TOBACCO-INDUSTRY DOCUMENTS
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THE NON-GOVERNMENTAL
ORGANIZATIONS
PROGRAMME
A PRESENTATION
11 A, avenue de la Paix
CH-1202 Geneva (Switzerland)
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THE NON-GOVERNMENTAL
ORGANIZATIONS PROGRAMME
The Programme, created in 1986, falls within the
activities of the Centre for Applied Studies in
International Negotiations (CASIN), a non-profit
foundation based in Geneva, Switzerland. Its
objective is to contribute toward a better
understanding of non-governmental organizations.
OBJECTIVES AND NATURE
The Programme facilitates regular and immediate
access to public information and documents on
NGOs.
Through analysis and research, the Programme
aims at expanding knowledge on the objectives,
philosophy, policies, activities and structures of
NGOs. It examines their involvement in selected
issues and their interrelations with inter
governmental
organizations,
governments,
business and the public.
The Programme is furthermore conceived as an
independent platform where NGOs and other
international partners, such as governments, inter
governmental organizations, corporations and
trade-unions can engage in dialogue on issues and
policies.
The Programme is of a scientific nature and it
works in cooperation with academic institutions.
Its scope is predominandy international. Every
effort is made to safeguard its neutrality and
objectivity.
BATCo document for WHO 4 March 1999
ACTIVITIES OF THE PROGRAMME
Information
The Programme provides independent information
on NGOs and their activities in the form of:
- Monthly Information Digests, based on die
survey of recent documentation received (NGOs
occasional information bulletin, newsletters,
literature, etc.);
- Monthly Calendars of Conferences listing
meetings organized worldwide by NGOs or related
to NGOs’ major interests.
Analysis and Research
The Programme is primarily engaged in analysis
and research activities. So far, these activities
have concentrated on the phenomenon of NGOs in
general, and on NGOs’ involvement in areas such
as environmental protection, consumer issues,
health, biotechnology, development, indigenous
peoples and ethics.
The following
Programme:
material
is
prepared by
foe
- Monthly NGO Profiles providing detailed
information
on
selected
non-governmental
organizations (aims, structure, activities, etc.) in
foe form of fact sheets. More than 100 NGO
Profiles are available;
- Issue Profiles consisting in an overview of foe
debate on an issue and an analysis of foe positions
and foe activities of foe main actors, be they
NGOs or international organizations;
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- NGO Directories listing non-governmental
organizations active on a specific issue, describing
their activities, and explaining who is who and
who is doing what in relation to the issue;
- Occasional Reports on selected NGOs and inter
governmental conferences.
Dialogues
Dialogues are meetings which offer all concerned
parties, an opportunity to review together a
specific issue, define the problems at stake and
explore potential solutions acceptable to all.
Past Dialogues have focused on:
- Drug policy in developing countries: the role of
international organizations and the
pharmaceutical industry;
- The future of international codes of conducts;
- The role of NGOs in the international system;
- The regulation of transborder data flows;
- The international dimensions ofhazardous waste
management;
- Consumer education;
- The management of distribution, and use of
pesticides;
- Product safety;
- Church organizations' involvement in
international affairs;
- The release of genetically engineered organisms
in the environment;
- Consumers' attitudes towards biotechnology;
- Tree plantations: benefits and drawbacks;
- European advertising in the '90s: principles and
practices.
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documentation centre
The activities of the Programme are based on a
Documentation Centre which holds pubiidyavailable information on non-governmental
organizations, NGOs’ relations with international
organizations, and selected societal issues. The
Documentation Centre gathers information on over
thousand NGOs worldwide and over forty NGO
networks. It collects also information on major
inter-governmental organizations, with special
emphasis on interactions with NGOs.
Computer Database
The Programme is developing a database which
will contain public information on NGOs. On-line
access by the public is scheduled for 1994.
STAJTF
Franco isc Montant
Danielle Ecoffcy
Dominique CouMiral-CousUre
Fabienne B recto lini-Mu latero
Programme Manager
Programme Officer
Administrative Assistant
Documentalist
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The aim of the Centre for Applied Studies in
International Negotiations (CASIN), established in
1979 as a non-profit independent foundation, is to
assist international negotiators (diplomats, national and
international civil servants, union leaders, businessmen,
representatives of non-governmental organizations,
etc.), to develop new attitudes and new techniques: the
capacity to anticipate and to identify long-term
implications, the ability to grasp the meaning of
complex and widening contexts, the sensitivity to
perceive and understand the point of view of other
parries, the skill to develop innovative policies and
strategies and to present approaches for mutual gain.
The objectives of CASIN are also to contribute to
the discussions of complex and confiictual issues and to
facilitate the dialogue between stakeholders. CASIN
pursues this aim by organizing continuing education
and training programmes, issue and policy dialogues,
seminars, informal negotiations and research related
aaivities.
The Non-Governmental Organizations Programme
is a research, information and dialogue programme,
which falls within the aaivities of CASIN. The aim of
the Programme is to contribute toward a better
knowledge and understanding of NGOs and their
involvement in selected issues.
For further information, please contact:
Ms Franpoise Montant, Programme Manager
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Centre for Applied Studies
in International Negotiations (CASIN)
Ila avenue de la Paix
1202 Geneva 11
Telephone: (4122) 734 89 50
Telefax: (4122) 733 64 44
Telex: 412 151 (pax ch)
CENTRE FOR APPLIED STUDIES IN INTERNATIONAL NEGOTIATIONS
NGO PROGRAMME
ANNUAL MEMBERS’ MEETING
22 September 1993
Villa Rigot
9, av de la Paix 1202 Geneva
tel. 22/733 26 92 or 734 32 35
AGENDA
14:30 - 16:00
Non-Govemmental Organizations Programme:
Discussion on:
. the activities of the NGO Programme in 1992 - 1993
. the proposed programme of activities for 1994
. computerization of NGO datas and on-line access to
the Programme database
. budget and accounts for 1992
. proposed preliminary budget for 1994
16:00 - 16:30
Coffee Break
16:30 - 18:00
Non-Govemmental
(continued)
18:00
End of the Meeting
Organizations
Programme
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CENTRE D’tTUDES PRATIQUES DE LA NfcOCIATION INTERNATIONALE
CENTRE FOR APPLIED STUDIES IN INTERNATIONAL NEGOTIATIONS
LIST OF PARTICIPANTS
September 22-23, 1993
Roussel Uclaf
European Public Affairs
Ms Jill GATCUM
Unilever
Public Affairs
Mr Jean-Fran<?ois GAUUS
International Federation of Pharmaceuticals
Manufacturers Association - IFPMA
Director
Mrs Joy MANNERS
Shell International Petroleum Company Ltd.
