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Tobacco and the Third World
See what tobacco means for the people living in underdeveloped countries.
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Tobacco Companies Profit at the Expense of Farmers
In a number of developing countries, tobacco companies provide farmers with loans of equipment and technical assistance. Many of these farmers find themselves heavily in debt to the companies and, since the companies control the price of tobacco, are unable to extricate themselves from tobacco cultivation. In Brazil, for example, officials predicted in 1998 that approximately 35% of the tobacco growers would finish the harvest owing more money to the companies than they earned. The companies are "strangling the growers," according to a local official. "Each year they come up with a new way to squeeze the growers tighter."
Between 1990 and 1998, Philip Morris's international tobacco profits more than tripled, from $1.3 billion to $4.97 billion. At the same time, tobacco company executives have seen their salaries soar. In 1999, Philip Morris Chairman Geoffrey Bible collected $20.6 million in salary, bonuses and stock options. Tobacco farmers for the most part have not shared in this wealth. In 1998, the average U.S. tobacco farm had a net income of only $19,597.
From 1980 to 1998, the tobacco growers' share of each dollar spent in the United States on a pack of cigarettes dropped from 7 cents to about 2 cents, while the cigarette companies' share increased from 37 to 49 cents. Since then, the tobacco growers' share has shrunk even further, while the cigarette companies' share continues to grow.
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Case Study Brazil
Brazil is the world's largest exporter of tobacco. Two U.S.-based companies, Universal Corporation and Diman Inc., have contracts with nearly half of Brazil's tobacco farmers, while Souza Cruz, a subsidiary of British American Tobacco (BAT), contracts with most of the rest. Farmers must sign a contract in advance promising to sell their crop only to one company and then are legally bound to purchase seeds, fertilizers and pesticides from that same company. The companies determine how much land will be cultivated and how much of each type of fertilizer and pesticide must be used. Company inspectors make regular visits to the farms to make sure their guidelines are being followed. Even though Brazilian leaf sells for about half the price of U.S.-grown leaf, this has not satisfied the companies. In the past, prices for different grades of tobacco fluctuated according to supply and demand. Following a growers' strike in the late 1980s, however, the companies "tightened the pricing noose" by banding together. In an effort to keep production costs even lower, the tobacco companies now "decide prices among themselves, and punish growers heavily should they decide to sell elsewhere. The big companies join together to estimate the growers' cost of production plus a modest margin. To help enforce their control, the companies hold back a share of the farmer's payment until the entire harvest is delivered." Farmers who try to withhold their crops over disputes often have their crops seized by the police acting on behalf of the companies.
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Other Issues
Child Labor: Although the tobacco sector is not unique in its use of child labor, the rigors of working the tobacco crop places the health and physical development of children at risk. The use of child laborers in tobacco production is widespread in the major tobacco-producing countries, including Argentina, Brazil, China, India, Indonesia, Malawi, the United States and Zimbabwe. In Brazil, for example, some 520,000 children under the age of 18 work on tobacco farms, 32% of whom are younger than 14. Those companies (mostly foreign) that purchase Brazil's tobacco have reportedly asked that school schedules be rearranged so that children will be available to work in fields.
Health Hazards: In many countries, people working in the tobacco fields are continually exposed to dangerous agro-chemicals, many of which are provided directly by the tobacco companies. An instruction leaflet given to tobacco farmers in Kenya, for example, includes the recommendation that during the three-month period from seedbed to transplanting, there should be 16 separate applications of pesticides.
The risks begin during the preparation of the soil, where highly toxic fumigants such as methyl bromide are often used to kill nematodes and other soil organisms. During the course of cultivating the crop, tobacco workers are directly exposed to chemicals such as aldicarb, butralin, and endosulfan, which can cause damage to eyes, skin, and internal organs, and are potentially carcinogenic and mutagenic. Exposure to these chemicals poses a considerably higher risk to children than adults since exposure in early years can lead to a greater risk of cancer, damage to the child's developing nervous system and immune system dysfunction.
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