Jim Schneeberger, global business relationship director of Alliance One International and its predecessor companies, will retire on April 3, after 27 years of service. Schneeberger has served in several business relationship management positions throughout his career, most recently leading the Philip Morris International Global BRM team. Graham Kayes will take over the Philip Morris International Global responsibility in the interim.
Tag: alliance one international
Alliance One is helping Kenya reverse deforestation.
By Robin Sutton Anders
The lush forests that once spread across Kenya’s landscape are now vanishing at an alarming rate. While environmental impacts of deforestation border upon dismal, the lack of trees also threatens the entire country with drought.
Today, the Kenyan government seeks to save its country’s green by constitutionally mandating an increase in forest cover from its current 1.7 percent to 10 percent by 2030, and Alliance One International is stepping in to help. As an independent leaf tobacco merchant that purchases tobacco in more than 45 countries—with a strong network of flue-cured growers in Kenya—Alliance One has good reason to accept the challenge.
“We would like to de-link tobacco from any form of deforestation and to sustain the environment in our growing regions,” says Francis Chege, deputy managing director of Alliance One Kenya. “Our main focus is to progressively reduce the use of firewood used for curing tobacco and ensure the wood that is used originates from a sustainably grown source. We believe this can be achieved through commitment and collaboration with the national government and other stakeholders.”
Starting with a program that helps growers cure their tobacco with sugarcane waste material instead of wood and continuing on to a reforestation program that has resulted in the annual planting of 4 million trees, Alliance One’s work has met with growing success—and has received international acclaim.
Innovation from within
Alliance One’s first reforestation strategy calls on the region’s surrounding crops. The idea of bagasse briquetting, or using a sugarcane waste product to produce a combustible wood alternative, was originally brought to management’s attention by Valentine Ogongo and James Gichuche in the company’s agronomy department.
“One of our core values is to ‘pursue innovation and excellence,’ and this stood out as an obvious example,” says Chege. “We immediately approached local sugar factories to get their buy-in. Then the Kenya management team presented a proposal to our corporate office, which immediately approved the initial investment for the test phase.”
The concept behind substituting traditional wood in tobacco curing barns is simple: Unlike wood, where one piece can burn differently from the next, briquettes burn uniformly. “Tests have proven that briquettes can be used as a fuel replacement without affecting the quality of a tobacco leaf in a flue-cured curing barn,” says Chege. “The controlled flame—and temperature increase—actually gives the farmer more control, resulting in a steady tobacco cure.”
And while briquettes can be constructed from many biomass materials, including dust, rice husks and coffee husks, Alliance One used sugarcane because bagasse has a high calorific content. “That means fewer briquettes are required to cure a hectare of tobacco in a barn, compared to other products,” explains Chege.
Plus, three sugar factories operate in Alliance One’s growing area, so the crop presents a viable long-term sustainable source of raw material. “The strong sugarcane farmer base helped us to get the briquettes to tobacco farmers quickly to replace the wood required as the standard fuel for curing,” Chege says.
Additionally, bagasse briquetting offers a sustainable solution for the disposal of sugarcane waste. “Until the idea of briquetting started three years ago, the sugarcane factories used a small volume of bagasse waste to fuel their boilers, and the excess was disposed of at a cost,” Chege says. “But now, there is a commercial value attached.”
He adds that not only do the briquettes save farmers money, they also save on the amount of time growers spend cutting, transporting, splitting and stacking firewood. “The briquettes are delivered to the farmers by the company. The farmers have not had to make any changes to existing barns, as briquettes are cut to the right size from the factory to fit the furnaces in their current state,” Chege says.
Bagasse integration, however, is not without its “teething problems”—the phrase Chege uses to describe the challenges faced by Alliance One. “The challenges were mainly technical in nature,” he explains. The first of which is sugarcane’s composition: If not decomposed, the large, fibrous form of bagasse can quickly degrade machines.
To discover how to most effectively preserve its machinery, Alliance One conducted extensive tests to see how production could be improved to accommodate bagasse’s stringy makeup. “We found that after breaking down the size of the material using a hammer mill, production increased by around 25 percent, and the machinery experienced less trauma,” Chege says.
The transition from firewood to briquettes also required buy-in from the farmers. “Their main concern was in storage of the briquettes,” says Chege. “Briquettes easily disintegrate if exposed to wet conditions, and therefore have to be stored in-house or under an enclosed shed. We put in a condition that farmers must provide storage to qualify for use of briquette.” Chege says farmers were willing to provide the infrastructure in exchange for the cheaper and more efficient fuel alternative.
“We can confidently affirm that, having seen the cost-cutting and reduction in labor days, the farmers are now accepting the new concept,” says Chege. After having gone through the initial trial of running bagasse through briquette machines, Alliance One is comfortable with expanding its investment and commitment.