International Affairs
Mr Alan PAYNE
International Primary Aluminium Institute
Secretary General
Ms Isobel NORWELL
British-American Tobacco Company Ltd.
Manager Corporate Communication
Ms Veronica ROY
Nestle
Corporate Affairs Department
Mr Otto WILDGRUBER
Siemens AG, Power Generation Group
Head of Public Relations International
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502571164
Mr Alain AUMONIER
CEPNI / CASIN
P»8» 2
Mr Jean F. FREYMOND
Director, CASIN
Ms Franqoise MONTANT
Programme Manager, CASIN
Ms Danielle ECOFFEY
Programme Officer, CASIN
Ms Dominique COUSSIRAT-COUSTERE
Programme Assistant, CASIN
Ms Samiha RAZA
Rapporteur
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LIST OF MEMBERS OF THE ISSUES AND NGO PROGRAMME
As of January 1st, 1993
BRITISH AMERICAN TOBACCO
Ms Heather Cooke
Information Officer
Mr Brendan Brady
Manager
Public Affairs
W
BRITISH PETROLEUM
Mr Charles Nicholson
Head of Corporate Affairs
CIBA-GEIGY A.G.
Mr F41ix Nicolier
Project Leader
Gba-Ceigy Foundation
EUROPRAXIS
Mr Jean-Pierre Hulot
President
HEINEKEN
Mr J.C. Banz
Director
Public Affairs
INTERNATIONAL FEDERATION OF
PHARMACEUTICALS MANUFACTURERS
ASSOCIATION - IFPMA
Mr Jean-Francois Gaulis
Director
INTERNATIONAL PRIMARY ALUMINIUM
Mr Alan Payne
INSTITUTE - IP Al
Secretary General
MONSANTO EUROPE
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Mr Kenneth Baker
Director
Public Affairs Department
Mr Claude Weber
Department of Public Affairs
Director
NESTLE SA
Ms Veronica Roy
Issues Analyst
Corporate Affairs Department
L’OREAL
i
PHILIP MORRIS
♦
Mr Michel Gillet
Director
Scientific Relations
Ms Sunaina Virendra
Corporate Affairs
Philip Morris International
Ms Eva Montgomery
Documentalist
Philip Morris Europe EEMA
Ms Claire Marchand
Supervisor Information
Documentation
Philip Morris Corporate Services
and
ROUSSEL UCLAF
Mr Alain Aumonier
European Public Affairs
SANDOZ INTERNATIONAL AG
Mr Colin Preston
Assistant Vice-President
Corporate Communications
SHELL INTERNATIONAL PETROLEUM
Mr Keith Cook
Agricultural Public Affairs Manager
Ms Joy Manners
International Affairs
SIEMENS AG, KWU Group
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Mr Otto Wildgruber
Head
International Public Relations Dept.
UNILEVER
Ms Marion George
International Affairs Manager
Public Affairs Department
WASTE MANAGEMENT INTERNATIONAL Mr William Seddon-Brown
Director
European Government Affairs
ZENECA LIMITED
Mr Chris Major
Public Affairs Manager
ZENECA Group PLC
Mr J.F. Cheshire
Manager of Public Affairs Department
ZENECA Pharmaceutical
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1993-0S-ZS
03:5;
CENTRE NESXIATION GENBJE
4122 733 64 44
P.01
_____________ ____________ •__________
I
CENTRE D’tTUDES PRATIQUES DE LA NgOOCIATION INTERNATIONA I P.
CENTRE FOR APPLIED STUDIES IN- INTERNATIONAL NEGOTIATIONS
FACSIMILE TRANSMISSION
TO:
BAT
ATTENTION OF:
”s So’jh1*
|
J
Secr«tary of Mr Brindan Brady
FAX NUMBER:
FROM:
DATE:
0044784/448 391
CAS IN
25.8.1993
-tf‘
NUMBER OF PAGES (Including this one):
MESSAGE;
Further to your fax of today, we send you herewith
details about the procedure of the ECOSOC resolution
on tobacco.
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CENTRE FOR:APPLIED STUDIES nr< Sm^ATORAlh^
MIMOIANDUM
From:
C.A.S.I.N. NGO Programme
Date:
Concerns: ECO5OC Debatt on the Resolution on Tobacco or Health
Further to our fax about the debate on the multisectoral collaboration on tobacco or
health, we send you an outline of the discussions on resolution L 32 on 'Multisectoral
Collaboration on Tobacco or Health’ (which you received Last week). You will And also a
first list of amendments (see attachment 2) and a second list of amendments (sec
attachment 3) proposed for the debate with the names of the country which suggested the
amendments.
J
The procedure about L.32 has been the following:
1.
2.
3.
4.
the draft resolution has been introduced orally ar the plenary (22.7.1993) by its
"sponsor country
:
*
Australia, with the support of ’cd-sponsor countries’: Canada,
the United Kingdom and the USA. (see Attachment 1)
internal consultations took place between interested delegations which led to
several amendments to the draft resolution
the draft resolution and its amendments have been dismissed at the ’informal
consultations’. The informal consultations are private meetings where draft
resolutions and proposed amendments are discussed and agreed. Agenda item
relating to Tobacco was discussed (amongst other items) on July 28 and 29. This
procedure aims at relieving the plenary of long debates. All Interested member
states can participate to those consultations. For summary of debate, see below.
the agreed amended resolution is then transmitted to the plenary for the vote.
However, countries can still make statements on the text in the plenary.
The text of the resolution is then issued as an official ECOSOC resolution
y
i
I
We hope that this memo is not too confusing but we wanted to give you the main
details of the debate, the way it developed and the reasons behind the amendments.
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SUMMARY OF DEBATE IN THE INFORMAL CONSULTATION
list of countries which intervened in the debate:
Algeria, Australia, Austria, Benin, Brazil, Cuba, Germany, Malaysia, Mexico, United
Kingdom, USA, Zimbabwe, plus representative of WHO, Dr Maaza Bekclc.
Australia - as the main sponsor - actually introduced the Resolution to the floor.
However, the United Kingdom soon took over the leadership of the debate from
Australia.
On another hand, Cuba, without really opposing the Resolution, often interfered
proposing several amendments.
