mt Elgon and Busia, said
that about 3,000 farmers in his region will earn Sh200 million
($2,642,007), less than in the previous season when they got Sh300 million
($3,963,011). He said that farmers will earn less because of crop disease
and poaching of the crop by their rivals. Mr Kimondiu warned of stern
measures the company would take to recover its money.

Bumula Member of Parliament Lawrence Sifuna has supported the move and
vowed not defend the defaulters "when the long arm of the law catches up
with them". "We have to be fair to each other because if someone has
advanced you farm inputs, it's a right for him to recover it," he said.

The law maker said that for a long time, tobacco farmers in the district
had been paid promptly whenever they delivered the crop, unlike their
counterparts who grow cane. He said tobacco farmers must be honest.

Though BAT is set to act swiftly, Mr Kimondiu said those farmers who have
been faithful and consistent in their supply of the crop to BAT and were
affected last year following the outbreak of the viral crop disease would
not be given special consideration.

Mr Kimondiu said although last season's target was 7.8 million tonnes of
tobacco, only 4.2 million tonnes were netted, a factor he attributed to
disease and poaching.

Most of the farmers, he said, failed to follow tobacco farming
instructions from the field staff, creating room for the spread of
diseases. After harvesting the crop, the farmers must uproot everything
and leave the farms fallow, he said. He said agriculture officers and
field staff would be on the look out next season to avoid a repeat.

A cross-section of farmers interviewed felt that it was not fair for some
of their lot to create a bad relationship with BAT which, they, had been
supporting them every year and appealed to the BAT management to soften
its stand on those who defaulted, as they looked for ways of paying the
money.

According to statistics obtained, 92 per cent of the total crop was
produced by 58 per cent of the active farmers, while 42 per cent of the
contracted farmers never delivered. Mr Kimondiu told farmers who have
already sold their crop to middlemen and were willing to pay to do so
before the firm acted against them.