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December 29, 1999
Tobacco Companies Betray American Tobacco Farmers
A recent report reveals that tobacco farmers are in crisis, not because fewer people are smoking
but because manufacturers are taking their business elsewhere.
SocialFunds.com --
As if cigarette companies do not already have enough enemies among litigating consumers, public
health activists, and investors, they have created bitter adversaries among the farmers that supply
them with raw materials. A report titled "False Friends: The U.S. Cigarette Companies' Betrayal of
American Tobacco Farmers" criticizes the industry's move to grow more tobacco overseas, sacrificing
the economic well-being of American farmers and their communities.
 American tobacco farming is in crisis today
according to the report, sponsored by the American Heart Association, the American Cancer Society
and the Campaign for Tobacco-Free Kids. The number of small family tobacco farms has declined from
more than 500,000 in the 1950s to fewer than 85,000 today. Purchases of U.S.-grown tobacco leaf are
down, farming costs are up, prices are not keeping up with inflation, and grower incomes have
shrunk steadily.
Tobacco companies have long been the vilified subjects of shareholder
activism and avoidance screening by social investors, due to the negative social impact of their
products. More than 400,000 people die annually from smoking-related diseases in the U.S., and
foreign markets are growing, promising more fatalities worldwide. Only recently has attention been
given to the impact of the industry on tobacco farmers, who have historically been regarded with
little sympathy as accomplices, but this report brings their disturbing economic reality to light.
One would hope that the root of this crisis for tobacco farmers is a reduction in
domestic demand, and in fact tobacco companies have asserted that this is the case. But foreign
markets are booming, and the report finds that U.S. cigarette companies have sought to increase
profits and cut costs by moving their operations abroad, relying on less-expensive foreign labor
and cheap foreign-grown tobacco. Companies have aggressively financed the development of new and
cheaper foreign sources of tobacco to replace U.S. growers.
"This report shows that
tobacco manufacturers have relentlessly pursued profit at the expense of the American tobacco
farmer," said M. Cass Wheeler, CEO, American Heart Association. "For years, tobacco manufacturers
have tried to blame the plight of the American tobacco farmer on declining smoking rates. The
problem is clearly coming from the manufacturers. They are raking in billions of dollars in
profits...profits that are made off the backs of cheap labor in foreign countries."
For
instance, since 1980 the U.S. share of global tobacco exports has been cut in half, to less than 11
percent. Since the 1960s, the percentage of American-grown tobacco used in American-made cigarettes
has declined from about 90 percent to less than 60 percent. So less U.S. leaf is being used in both
foreign and domestic products. Today, nearly 90 percent of all American-style cigarette tobacco is
now grown by foreign farmers in at least 78 countries.
Since 1995, Philip Morris, R.J.
Reynolds, and British American Tobacco have established manufacturing capacity in Switzerland,
Hungary, Tanzania, Poland, Cambodia, Viet Nam, Mexico, Romania, Russia, Bulgaria, Ukraine, China,
and elsewhere, subsidizing growers their with loans, fertilizers, technology, and training.
Accordingly, exports of U.S.-made cigarettes now account for significantly less than one-fourth of
all U.S. company brands sold overseas and have declined about 30 percent since 1996.
But
while U.S. cigarette companies' profits have soared since the 1980s, due to increased foreign
markets and domestic price hikes, U.S. tobacco growers' profits have stagnated or declined. For
example, from 1985 to 1998, Philip Morris' annual profits from cigarettes have roughly tripled, to
$6.5 billion. Between 1980 and 1998, the cigarette companies' share of every dollar spent on
cigarettes in the U.S. increased from 36 cents to 49 cents, while the growers' share declined from
7 cents to less than 2 cents.
The impact of the companies' actions on tobacco growing
families and communities would be familiar to anyone concerned about the responsibility of
corporations to the communities that support them. But in addition to detailing the results of
cigarette company actions, the report describes a growing alliance between U.S. growers and the
public health community to address their common concerns. This alliance may seem like strange
bedfellows, but the decisions of cigarette companies have made them natural allies.
"Today, growers and the public health organizations are actively working together in the
tobacco states to direct tobacco settlement funds both to reduce tobacco use and to provide
transitional aid to growers and tobacco-dependent communities," said Wheeler. "We hope this report
will set the record straight on the problems of the American tobacco farmer and help us continue
the public health community's dialogue with growers on how to break their dependence on tobacco."
While drawing attention to the disloyalty of cigarette companies to U.S. growers and their
communities, this report also expresses hope for growers in finding alternatives with their new
allies that are economically viable. Among the possibilities are developing alternative,
non-harmful uses for tobacco plants, such as bio-engineered medical products, and adopting state
and regional plans to assist growers to make successful transitions to alternative and
supplementary crops.
©
SRI World Group, Inc. All Rights Reserved.
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