ALLIANCE ONE ZAMBIA

ALLIANCE ONE ZAMBIA
4th October 2013
Who are we?
• Alliance One is a publicly listed tobacco merchant
listed on the NYSE
• We do not manufacture cigarettes. We buy and
process “green” tobacco for onward sale to
cigarette manufacturers.
• In Zambia we sponsor approximately 8,000
farmers producing of 3 different types of tobacco:
• Flue Cured. Cured in barns using heat
• Burley. Air Cured
• Dark Fire Cured (smoked)
Flue Cured Tobacco
Approximately 3,000 sponsored
growers in Zambia. Main Production
areas. Choma, Kaoma, Kabwe,
Mkushi, Serenje and Eastern Province
Zambia National Crop
Approximately 25 million kgs
Grown in Zimbabwe, Zambia
Malawi, Kenya and Tanzania
Burley
Approximately 4,000 farmers
sponsored. Zambian
production based in Eastern
Province
Zambia National Production
in the region of 10 miilion
Kgs this year.
Grown in Malawi, Mozambique
Zambia, Zimbabwe and Tanzania
Dark Fire Cured
Approximately 850 growers.
Grown in the Mukonche area
And around Lundazi
Zambia National Production
Approximately 800 t. Grown
In Malawi and Zambia
Industry trends
• Manufacturers putting pressure on old
traditional auction systems. No traceability
• Growers have to be registered with company
for traceability purposes
• Strict focus on Social Issues – Child Labour,
reforrestation, pesticide useage, land
degradation and pollution
Sustainability issues
• Population growth – land for food crops
• The need to make a living and to lift people out
of poverty.
• Firewood for curing fuel.
• Approximately 18 cubic meters of wood require
to cure 1 ha (ton) of tobacco. Improved curing
barns can cut this by 60%.
• Trees cut to build barns and for domestci use.
• Farmer training. Not just tobacco but other food
crops.
• Rate of deforrestation estimated at approx
250,000 ha/anum (“UN Redd”) Tobacco useage
equivalent to approx 4-6000 ha/anum
Farmer income
• Alliance One have set up a training Academy
in Mkushi. Each trainee is growing 1 ha
tobacco, 1 ha maize, 1 ha soyabeans and 3.5
ha trees. Currently 15 students.
• Results. Tobacco Sales Kw 35,282 Costs 5,687
• Maize Sales Kw 5,088 sales Costs Kw 3,362
• Soya beans Sales Kw 1,178 Costs Kw 3,521
Deforestation
• Twin track approach needed
1. Reduce consumption (improved curing facilities)
2. Farmers to plant trees for fuel wood
3. Live barns for burley curing
• Problems.
1. Lack of interest in planting trees. Farmers see
trees all around them
2. Weak regulatory enforcement
3. No security of land tenure
Possible solutions
• Large maintained woodlots but this is not ideal.
Expense, distance from consumers etc
• Security of land tenure. Politically difficult
• Stronger government enforcement of environmental
policies
• Traditional leadership to enforce local regulations
• Use of Carbon Credits to pay farmers for growing
trees ie make them a crop