BAT Indonesia provides loans to tobacco farmers
BAT Indonesia provides loans to tobacco farmers
JAKARTA (JP): Publicly listed cigarettemaker PT British
American Tobacco (BAT) Indonesia expects to provide a total of Rp
1.9 billion (about US$253,000) in loans to tobacco farmers in
Lombok, West Nusa Tenggara.
Company president Mark Anthony Jennings said on Tuesday that
the funds would be channeled to 615 growers in 15 districts in
Lombok under the company's partnership program.
He said the company's well-established connection with banks
allowed BAT Indonesia to obtain loans on behalf of the tobacco
growers.
"The company acts as a loan settlement agent, whereby the
loans are repaid through the growers' sales of their tobacco to
BAT Indonesia on an agreed price calculated based on the
tobacco's quality," he said in a ceremony marking the tobacco
harvest in Lombok.
Corporate communications manager Anton Susanto said the
partnership, in which BAT acts as loan settlement agent, was
started in 1976. But he said the company would mostly fund this
year's program on its own because of high bank interest rates.
"It is likely that the loans to be disbursed this year will
come from our pockets again since the interest rates offered by
local banks are still too high for farmers," he told The Jakarta
Post.
"Last year, local banks were reluctant to provide loans due to
high interest rates set by the government. Farmers faced
difficulties to obtain credits to finance their farming
activities.
"So we decided to provide loans from our own money with
interest rates far below the rates offered by banks."
He refused to disclose the amount of loans distributed to
farmers last year.
Jennings said one of the most important aspects of the
partnership was the company's role as a market guarantor, whereby
the company purchases its partners' entire tobacco crop.
He explained that with the partnership scheme, the tobacco
growers were ensured market guarantee for their harvest crop, and
eliminating their concern about securing the necessary funds in
order to resume their farming activities.
Jennings said the market and purchasing guarantee from BAT
Indonesia removed uncertainty for the farmers and the risks from
withholding their stocks indefinitely while awaiting a price
increase.
Within the partnership scheme, BAT Indonesia acted as a
technological facilitator by providing efficient technology.
He added that the company also played an important role in
planning tobacco farmers' annual production targets based on the
projected market potential and the farmers' farming capacity.
"The partnership has reaped mutual benefits, both for BAT and
our partners, the growers," Jennings said.
Listed on the Jakarta Stock Exchange, BAT is one of the
country's oldest cigarette producers, commencing operations in
1917. It remains one of the market leaders in the regular
cigarette sector with brands including Lucky Strike, State
Enterprise, Express 555, Kent, Benson & Hedges, Ardath and
Commodore. (gis)