Headlines of the debate:
Between the informal consultation meeting of the 28th and that of the 29th, co
sponsoring countries agreed to reduce the number of amendments. Therefore, the second
list of amendments was informally accepted ar the informal consultation, except for two
main points (point 1 and 2 hereunder) and several other details:
1)
Cuba insisted on having a new preamble par. 8 (existing in the 1st list of
amendments) but which was withdrawn by the co-sponsors from the second list, for being
deemed “inappropriate". Cuba asked that "Indigenous populations and other populations
*
be mentioned. The reason for this request is that in Cuba, there is a use of tobacco which
should be taken into account and which is not linked to indigenous populations but rather
to a custom in Cuban population in general.
UK said that its delegation, together with a number of others, had some difficulties
with the amendment proposed by Cuba, considering it rather odd to single out certain
practices for certain groups, referring to the abuses that such practice entail (when we
think of drug abuse, for example).
Benin said that it had its own reasons for requesting the deletion of the terms "some
indigenous populations' which Is not acceptable for African countries.
Mexico, for its pan, in an effort towards a compromise, suggested the following
amendment to the Cuban amendment: instead of "should be respected”, he suggested
'should be duly taken into account'.
Then the UK, stressing that the Mexican was going in the right direction, suggested that
the text read as follows : "Acknowledging that cultural practices and customs relating to
the use of tobacco should be duly taken into account in developing multisectoral
approaches to the tobacco or health issues', which was agreed by all delegations.
1
50257 I 0 9
2)
The second point to raise difficulties is preamble par. 5 relating to the World
Bank. Cuba suggested to delete the whole par. Along the same line, Mexico, wondered
whether this Resolution had to do with financing or with health. They consider themselves
that the WB has nothing to do with health directly. As for the UK, they stressed that this
par. represents a factual statement (beginning with "Noting”), hence should not raise any
problem. It/Airjition, the text of the par. had been approved by the WB representative.
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Benin claimed that it is not up to the WB to deal with health malten and that it is not
serious that such a Resolution should refer to the WB. In their opinion, WB deals with
development above all. Benin, together with Malaysia and Zimbabwe proposed to delete
the whole par. Then Algeria made an interesting comment: they find it odd that, under
certain circumstances, it can be referred to the WB, whereas in others, it cannot,
depending on the interests at sake. They probably referred to past resolutions concerning
development issues where industrialized countries such as the UK wished to keep the WB
apart from the UN System. The USA emphasized that it was relevant to mention the
Breoon Woods institutions in the text of the Resolution as the Whole Resolution deals
indeed with ’Multisectoral Approach’. The UK then proposed the following compromise:
whereas they do not have any objection to the par. on the WB,1 in a spirit of compromise,
they accepted to delete the part of the text appearing between the two commas. All
delegations accepted this UK amendment
The term ’pandemic’ used in preamble par. 2 and operative par. 8 raised a nourished
debate. Both Benin and Brazil requested clarification on the very meaning and use of the
term. Benin wondered why ’pandemic" is used for tobacco when it is usually utilized
relating tn HTV. A3 for Brazil, he noted that it is incorrect to use the same term
("pandemic") for HTV and tobacco, taken into account that HIV is a virus, and tobacco is
a plant I He wondered if "pandemic"- might also be applicable
*
to alcohol 77 At the request
of the President of the consultation, the WHO representative (Dr Maaza Bckele) provided
the following explanation: "Pandemic" refers to a situation which affects every angle
country in the world. Following this explanation by WHO, Benin suggested to delete in
operative par. 8 the world ’global" judging it redundant
Finally, in preamble par. 4, Benin asked for clarification about the addition of the
expression "under the auspices of WHO' which they found ambiguous. In a humorous
tone, France answered that one thing was clear for sure, no post of under-secretary
general was to be created for Tobacco or Health. Cuba recalled that this par. had been
one of the most debated. The mention of WHO means that the 'focal point’ will be in
WHO and will coordinate the multisectoral approach. The President concluded that this
understanding could be agreed upon.
The final text was forwarded to the Plenary and adopted by the latter by consensus (see
attachment 4). Only two delegations made statements in the Plenary. The UK sated that,
despite their full support to the resolution, they had to withdraw their co-sponsorship ’for
technical reasons’. Brazil, for its part, expressed its gratitude towards those who worked
on this Resolution which gives a balanced approach to curbing demand which it sees as
the only way to limit tobacco consumption.
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ACTT-TTY REPORT
July 1994
ECOSOC
An interim report by the Secretary General on progress made in the implementation of
multisectoral collaboration on tobacco or health was given at ECOSOC’s Substantive Session
in New York, 27th June - 29th July. Copies of the full text are available from TDC but the
major points are summarised here.
The report provides an inventory of activities in the UN system as well as relevant other
intergovernment and non-govemment organisations in the area of tobacco or health and
concludes that a two prong approach - tackling simultaneously both the production side and
the consumption side of the issue - is essential. The UN focal point on tobacco or health is
stated to be “an ideal mechanism for ensuring that (the) multisectoral approach takes place in a
timely and effective way", noting that no single organisation can hope to achieve the goals of
Council resolution 1993/79.
However, further development of component action plans will depend upon the availability of
the necessary resources both within the participating organisations and within the focal point
itself for progress to be made Thus far, attempts to raise such funding from extrabudgetary
sources have not been successful. The report notes that unless such resources become
available "it is difficult to envisage a full and effective response to the resolution."
Of the 36 UN organisations and bodies contacted, 20 had been received by the focal point at
the time this report was prepared. Of these 20, six submitted individual plans of work (FAO,
ICAO, UNCTAD, UNICEF, UNIDO and WHO) and five (ILO, World Bank, UNICEF, the
International Trade Centre and the Department for Economic and Social Information and
Policy .Analysis of the United Nations Secretariat (sic)) "manifested a keen interest in co
operating with the WHO and the focal point..."
A number of other organisations and bodies (the Economic Commissions for Europe, Latin
America and the Caribbean and Asia and the Pacific, the International Maritime Organisation.
UNDP, UNEP, the United Nations Population Fund, the World Food Programme, and the
World Meteorological Organization), while supportive of the resolution, considered that the
scope of the work fell outside their areas of competence or that ±ey had neither the mandate
nor the resources to submit individual plans of work.
