Morogoro — THE tobacco sub-sector in the country faces many challenges which, once addressed, the crop that currently leads others in foreign exchange contribution may have better yields and thus perform better.
Group Legal and Corporate Affairs Director of Tanzania Leaf Tobacco Company (TLTC) and Tanzania Tobacco Processors Limited (TTPL), Mr Richard Sinamtwa mentioned some of the challenges in his presentation to Morogoro Regional Commissioner Joel Bendera during his visit to TPPL.
He said the sub-sector was plagued by multiple taxes such as those 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 named another sub-sectoral problems as failure of the crop to access the American market under Africa Growth Opportunity Act (AGOA), owing to harmonised tariff schedule of 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 Dar es Salaam Port resulting in prioritising handling of loose cargo and fuel against tobacco containers and other goods.
"This results in unnecessary delays on the crop's export chain, hence highly impacting on shipment booking arrangements," he noted.
Other TPPL challenges include unreliable power supply resulting in production losses owing to down time as they frequently run the factory on standby generators, making primary processing less efficient.
He said another challenges are security of supply of the tobacco crop, which was partly threatened by crop supply and demand measures spearheaded by World Health Organisation's Framework Convention on Tobacco Control (FCTC), including advocating alternative crops.
According to Mr 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 transport is normally cheap but it is currently very unreliable. Road transport is to some extent reliable, but comparatively expensive," he noted.
Mr Sinamtwa named the companies' achievements, including fixed assets, which rose from 15.6 million US dollars in 1997 the time when they took over the now defunct Tanzania Tobacco Authority to 57 million US dollars in 2012, an increase equivalent to 276 per cent.
Also the corporate taxes' contribution rose from 1.7bn/- in 2008 to 2.2bn/- last year, whereas 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 counselling for HIV/Aids.
Morogoro Regional Commissioner, Mr Joel Bendera vowed to work on challenges facing tobacco production by engaging relevant authorities, saying part of his mission and vision was to eradicate them, as tobacco as well as those 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.
"I congratulate you for excelling in creating employment to our people, otherwise without you all might have been jobless," he said.
Bendera also congratulated the companies for having a 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 said under a new initiative of the Big Result Now, the government was keen to improve the port of Dar es Salaam as well as revamp both the Tanzania Zambia Railway Authority and Tanzania Railway Limited.
"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.
The Managing Director of the two companies, Mr 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 among many good things coming in the sub-sector," he said.