Trade ministry probes tobacco firm over marketing malpractices
Nov 11, 2007
MARKET INTELLIGENCE<br><br>THE trade ministry is investigating Uganda Leaf Tobacco Company Ltd for engaging in marketing malpractices.
MARKET INTELLIGENCE
By Stephen Ilungole
THE trade ministry is investigating Uganda Leaf Tobacco Company Ltd for engaging in marketing malpractices.
The ministry is furious that the firm contravened the Tobacco Control and Marketing Regulation 1996 by buying tobacco leaf in Kibaale district from farmers sponsored by Continental Tobacco (U) Ltd, a rival company.
“This office has received allegations suggestive of the fact that your company has been involved in marketing malpractices by buying tobacco from farmers in Kibaale district where you have only been introduced to conduct feasibility studies but have not been issued a Tobacco Buyers’ Certificate.
“It is further alleged that in Kyebando Unit, you bought tobacco at night without issuing receipts.
“The details of this allegation will be brought to the attention of the tobacco inspecting officer who will conduct an investigation and furnish this office with the required information before any measure can be taken,†D.E Oule, the commercial desk officer in charge of tobacco, wrote to Uganda Leaf Tobacco Company Ltd on behalf of the trade ministry’s permanent secretary.
Investigations have shown that Continental Tobacco (U) Ltd sponsored farmers in Kibaale to grow an estimated 650 tonnes of dark fire tobacco for export.
However, the company only bought 200 tonnes in October after the farmers sold the bulk of the tobacco leaf to third parties.
Uganda Leaf Tobacco Company Ltd has not sponsored any farmers to grow the dark fire tobacco in Kibaale.
Investigations also established that the company issued and circulated tobacco price list for the dark fire tobacco to Continental Tobacco (U) Ltd-sponsored farmers, contravening the law. The regulation is stringent on rogue practices in the marketing of the tobacco crop.
According to the regulation, no person can carry out tobacco buying activities without a valid certificate issued by the trade commissioner. The regulation also provides that “No person shall purchase any crop from a grower with whom he has no subsisting sponsorship agreement.â€
It also bans the transportation and storage of any crop that the buyer has not sponsored or does not belong to him or his employer.
Where a person is found in possession of a crop purchased contrary to the provisions, such a person shall surrender the tobacco crop to the lawful sponsor.
The legal sanctions also include cancellation of the certificates. Continental Tobacco (U) Ltd has demanded that the commissioner takes action against Uganda Leaf Tobacco Company Ltd and impound the tobacco purchased from its farmers to instill discipline in the industry’s players and for the stability of the market.
“Lack of discipline will otherwise lead to instability and uncertainty. This will have a spiral effect on the farmers, who will bear the brunt of suffering uncertain prices, poor markets and unstable production. It is in light of this scenario that the commissioner should take a firm action against Uganda Leaf Tobacco Company Ltd,†an industry player argued.
Uganda Leaf Tobacco Ltd is a subsidiary of the multinational Universal Leaf Tobacco.
It was not possible to get a comment from the local representatives because they could not pick their landline phones.
By Stephen Ilungole
THE trade ministry is investigating Uganda Leaf Tobacco Company Ltd for engaging in marketing malpractices.
The ministry is furious that the firm contravened the Tobacco Control and Marketing Regulation 1996 by buying tobacco leaf in Kibaale district from farmers sponsored by Continental Tobacco (U) Ltd, a rival company.
“This office has received allegations suggestive of the fact that your company has been involved in marketing malpractices by buying tobacco from farmers in Kibaale district where you have only been introduced to conduct feasibility studies but have not been issued a Tobacco Buyers’ Certificate.
“It is further alleged that in Kyebando Unit, you bought tobacco at night without issuing receipts.
“The details of this allegation will be brought to the attention of the tobacco inspecting officer who will conduct an investigation and furnish this office with the required information before any measure can be taken,†D.E Oule, the commercial desk officer in charge of tobacco, wrote to Uganda Leaf Tobacco Company Ltd on behalf of the trade ministry’s permanent secretary.
Investigations have shown that Continental Tobacco (U) Ltd sponsored farmers in Kibaale to grow an estimated 650 tonnes of dark fire tobacco for export.
However, the company only bought 200 tonnes in October after the farmers sold the bulk of the tobacco leaf to third parties.
Uganda Leaf Tobacco Company Ltd has not sponsored any farmers to grow the dark fire tobacco in Kibaale.
Investigations also established that the company issued and circulated tobacco price list for the dark fire tobacco to Continental Tobacco (U) Ltd-sponsored farmers, contravening the law. The regulation is stringent on rogue practices in the marketing of the tobacco crop.
According to the regulation, no person can carry out tobacco buying activities without a valid certificate issued by the trade commissioner. The regulation also provides that “No person shall purchase any crop from a grower with whom he has no subsisting sponsorship agreement.â€
It also bans the transportation and storage of any crop that the buyer has not sponsored or does not belong to him or his employer.
Where a person is found in possession of a crop purchased contrary to the provisions, such a person shall surrender the tobacco crop to the lawful sponsor.
The legal sanctions also include cancellation of the certificates. Continental Tobacco (U) Ltd has demanded that the commissioner takes action against Uganda Leaf Tobacco Company Ltd and impound the tobacco purchased from its farmers to instill discipline in the industry’s players and for the stability of the market.
“Lack of discipline will otherwise lead to instability and uncertainty. This will have a spiral effect on the farmers, who will bear the brunt of suffering uncertain prices, poor markets and unstable production. It is in light of this scenario that the commissioner should take a firm action against Uganda Leaf Tobacco Company Ltd,†an industry player argued.
Uganda Leaf Tobacco Ltd is a subsidiary of the multinational Universal Leaf Tobacco.
It was not possible to get a comment from the local representatives because they could not pick their landline phones.