* BATU accounts for about half of Uganda's tobacco output
* 2010 output seen down 8.2 percent
By Elias Biryabarema
KAMPALA, Nov 29 (Reuters) - British American Tobacco Uganda (BATU) expects its 2010 tobacco production to drop by 8.2 percent from last year's output, depressed by crop disease and pests, top company officials told Reuters on Monday.
Tobacco is one of the east African nation's important foreign exchange earners and BATU, which is listed on Uganda's bourse, is its biggest grower of the narcotic leaf, producing about half of the country's total output.
BATU's managing director, Alain Schacher, forecast the company would produce 18,000 tonnes of tobacco this year, down from 19,600 tonnes in 2009.
"Unfortunately we had some adverse conditions this year. We had a disease problem in our main area of growing, West Nile, and that means we'll not be able to achieve last year's volumes," he said in an interview.
The company's agronomist, Robert Bakyalire, said their crop had been attacked by tobacco mosaic, a viral disease that turns leaves pale-green and lightens their weight, and nematodes, which chew through the roots making the plant dry prematurely.
BATU, a unit of British American Tobacco typically accounts for about 70 percent of Uganda's exports.
Some 12,000 hectares of east Africa's third-largest economy are planted with tobacco, grown by an estimated 50,000 farmers. Schacher said BATU was trying to help farmers control the disease.
"The disease doesn't affect the tobacco in terms of quality but the yield is affected. We're encouraging famers to ... apply the right chemicals that we supply them and this will mitigate the risk in future," he said.
Schacher said the company would not recover all the loans it had advanced to farmers, to help compensate for the reduced yields.
Contract tobacco farmers are normally offered credit by companies to purchase fertilizer, seedlings and other vital farm supplies. The loans are recovered from their tobacco sales. (Editing by Richard Lough and Erica Billingham)