The response from the WHO outlined its plans for 1994 in the areas of national tobacco
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control, advocacy, and data centre activities, the latter including preparation of the first draft of
a world atlas on tobacco or health. It also cited the provision of assistance to ICAO (in
respect of the World Health Assembly’s call for a ban on smoking on international flights by
1st July 1996) and the World Bank (in implementing tobacco control activities as set out in its
World Development Report 1993: Investing in Human Health). The WHO will seek to
increase the number of countries with national programmes for the prevention and reduction of
tobacco use to 50 per cent of member States by the year 2000.
Work on-tobacco undertaken by the FAO fells into two broad areas: production and
marketing. It notes that it is unlikely that any single crop could replace tobacco as a
comparable income source and therefore a wide range of lesser cash crops have to be
considered to serve specialised market niches. In its response, the FAO suggested that the
focal point on tobacco or health should make concrete proposals for inter-agency consultation
and system-wide collaboration. Interestingly, it also asserts that multisectoral priorities may
have to take into account the fact that “poverty and malnutrition may be linked to greater
health risks for a larger number of people (particularly in developing countries) than tobacco”.
The FAO’s submission also included a position paper on tobacco cultivation. This was drawn
up some years ago and still serves as the current guidelines for FAO work in the sub-sectors.
This acknowledges that tobacco cultivation represents an important source of employment and
cash income in all countries where the crop is produced and that tobacco also represents a very
important source of tax revenue. Furthermore it asserts that tobacco cultivation in developing
countries may be of fundamental importance in achieving short- and medium-term
development objectives. “(T)he ultimate objective to reduce tobacco production is necessarily
a long-term process. Any rapid movement in this direction would not only be impracticable
but would probably lead to a serious dislocation of economic resources in the countries
concerned.”
Whilst restating its support for the WHO's efforts to discourage demand for tobacco, the
FAO’s position paper states that it cannot exclude recommending development of the
(tobacco) crop in such cases where the overriding economic considerations so warrant. In
cases where it is neither feasible nor acceptable to grow alternative crops, the FAO will,
wherever appropriate, recommend the possibility of producing mild leaf. The organization
“stands ready, subject to ±e availability of funds, to assist any Government that requests
investigation of the possibility of diversification from tobacco production."
Tne Secretary General's report noted that UNCTAD is in the process of preparing a report
concerning the impact of tobacco production on the economies of tobacco-producing
countries, in particular those that depend upon tobacco as a major source of income.
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(This is the paper being prepared by David Elliot in Geneva, to which the ITGA has
contributed information, and which we understand should be available by year end.) It will
deal exclusively with the economies of tobacco-producing countries and cover the following
areas:
(a)
production and export earnings, involving a detailed analysis of national and
global statistics of the tobacco sector,
(b)
income, employment and resources used in tobacco production and manufacturing;
(c)
government revenues from tobacco and subsidies for tobacco production.
UNCTAD also envisages, subject to the availability of extrabudgetary resources, to make a
contribution to the objectives listed in the ECOSOC resolution, particularly those concerned
with bilateral and multilateral coDaboration on agricultural diversification and the assistance of
“economies for which tobacco is a major export and where demand for their tobacco products
has decreased as a result of successful strategies for tobacco control".
The many UNICEF programmes that focus on children and youth in especially difficult
circumstances will continue to strengthen ±e components of their programmes that focus on
tobacco issues. It will continue to take advantage of opportunities for advocacy through the
Office of the Executive Director and through strengthening relevant sections of pubHcarions
that are produced and disseminated by UNIt.hU
*
and will be participating at the upcoming
International Conference on Tobacco or Health in Paris. It will continue its current strategy of
mobilising and linking with other organisations and identify new opportunities for
collaboration.
The UNIDO position on the reduction of tobacco production is based on the feet that tobacco
growing is just one component in an agro-industrial system and that any adequate alternative
must address all aspects of ±e entire system, including the marketing aspect. It suggests that a
comprehensive study on the impact of the “entire tobacco agro-industrial system" on the
economies of countries involved in its production should be undertaken. Phase 1 of such a
study should deal with the agricultural aspects of the tobacco industry and probabiy best be
undertaken by the FAO. Phase 2 should deal with aU aspects of the manufacturing industry
and would thus fall within the agro-based industries field of activities of UNIDO. It is planned
that UNIDO will discuss with the focal point in Geneva the preparation and implementation of
Phase I of such a study. With regard to Phase 2, UNIDO will prepare and submit to donor
countries a project proposal which will examine the impact of tobacco reduction on the GDP
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of selected tobacco growing and processing countries, with special emphasis on developing
countries. Phase 2 will also evaluate the impact of tobacco reduction in terms ofjobs and
taxes and “will propose practical alternatives in the area of high value-added agro-industrial
processed products”. Progress towards actioning the proposed study will, again be subject to
the availability of extrabudgetary funds.
At the present time. ICAO is complying with the request of its Assembly that the ICAO
Council intensifies its studies into the safety aspects of banning smoking on board aircraft
following its Secretary-General’s call on Member states to take steps to implement a smoking
ban on all flights by 7th December 1994 - the fiftieth anniversary of the signing of the
Convention on Civil Aviation. An analysis of the results of a questionnaire sent to all member
States should have been completed by May this year but the findings, if available, were not
included in the report. Notwithstanding this delay, ICAO is fully committed to the UN multi
sectoral collaboration on tobacco or health.
As a tripartite organisation (of workers, employers, and governments), ILO's contribution to
multisectoral collaboration would consist primarily in helping to make relevant information
available to workers and employers. It will not be submitting a specific work plan. UNESCO
noted that through its education programmes against drug abuse, including tobacco, it is ready
to co-operate with the focal point. The Statistical Division of the UN Secretariat (UNSTAT)
would “like to be actively involved in any multisectoral activities....with a view to further
developing that very important area of statistics" (on tobacco and smoking in their social and
economic context).
No reference is made to the submissions from either the World Bank or the International Trade
Centre.
The report lists 31 intergovernmental organisations and bodies of the UN which have been
contacted by the focal point of which 13 had replied at the time of the preparation of ±e
report. In general, it is claimed, the organisations contacted were supportive of the text and
objectives of the Council resolution 1993/79. (Since a significant majority of those contacted
had not replied, it is rather difficult to see how this conclusion is reached!). Fifty six relevant
non-govemment organisations were also contacted and replies received from 20-
Tne American Cancer Society, ASH. Association africain d’education pour le
developpement, Le Comite National franpais contra le Tabagisme. BASP. The
European Medical Association Smoking or Health. The International Committee
of the Red Cross, The International Council on Alcohol and Addictions, The
International Council of Jewish Women. The International Olympic Committee.
