According to media reports from Nation Africa on May 27th, British American Tobacco Kenya (BAT Kenya) recently raised the price of tobacco leaves to nearly 200 Kenyan shillings per kilogram (approximately $1.5). This price increase aims to address the issue of declining numbers of contracts being signed with farmers.
The latest data shows that despite the number of growers falling below 2,000 for the first time, this tobacco manufacturer has increased the payment price per kilogram by 5% to 198.75 Kenyan Shillings in the fiscal year ending December 2023 (compared to 189.2 Kenyan Shillings the previous year). The decrease in the number of contract farmers in western Kenya has put pressure on British American Tobacco.
The total number of tobacco farmers for the British American Tobacco company last year was 1,672, a decrease of 19.7% from the previous year's 2,083. This means the company has lost approximately 67% of its 5,000 farmers over the past five years, with this shift being facilitated by anti-tobacco lobbying organizations.
Last year, British American Tobacco paid a total of 954 million Kenyan shillings (approximately 7.17 million USD) to farmers for a price of 198.75 Kenyan shillings per kilogram of tobacco leaf, marking the second consecutive year that the total payment was below 1 billion Kenyan shillings. In 2022, the total payment amounted to 946 million Kenyan shillings (approximately 7.11 million USD).
The amount of tobacco leaf delivered to British American Tobacco has been decreasing for four consecutive years, dropping from 8.9 million kilograms in 2019 to 4.8 million kilograms last year, marking the first time in about a decade that it has fallen below 5 million kilograms. British American Tobacco has been steadily increasing the price of tobacco leaf, reaching 198.75 Kenyan Shillings per kilogram (approximately $1.49) last year, surpassing 170 Kenyan Shillings (approximately $1.27) since 2022. The price in 2017 was 118.70 Kenyan Shillings per kilogram (approximately $0.89).
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