How Uganda’s thriving tobacco withered and went up in smoke

At the peak of production in 2013, tobacco leaf was one of Uganda’s biggest foreign exchange earners, raking in $120 million in exports revenue and employing over 75,000 farmers who were producing about 18,000 tonnes per year.

Started in the 1920s by British American Tobacco (BAT), tobacco farming and the entire industry was so vibrant that in 2012, British American Tobacco Uganda (Batu) — the biggest exporter of Ugandan leaf at the time — invested about $1 million in its central purchasing point in Hoima, Bunyoro sub-region, an area that had 15,000 of Batu’s 30,000 contracted farmers.

In the same year, BAT Group also relocated its regional headquarters for leaf operations for eastern Europe, the Middle East and Africa, from South Africa to Uganda.

Following this move, in 2013 Batu earned about $60 million from exporting tobacco leaf and paid $21.7 million to the Ugandan government in taxes, which made the company one of the top 10 taxpayers in Uganda.

Downward spiral

However, with campaigns against tobacco growing and consumption and Uganda’s 2015 passing of strong control laws — such as banning of direct advertising and an increase in taxation — the industry went through a downward spiral.

In 2014, Batu ceded its tobacco leaf operations in the country to Alliance One International and decided to concentrate on its cigarette business arm.

Between 2017 and 2019, NIMA Tobacco Company, Continental Tobacco and Tropical Leaf Company failed to pay a total of $3 million for the tobacco leaf they got from farmers in the Bunyoro sub-region, one of the areas where many farmers grew tobacco.

The farmers subsequently took the tobacco companies to court. The government has since denied the three companies’ licences to contract farmers for tobacco growing in the area.

However, other new players, such as Alliance One Uganda, Global Leaf Holdings, Meridian Tobacco and Uganda Tobacco Services, have operations in the area, but output has since dropped to an all-time low.

By 2020, less than 10,000 tonnes of tobacco leaf were produced across the country, and annual revenue from exports had fallen from $120 million in 2013 to $49.7 million.

In mid-western Uganda, where 7,000 tonnes of tobacco used to be produced per year, King Solomon Gafabusa Iguru of Bunyoro-Kitara Kingdom was at the forefront of persuading farmers in Bunyoro’s Hoima, Masindi and Kiryandongo districts — the biggest producers in the country at the time — to switch to alternative cash crops because, among other reasons, he said the tobacco companies were exploiting them.

“The discouragement of tobacco growing started from the kingdom,” said Apollo Rwamparo, the second deputy prime minister of Bunyoro-Kitara Kingdom.

“In 2011, the king told his subjects that he no longer wanted them to grow tobacco because it’s a full-year occupation and yet it has many disadvantages.

“Tobacco growing was also the biggest child labour employer and yet the entire process is toxic, which put the children at the risk of getting health complications such as heart and lung diseases.

After going through all this, the farmers were paid little.

Mr Rwamparo said that the kingdom also discouraged tobacco-growing because, by keeping farmers busy with one commodity all-year-round, food crop production was negatively impacted and the region faced food insecurity.

Geoffrey Ozuma, a crop scientist at the National Agricultural Research Organisation (Naro) in Hoima and a former tobacco farmer himself, said that many farmers were also discouraged by the declining prices.

“When companies such as Continental Tobacco and Link Tobacco Company came in, prices dropped because they started giving farmers inputs on loan and then set low prices for tobacco leaf. That uncertainty, coupled with rising costs of production due to increasing scarcity of essential inputs such as firewood, forced many farmers to give up,” he said.

Simon Abindu, who has been a tobacco farmer in Hoima for several years, says that in 2013 he used to earn up to $5,000 (Ush20 million) from his four-acre tobacco plantation. However, last year he was only able to earn about half of that.

“In the previous years a kilogramme of good quality tobacco leaf used to sell at no less than $2 (Ush7,000) but now traders pay $1.2 (Ush4,500) per kg,” he said.

His eight years of tobacco farming don’t seem to have paid off as he still lives in a grass-thatched house.

High production costs

Mr Ozuma said the cost of production of tobacco is so high that a farmer has to spend 50 percent of their total earnings.

“You spend at least Ush1,000,000 ($278) to earn Ush2,000,000 ($556), which is not so profitable considering that a season is one full year,” he said.

Falling prices aside, Mr Ozuma said he stopped growing tobacco because it was too labour-intensive, requiring him to work on only one crop before he could sell.

“The entire process — from making the nursery bed, transplanting, tending to the garden and fire-curing the tobacco after harvest — takes 11 months and a lot of resources. For instance, fire-curing alone requires about 20 cubic metres of firewood per acre,” Mr Ozuma said.

The 50-year-old said that he felt relieved when he started growing food crops such as beans, groundnuts and vegetables because they take only about two months to mature and they are not as labour-intensive as tobacco.

In the Bunyoro sub-region, tobacco has been grown for centuries.

“Some farmers came to me after they stopped growing tobacco asking me to find them buyers for their land, but I encouraged them to keep it and instead grow organic food crops such as avocado and also venture into bee-keeping.

“With an international airport now being constructed in Hoima, it will be easy for farmers here to export their food and earn more,” Mr Rwamparo said.

Some farmers started growing sugarcane, which seemed lucrative at the time. However, sugarcane has since become less profitable due to oversupply.

Henry Bihemaiso is a sugarcane farmer in Masindi district. He is one of those who are struggling to sell the crop.

“My three-acre plantation is now three years old, but the factory we sell to (Kinyara Sugar Works) is not buying,” he said.

“Sugarcane matures in 15 months and I would have cut it twice by now and earned at least $7,000 (Ush25 million).”

For a number of years, outgrowers have complained about the low prices offered by Kinyara Sugar Works. In March 2018, the company reduced the price of sugarcane from $39 (Ush141,000) to $22 (Ush82,000) per tonne.

Farmers suspended supply to Kinyara, but they did not have a ready alternative. The price later went up to $36 before it was dropped again in a notice issued on July 1, 2020, to $25 per tonne.

“The forces of demand and supply will chase them from sugarcane growing,” Mr Rwamparo says.

“The big sugarcane factories are now growing their own, so farmers will learn the hard way and give up. We don’t want to go out there again and discourage the growing of sugarcane because we could be viewed as an institution that is against government programmes.”