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IOCU, ISO, The International Society and Federation of Cardiology, IUAC,
The International Union Against Tuberculosis and Lung Disease, The NonSmokers’ Rights Association, The Women's International League for Peace and
Freedom Organization, The World Conference on Tobacco or Health, The
World Organization of the Scout Movement, World Vision International.
The Red Cross welcomed the adoption of the resolution but indicated that its mandate did not
include any specific reference to tobacco; ISO reported that contacts were made between the
WHO and ISO’s central secretariat in 1993 in order to establish co-operation and it also
suggested the appointment ofan ISO representative to the focal point at UNCTAD; the NonSmokers’ Rights Association stared that it was not currently in a position to commit itself to
additional collaboration and responsibility; World Vision International has taken a strong stand
on tobacco and is strongly opposed to the production, manufacture, sale and transportation of
tobacco related products, as well as to advertising, especially in developing countries.
Meeting with Raul Uranga (UNCTAD)
As head of UNCTAD's focal point on tobacco or health, Raul Uranga attended the ECOSOC
meeting to deliver his report on 27th July. At the ITGA’s request, and acting on its behalf
Lisa Eddington, of the Tobacco Growers’ Information Committee in Raleigh N.C., met with
Uranga in New York on the 29th.
Ar foe ECOSOC meeting Uranga was asked to trim his presentation to a mere five minutes.
This angered him and he was subsequently dismayed that not a single question was asked
following his presentation and before the assembly moved quickly on to an unrelated issue.
He has offered to send on a copy of foe final resolution, with which he seemed pleased, even
though it apparently directs him to continue working with “any countries which ask for his
help". It appears that funding to support additional work ax foe focal point cannot be provided
and for this reason UNCTAD's subsequent reports will be minimal
He was very impressed with the information provided to him by foe ITGA and said that he
reads and analyses foe reports with great care. Tobacco Trade or Aid? and Sustainable
Alternatives? were discussed at length. Whilst he appreciates the arguments made in Trade or
Aid?, he was critical of foe fact that the study focused only on developing countries and would
like to see a study on how developed countries have been and are threatened on social and
economic fronts by anti-tobacco activity. In particular, he suggested a study focused on
/...6
BATCo document for WHO 4 March 1999
-6-
the US tobacco industry - “a mature and thoroughly evolved industry" - since he believes that
it is the developed countries which are threatened most at this time.
Arrange wants very much to receive from the ITGA and other tobacco organisations around
the world information which contains “non-biased foots on tobacco and trade which are in the
form of raw data" and “not interpreted or filtered by any organisation"
Whilst he was very clear in his belief that smoidng is bad for health, he fully supports the
principle that tobacco is a legal product, although he insisted on calling it a drug. He was
found to be a very likeable person who takes a thirty balanced view of tobacco issues. He was
quite frustrated with the bureaucracy ofECOSOC and was not at all pleased about the way his
report was cut short and received no response from the audience. He said that he would very
much like to artend the tobacco congress ar TABEXPO which is scheduled to address many
international trade issues.
Tobacco Briefing
The first edition, on 1993 World Tobacco Production, has been received from the printers and
will be distributed shortly. The second edition, on tax changes in Canaria is to be printed later
this month and will be available for distribution during September.
Future Known Movements
16th - 31st August
Vacation
4th - 10th November
ITGA General Meeting, Tilsonberg, Canada
f
502570840
BATCo document for WHO 4 March 1999
Strange Bedfellov
GETTING HOODWINKEI
world’s tobhccp. growers-ihet-a '
senior delegation from,’-the '.
' World ileal®;digan^tiqrii/^B
(WHQTin Geneva to discuss the A gg
> long-term; prospects' of growers.' -;S|
and their ha tiontd.econotrues.......
Richard. Tate; president of..
the-/International^Tobacco
powers': Association, (ITGA)/' HB
Wud 33 million people; derive
>? together arise? We;ffope‘>l
that, the 'dialogue parted i
■ in Geneva will'continue/?;
7 For its part, WHoj
has called oh all tobacco ■:
v ' growers., to-back; its;ef ?
jg forts to give .the world ;
its first public health
M Treaty, the Framework.,
k]-:.Cohvention ort’TobaccO II AControl. ■;
.
-In 1993, Dr. Derek.;
■ Yach, the head of WHO's 1!
K ~ "Tobacco Free Initiative,-"
* y. told delegation of ITGA,;
E
Xi."WHO is not against to3 bated farmers, but as the
■ ' world's premier health
■ agency, WHO is commit
ted to addressing the to-
’ their livelihood from" tobacco
growing and early stages of its - .■88
. processing, mostly in the develdping world'.'''' . KaS
The ITGA was established
in 1984 to, bring together tobacco growers' associations
from all over the world.,Its 21 tSkx
members produce more than.
"80% of the world's interriahonally Traded tobacco.
“bacco epidemic." • ■
Yach chaired the meeting between public health
"The case put to WHO was that it must take into
account the impact of its Tobacco Free Initiative and professionals and the association in Zimbabwe. He in
the Framework Convention on Tobacco Control upon vited the organization to work with WHO, the World
farmers, their families, communities, and national Bank, and other international agricultural agencies to
economies," he said. "The grower economies are not explore long-term options for what is curiously called
WKcessarily the consumption economies."
"crop substitution."
WHO Director-General Dr. Gro Harlem Brundtland
Tate said ITGA gave its full support to WHO's
'ocus on eliminating malaria and HIV/AIDS. "Many also has identified global tobacco control as one of her
of our members are from developing countries and major priorities.
She said the Framework Convention, the world's
know the suffering and distresses caused by both dis
eases," he said. "This is the type of fundamental public first multilateral convention focusing specifically on a
public health issue, would deal with a range of tobachealth campaign that we applaud.
"In Zimbabwe, for example, tobacco farmers have co-related issues, but it would also ensure that individ
set up one of the most extensive HIV/AIDS prevention ual countries are "protected from the impact of multi
programs in rural areas. Without their action, there national tobacco companies."
Yach told the delegation that tobacco multination
would have been few resources available to combat
als were shifting their focus to developing countries.
this terrible scourge.
"Although it may be difficult for WHO to align it "WHO cannot simply stand by and count the dead,"
self with ITGA, the [United Nations] body can be as- said Richard Peto, scientific advisor to the Tobacco
I sured of our support should the opportunity to work Free Initiative.