During the project’s test phase, which ran from January through August 2013, Alliance One saved 2,666 trees through the production of more than 200 metric tons of briquettes from bagasse. And that’s just the beginning, says Chege. “Our intention is to expand our investment in briquetting plants from curing 50 percent to 100 percent of the Alliance One portion of the current 12 million kilos [of] production volumes by 2015,” he says.
In this first year of full production, Alliance One hopes to produce about 7,500 metric tons of briquettes, enough to cure 1,664 hectares of tobacco. If that figure were realized, the company could spare 40 hectares of trees in the first year alone.
“The introduction of a briquetting plant was an expensive venture in terms of cost,” Chege says. “However, the long-term savings far outweigh the costs.” If the company meets its eventual target of 34,944 tons of briquettes each year, then 186 hectares, or 465,919 trees, would be preserved.
While environmental sustainability was the original target, Kenyan farmers have also realized the added benefit of significant savings to their operations. To cure one hectare of tobacco with wood costs growers $610, whereas to cure the same amount with briquettes only costs $418.
Alliance One believes this project will also have a significant impact on household energy requirements by providing an alternative fuel for domestic cooking and heating. “The more bagasse being used, the less pressure on forests since households will not have to cut trees for their domestic needs,” says Chege. “That alone would go a long way in helping the country achieve its target of 10 percent land cover under forest by 2030.”
Alliance One International employs a robust agronomy department that includes professional agronomists, foresters and technicians who work directly with farmers to aid in another of the company’s missions: to plant 4 million trees a year.
“The reforestation program started in 2003,” says Chege. “To date, we have planted over 30 million trees, with 23 million surviving.”
AOI Kenya manages 22 nurseries across the country. To ensure its reforestation target is met, the company sells the seedlings from these nurseries to tobacco, commercial and independent farmers at 2 cents each. “We also donate tree seedlings to schools, government institutions and non-cultivated government areas for reforestation.”
Not only does the program get the government closer to its target, it also helps growers from a financial perspective, as they have the availability of tree seedlings to grow as a cash crop or for domestic use.
Alliance One’s tree experts offer specific guidelines to growers for how to select the type of tree seedlings, how to plant the seedlings, how to care for them during the rainy season, how to determine the appropriate fertilization regimen and how to effectively apply certain pesticides. “This is in order to achieve self-sufficiency for tobacco at the same time, assisting with reducing domestic consumption,” says Chege. “The program has been very well received by farmers as a continuous sustainable wood source.”
Alliance One may still be in the initial roll-out phase of the bagasse project, but the company is already looking ahead to solar energy-assisted curing barns. “These curing barns are currently in the research and development stage,” says Chege. “One of the initiatives is the ongoing conversion of conventional barns to more efficient rocket barns in order to reduce curing’s fuel usage.”
According to Chege, the company is also partnering with a nongovernmental organization to introduce energy-saving cooking stoves and solar lamps for lighting within its farming communities. “Through commitment and collaboration with the national government and all other stakeholders—and by investing in reforestation—we not only protect the future viability of the tobacco crop, but we also help protect the natural resources and biodiversity of the country.”
Pieter Sikkel will become president and chief executive officer of Alliance One International on March 1. Sikkel is currently the company’s president and a member of its board of directors. Mark W. Kehaya, currently chairman of the board of directors and interim CEO, will continue as nonexecutive chairman of the board of directors and will assist in the transition.
“This transition in leadership marks an end to our significant restructuring that began in December of 2010, and the company once again has a firm foundation. We want to thank Mark for his leadership and efforts in driving the restructuring and the refocusing of the business,” said William Sheridan, lead independent director.
“The board of directors and I are extremely pleased to appoint Pieter to the role of president and chief executive officer,” said Kehaya. “Mr. Sikkel has served Alliance One and predecessor companies for over 30 years as China country manager, Asia regional director, executive vice president [of] business strategy and relationship management, and most recently as president of the company and a member of the board of directors.
“Pieter’s exceptional experience, strategic insight and extensive industry knowledge make him well positioned to lead our global team, both to continue and expand on the company’s key initiatives and innovations, and to further strengthen the company’s market position by delivering additional value to our shareholders, customers and growers. I would personally like to thank all of our employees for their efforts, loyalty and talents that they have brought to bear during the last two years.”
“I’d like to thank Mark Kehaya for his excellent work leading the restructuring of the company,” said Sikkel. “As a result of his efforts, Alliance One is in a substantially stronger position to address the varied challenges and opportunities of this industry.
“Alliance One remains firmly focused on both the present and the future. From seed, through leaf and sales, we are committed to supplying the product type and quality that our customers require, to providing the highest quality service, and to being the lowest cost supplier in every market in which we operate.
“In addition, through our continued emphasis on agronomy ingenuity, we remain focused on improving farmer income and sustainable global supply security. We have also instituted programs that are targeted at reducing operating cycle and improving financial metrics, and through such initiatives are seeking to create and capitalize on opportunities that should enhance shareholder value.”