Iringa District Commissioner Richard Kasesela
Tanzania’s tobacco sector is in peril with international stakeholders threatening to boycott the country’s product citing environment degradation issues.
As such, tobacco growers and other stakeholders are urged to implement environment conservation initiatives particularly reforestation and afforestation to lure back the market.
Reforestation refers to establishment of forest on land that had recent tree cover, whereas afforestation refers to land that has been without forest for much longer
Addressing a stakeholders’ meeting on Monday in Morogoro Region, Iringa District Commissioner Richard Kasesela said the derictive on environment conservation comes from the Director of the Tanzania Tobacco Board Winfred Mushi based on a report from international tobacco buyers who have threatened to stop purchasing Tanzanian tobacco if no efforts are taken to conserve the environment.
Kasesela said the stakeholders, including banks, tobacco buyers and farmers, must allocate tree planting areas instead of leaving the task to farmers alone. He also advised the board to explore the possibility of using coal instead of firewood in drying tobacco.
Opening the conference earlier on, Minister of Agriculture, Livestock and Fisheries Mwigulu Nchemba advised buyers of the crop to recognise the crucial part played by small scale farmers and to pay them aptly and that way support their the fight to end poverty.
Nchemba said tobacco is vital for the country’s economy and that for the past 10 years it has greatly contributed to the government coffers, however the minister did not offer any figures to quantify tobacco’s contribution to the economy.
“There are challenges facing the crop including poor system of securing agro inputs and poor participation of stakeholders in the development of the crop but the government is working to address these hurdles,” he said.
“It is crucial to support development of the crop because the country has already signed an agreement to sell tobacco to China among other places,” said the minister.
In 2013, the Tanzania Leaf Tobacco Company (TLTC) had outlined multiple challenges currently facing the sub-sector, which had led to the traditional cash crop’s decline in fetching foreign exchange.
The TLTC’s and Tanzania Tobacco Processors Limited (TTPL) Group Legal and Corporate Affairs Director, Richard Sinamtwa unveiled the challenges in a presentation when he visited the then Morogoro Regional Commissioner, Joel Bendera.
One of them, he said, was a the multiplicity of taxes such as the crop cess paid to district councils at farm gate price, a service levy paid to municipal councils, where processing factories are as well as corporate tax, all on the same leaf.
“This is one and the same crop from the farm to the factory being charged more than one levy, rendering the crop less competitive in the global market,” he noted.
He cited another sub-sectoral problem as failure of the crop to access the American market under Africa Growth Opportunity Act (Agoa), owing to harmonised tariff schedule in the US, which imposes prohibitive tariff rate, quotas (TRQ) on certain agricultural goods, including sweetened cocoa, peanuts, sugar and leaf tobacco.
“TRQ permits a specified quantity of goods to be imported at duty free or reduced rate for a certain period, quantities in excess of the quota are subject to significantly higher rates of duty,” he noted, asking the RC to liaise with the Ministry of Industries and Trade in effort to enhance market diversification to the Agoa market.
Other challenges in the sub-sector include insufficient capacity of the port of Dar es Salaam, resulting in prioritising the preferential handling of loose cargo and fuel against tobacco containers and other goods.
“This leads to unnecessary lengthy time on the crop’s export chain, hence highly impacting on shipment booking arrangements,” he said.
Further, TPPL faces unreliable electric power supply which subsequently causes production losses owing to down time as they frequently run the factory on standby generators hence making primary processing less efficient.
Security of tobacco supply was partly threatened by crop supply and demand measures spearheaded by World Health Organisation’s Framework Convention on Tobacco Control (FCTC), and advocating alternative crops.
According to Sinamtwa, the sub-sector was in dire need of rail transportation especially ferrying the crop from production zones to the Morogoro-based processing facility as well as the Dar es Salaam port.
“Rail is normally cheap, but currently very unreliable. Road transport is to some extent reliable, but comparatively expensive,” he noted.
However, Sinamtwa mentioned some of the companies’ achievements, including fixed assets, which rose from USD15.6 million in 1997 the time when they bought a defunct Tanzania Tobacco Authority to USD57 million in 2012, an increase equivalent to 276 per cent.
Aside from that, corporate taxes’ contribution rose from 1.7bn/ in 2008 to 2.2bn/- last year while Stakeholders’ dividends via tobacco trust rose from 104m/- in 2008 to 165m/- last year.
He said the companies also offered health services to all employees at their clinic, which was also the centre for treatment and counseling HIV/Aids.
On his count, Joel Bendera Bendera vowed to address the challenges facing tobacco production by engaging relevant authorities, saying part of his mission and vision was to eradicate them, as well as impediments facing other sectors that contributed significantly to the national economy.
He congratulated the two companies operating in the region for becoming the employers of choice of 2,694 employees, out of the total 154 permanent and 2,540 seasonal employees.
Bendera also congratulated the companies for running well organised social responsibility programme that touches people’s lives through water, education and health, which for the past three years funded Morogoro-based projects at 180m/-
He noted that under the new initiative “Big Results Now”, the government was keen to improve the port of Dar es Salaam as well as revamp both the Tanzania Zambia Railway Authority (Tazara) and Tanzania Railway Limited (TRL).
“Under the new development, Morogoro is set to become another dry port, and plans are underway to set aside 500 acres of land for the same in either Mikese or Nanenane,” he said.
In his thanks-giving note, the Managing Director of the two companies, Paul Crossan, thanked the RC for his visit, saying it was timely and meant a lot to the sub-sector.
“We greatly appreciate for taking your time to come and listen to us.
We believe this is a new beginning of many good things to happen in the sub-sector,” he said.
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