78
April 1999
International Tobacco Growers Association -Secret documents
1- December 1988: MEMO from G. Bible (now CEO)
PM #2021596422 to 202159643
To:
Distribution Attached
From:
Geoff Bible
Subject:
Corporate Affairs Conference / Action Plan
Date: December 13,1988
Confidential
Schedule of issues / responsibles party I timing of plan
1)
WHO/UICC/IOCU Initiative
This organization has extraordinary influence on government and consumers and we must find a way to
diffuse this and re-orient their activities to their prescribed mandate. In addition, we need to think
through how we could use our food companies, size, technology, and capability with governments by
helping them with their food problems and give us a more balanced profile with the government than
we now have against WHO’s powerful influence.
2)
18)
Our tactics are the same old tactics that have not proved to be very convincing or successful. We need
new thinking, lateral thinking and new ideas.
ILO:
The aim is to inhibit incorporation of ILO into WHO Anti-smoking program
Action: Take urgent steps to contact Worker/Employer leaders of these groups in the ILO Governing
Body.
19)
LIBERTAD:
a)
2.
The discussions here reminded me of the 5% and 3% levy on tobacco sales in Victoria and
South Australia to be used to buy out tobacco sports and cultural sponsorships. This emerged
from WHO’s program. This is a very effective strategy that we must stop. The question is
how?
January 1989: Options are written down
PM #2021595895 to 2021595905 Date 1989-01-30
OPTION 1 - Mobilize Global Agro-Lobby
1.1 Programme Goals
1.1.1
1.1.2
1.1.3
1.1.4
1.1.5
1.1.6
1.1.7
1.1.8
Create global organization
Organize regional lobbies
Fund central executive
Set Communications material
Create propaganda material
Manage political education
Develop Third World economic cases
Link agriculture lobby with other programmes
1.3 Benefits?
1.3.1
1.3.2
1.3.3
Purity of agro-lobby
Power of agro-constituency
Useful Third World Bias
OPTION 2 -Manage F.A.O. Lobby
2.1 Programme goals
2.1.1
2.1.5
2.1.6
Split F.A.0./W.H.0
Destroy crop subsitution myths
Focus on Third World
2.2 Possible structures
2.2.1
2.2.2
Infotab sub-group
I.T.G.A.
2.3 Benefits?
2.3.1
Counter W.H.O. crop propaganda
OPTION 3 - Attack WJ1.0.
3.2 Possible structures
3.2.7
I.T.G.A./agro-lobby
OPTION 4 - Negotiate with W.H.O.
4.1 Programme Goals
4.2 Possible structures
4.3 Benefits?
3.
4.1.1
4.1.2
4.1.3
4.1.7
4.2.1
4.2.2
Reduce dialectic tilt
Defuse peripheral activists
Create climate of progress
Major on real issues (e.g. children)
Infotab
Third-party institution
4.3.4
Improve industry image
November 1989: inter-office correspondence
PM # 2023270378 to 2023270380
Philip Morris International inc, inter-office correspondence
To:
Mr. Frank Resnik
November 9, 1989
From: John Dollison
Subject: Infotab Meeting - November 8, 1989
WHO Action Plan
The plan was approved including a one year trial of the proposed publication
Tobacco Action Plan
The plan was approved , a CEO should be appointed to the ITGA by early 1990 and the Global Issues
Working Party (GIWP) are to prepare a program for each company to assist in recruitment of member countries.
The group will also develop a plan to develop a plan to enlist die support of the Central Banks of tobacco
growing countries.
Seventh World Conference
The GWIP is to prepare a proactive program inclusding the ITGA, Smokers’ clubs, etc. to address the media
from the conference.
4.
1990: Strickly confidential PMI Corporate Affairs Action Plan 1990
PM #250019979 to 250019999
PMI Corporate Affairs Action Plan 1990
Strickly confidential (handwritten note)
Anti-tobacco network
Question WHO strategy on tobacco
>
>
>
>
>
>
>
>
>
>
Publicize FAO papers on tobacco
Publicize ILO papers on tobacco
Identify expert spokespeople on FAO/ILO study and prepare media plans
Encourage membership of ITGA to assist relationship with FAO (prepare list of target countries)
Test WHO regions office support on WHO priorities in Latin America
IF WHO regional office strategy is successfill in Lation (sic) America, apply in Africa, Philippines and
India i.e. encouraging WHO to redirect its priorities to its original mandate
Request GAO to review U.S. funding priorities of WHO
Work with selected journalists to question WHO priorities, budget, role in social engineering, etc. prior to
WHA May 1990 meeting
Prepare program to address April 1990 conference on smoking and health including ITGA, expert
spokespeople selected journalists, libertad conference
Aproach allies in large growing countries to raise questions about WHO priorities eg. Latin America
Tobacco Council, Minister of Health of Malawi
Examine activities of IOCU
>
>
Organizae international agricultural campaign including health and nutrition, tobacco impact, tobacco trade
Establish ‘think tank’ to develop strategies on WHO/IOCU including consideration of conference on
priorities, extremism
Infotab
International Tbbacco Information Centra
FAX
Tot
Board Members
From:
John Bloxcidge
Ref:
International Tobacco Growers' Association (ITGA)
Date:
11th October, 1988
The following proposal is supported by Lester Pullen/ and is
recommended to you for urgent approvali
1.
INTRODUCTION
1.1
We need to develop the agriculture lobby.
Its
"integrity" and independence are of great potential
value, both at NGO and regional level.
1.2
We must ensure that the growers stick to politics, and do
not eeek to use the global organisation to gang up on
manufacturers.
1.3
The nearest thing to a *
'global
organisation is the
International Flue-Cured Tobacco Growers' Association.
It la poorly run and inadequately funded, but it contains
the core of a genuine "I.T.G.A." - with full geographic
spread. Burley and oriental associations could be
persuaded to join.
1.4
The “I.T.G.A." might get fully accredited observer status
at the F.A.O.
PROPOSAL
INFOTAB should be authorised by the Board to assist the
formation of the "I.T.G.A.
.
*
INFOTAB should be used by the industry as the channel
whereby funding assistance is given to the agriculture
lobby.
The I.F.T.G.A. should be based in Brussels, Paris or
London.
Full-time Chief Executive/ Board Representative
of global spread of interests/ minimal Secretariat.
BATCo document for WHO 2 March 1999
502555416
sTh.moWdo Contio. K«w Bridge Rood. Bramlord.MCdloxw.TWBOHF, England TallOl-MB 7700 Tblex: 81BB3S NFOTABO Fax: 01-660 7021
LUbOrty ol mo momeoix cl mo Astoclai.cn u Umma Roglxiranon No. FC 14231 Vai. RogitUodon 487 5103 04 E»l«M»iwiln Swlix»n
*(W
2.4
Initial funding should be arranged as followsi
Growerst
INFOTABt
Monopolies/Processors
USS 100,000
USS 200,000
USS 100,000
The funding imbalance is due to the foreign exchange and
other difficulties faced by national growers' association
members of I.T.G.A.
INFOTAB should be authorised now to guarantee $100,000
(of total $200,000) funding from 1989 onwards, in order
to give 'activist
*
members (like Zimbabwe) enough backing
to get the project off the ground.
3.
BENEFITS
3.1
Manufacturers, through INFOTAB, would "control" the
primary funding of the organisation, and would thus be
able to ensure that it stuck to politics.
The I.T.G.A. would have the clout to combat idiotic crop
substitution programmes.
3.3
The I.T.G.A. could "front" for our third world lobby
activities at WHO, and gain support from nations hostile
to MNCs.
3.4
The I.T.G.A. (pushed by us) could activate^ regional )
agriculture lobbies which are at present very weak^and
resistant to industry pressure.
Tour early agreement would enable ua to get the project moving
before the November I.F.T.G.A. Conference meets to agree 1989
strategy.
Regards,
Bloxcldge
502555417
BATCo document for WHO 2 March 1999
THE AGRO-TOBACCO PROGRAMME
- Some Background Notes -
The principal objective of the programme is to promote the arguments detailing the
benefits arising from the cultivation of tobacco, thereby demonstrating the global threat
posed to the future of tobacco farming by anti-tobacco initiatives at international,
regional and national levels. Activities in support of this objective are increasingly being
undertaken through the International Tobacco Growers' Association (ITGA) which is
becoming the effective international voice of the 33 million people worldwide who are
engaged in tobacco growing. The major planks of the agro-tobacco platform are (a) the
economic benefits of tobacco production, particularly in developing countries, (b) the
social benefits, such as employment in rural areas, and (c) the general agricultural
development benefits arising from tobacco cultivation.
The primary focus of the agro-tobacco lobby effort has been at the WHO and the FAO.
Support generated for the fanners’ case, paniculariy amongst African and Latin
American representatives to these agencies, has been reflected in two significant
developments in both UN agencies. Firstly, at the World Health Assembly it has been
acknowledged that the Tobacco or Health programme should take account of the
economic consequences of its actions. Secondly, mobilisation of support amongst key
Permanent Representatives to the FAO has ensured the publication of two seminal
studies on tobacco. In addition to adding further authoritative substance to the growers'
case, the FAO reports' prognosis of increasing demand for tobacco through to the year
2000, severely embarrassed the WHO and its ambitions for the Tobacco or Health
programme.
/
The success of these of lobbying efforts has built upon relationships and tactics
developed over a number of years. With the emergence of the ITGA as a pro-active and
adequately resourced organisation,
however,
the strength of the agro-tobacco
programme has been enormously increased. Arguments previously advanced on behalf
of the growers are now voiced directly; their developing countries' constituency is a
powerful political asset; and, at a national level, its members can access government
BATCo document for WHO 2 March 1999
502555358
through channels less readily available to the manufacturing sector.
-2-
By providing the resources necessary to transform the ITGA from an introspective and
largely ineffectual trade association to a pro-active, politically effective organisation, the
industry created the opportunity to capture the moral high ground in relation to a
number of fundamental tobacco-related issues. Moreover, tobacco growers' motivation
and self-esteem, previously diminished in a climate of anti-tobacco opinion, is being
restored by the ITGA’s advocacy.
In support of its lobbying activities, the ITGA published in April 1990, its comprehensive
position document Tobacco in the Developing World. T.iis was extensively distributed to
key agriculture and development media around the world and provided appropriate
support to the lobbying activities undertaken in Geneva in the run-up to the World
Health Assembly in May of that year. It also provided the opportunity to pre-empt
lOCUs publication Tobacco Control in the Third Wori. at the 7th World Conference on
Tobacco and Health, in Perth.
Taking the opportunity to build on the success of To: icco in the Developing World and
to extend the reach of the agio-tobacco case, the ITG.- has embarked on the production
of a quarterly broadsheet, Tobacco Forum. This pro- des the vehicle to develop and
refine the broad argumentation base, and to target pa ticular items on the anti-tobacco
agenda. Tobacco Forum is produced in a style which v 11 encourage re-publication of its
articles in other print media, thereby offsetting the severe imbalance in media treatment
of tobacco issues.
The thrust of the agro-tobacco programme is thus ch;, nnelled through two interrelated
primary activities - lobbying and publication. Uppermost in the lobbying element is the
need to consolidate and extend the activities in and a-ound the WHO, FAO, and other
UN agencies such as the United Nations Developrm nt Programme (UNDP) and the
United Nations Environment Programme (UNEP), wh’ch4nll be increasingly drawn into
the tobacco debate. The ITGA's stature will be enhanced if it can achieve Specialised
Consultative Status with the FAO.
For this, it will have to demonstrate, through
collaborative activities, its relevance to the Organisation's objectives.
502555359
BATCo document for WHO 2 March 1999
THE AGRO-TOBACCO PROGRAMME
- Current Activities -
1,
Lobby
1.1. World Health Assembly, May 1991
The WHO's inability to effectively counter the socio-economic questions posed
by the lobby in respect of the impact of a successful Tobacco or Health
Programme has Jed the Executive Board to distance the WHO from involvement
in the awkward non-health related issues raised.
Objective:
To ensure that the concerns of tobacco producing
developing countries are reinstated in the World Health
Assembly and given proper consideration.
Strategy:
To lobby ambassadors from key countries in Geneva in the
period immediately before the Assembly and to promote the
tabling of an additional Resolution.
Details to be
determined in consultations with possible sponsors in Africa,
mid-March. Support material will include next edition of
Tobacco Forum which focuses on the question of crop
substitution.
.1,2,. British-rid policy in respen of. tobacco
The British government has decided it will no longer support the tobacco
production sector in developing countries. It will also pursue a similar policy by
multilateral aid agencies to which it contributes. It is unlikely that this policy will
be reversed.
Objective:
Strategy.
To secure the greatest flexibility in the application of the
policy to the benefit of tobacco producing developing
countries.
/
To be coordinated with other interest groups, including
manufacturers, but ensuring that the growers' position is
presented independently. To include:
mobilization of reactions from tobacco producing
developing countries.
briefings for selected UK parliamentarians.
drawing attention to policy incongruities (e.g.
continued support of tobacco growing in Europe
through the CAP).
502555360
BATCo document for WHO 2 March 1999
-21,3.
Th? Fosd-aad Agriculture Organisation
The FAO is unlikely to become involved in any further direct work on the
economic significance of tobacco, nor on demand projections, at least for the
foreseeable future. It will remain willing to assist individual governments who
specifically request help with tobacco crop substitution programmes but is unlikely
to initiate any programmes of its own.
Objectives:
1. To ensure that the FAO continues to support the
fundamental values of tobacco growing.
2.
To secure Special Observer status for the ITGA with the
FAO.
Strategy.
1.4,
To maintain contact with key managers within the FAO and
amongst the Permanent Representatives in Rome who have
supported the lobby hitherto. To satisfy FAO requirements
regarding official recognition of the ITGA by increasing the
Association's membership and seeking to collaborate with
the FAO on issues of common interest
Other International .Agencies
The "greening" of the anti-tobacco activist programme, as evidenced by Trade for
Life, calls for a number of UN agencies to add their weight to the anti-tobacco
cause, including the United Nations Development Programme (UNDP) and
Environment Programme (UNEP). The World Bank, Regional Development
Banks, and other donor agencies, are to be asked to fund tobacco control projects.
Objective:
To pre-empt the activists' further moves into these
organizations and limit the support given to anti-tobacco
initiatives.
Strategy:
To encourage the UNDP to maintain its agricultural support
programmes for tobacco; to draw the UNEP's attention to
the tobacco-growing sector's responsible attitude to
afforestation, agro-chemical use, and its beneficial role in
marginal land utilization and agricultural development. To
remind the international banking/funding agencies of the
value of tobacco to developing countries' economies.
1.5.
United .Nations Conference on Environment and Development
BATCo document for WHO 2 March 1999
502555361
UNCED will take place in Rio de Janiero in June 1992 and will produce a
"charter for the 21st century", backed up with specific resolutions or proposals
dealing with individual issues. Although unlikely to feature directly in the main
conference, environmental issues relating to tobacco, especially deforestation will
Appendix II
ACTION POINTS AND RECOMMENDATIONS
1.
Public Affairs Resource Group Efficiency and Effectiveness
There was overall support for the PARG system although not surprisingly after
only one year a number of pros and cons were identified.
Pros
-
A good exchange of information where previously there had been very little.
-
The creation of a workable early warning alert system in the region, ie.
Harare conference, Panos report.
-
Development of inter-company Public Affairs training within the group.
Kenya being seen as the regional public affairs centre of excellence.
-
Regional attention to media coverage rather than national
Millbank role needs clarification. Who is responsible for the African region?
What budget if any is available from the RBU for public affairs activity?
A number of GMs are still not committed to the PARG concept and therefore
MHIbank needs to take responsibility for selling in the concept to GMs and
other senior managers.
A global PARG report is considered unnecessary as TDC already provide
weekly news reports and alerts. It was agreed that a more useful report
would be regional in nature and compiled by the regional co-ordinator(s).
The PARG members have little opportunity to meet to work on regional
issues although there are a number of one-to-one meetings. It is suggested
that this group meet once per year.
AH African Tobacco Conference, Harare - November 1993
BATCo document for WHO 2 March 1999
300565565
This conference being organised by the outspoken, infamous anti-tobacco
campaigner from South Africa, Dr Yach, is cause for concern.
It is the first of its type in Africa and is likely to be the forerunner to similar high
profile attacks on the industry. Even if this conference has a minimal impact, the
fact that it is happening at all necessitates the need for action.
A secondary consideration is the control of the Public Affairs response to this
conference. If BAT do not take the initiative, Philip Morris will and that could
have damaging consequences in the region.
'The Public Affairs managers unanimously agreed on the following plan however
General Manager consent is needed together with a payment plan.
Harare Conference, BATCo Action
Objective
To minimise the impact of the conference.
Strategy
Respond to conference through comprehensive media relations programme.
Plan
i)
Media Briefing Seminar (see appendix in)
South Africa
5-9 October 1993
Cost 590,000 4- travel and accommodation for journalists.
£A"V -tcuX»gA
5)
Media Training
Zimbabwe
10-12 November 1993
Cost $200 per delegate + travel and accommodation for delegates.
iii)
Highlight International Aids Conference being held in Uganda in November
1993.
Martin Gwoke to supply further details
BATCo to devise plan to gain publicity for the conference.
ITGA to launch booklet Trade or Aid' before conference.
Economic impact studies based on the Minster study and operaring
company updates to be released in the months prior to the conference.
Page 2
BATCo document for WHO 2 March 1999
300565566
iv)
v)
-3be raised by anti-tobacco groups seeking to take advantage of the occasion.
Objective:
To deliver the message that tobacco's relative importance
within the deforestation issue is minimal and that the use of
fuel wood by tobacco growers is being dealt with in a
responsible manner.
Strategy.
To develop a submission, to be delivered through
established communication routes for the conference,
sufficiently broad on the environment issue to put tobacco
into context within the total mix. To be coordinated with
AFUBRA and ABIFUMO in Brazil, but including
participation from ITGA member organizations, including
local lobbying of national delegations to UNCED.
L. Publications
A major element of the overall programme's resources is being applied to the
publication and distribution of Tobacco Forum. To date two editions have been
produced, the first focusing on Africa, the second on the issue of wood fuel. At
the end of April, and in support of the lobbying activities around the World
Health Assembly in May, the third edition, on crop substitution, will be
distributed. This will include an additional centrefold comprising a world map
detailing 1990 tobacco production masses from 104 countries.
Objectives:
1. To restore media balance in the treatment of tobacco
related issues, especially in Third World countries.
2. To influence the international debate on such tobacco
related issues at international, regional, and national levels
in support of tobacco growers' legitimate concerns and the
lobby programme activities.
Strategy:
To produce a regular broadsheet {Tobacco Forum) which
puts readily usable media material in /the hands of
journalists around the world, especially those identified as
having interests in agricultural, developmental, and Third
World issues, and to encourage local re-publication. To
target the subject matter of each edition on a particular area
of concern, linked where appropriate to the lobby
programme.
On an ad hoc basis, to research/commission more detailed
treatments of particular issues for publication (e.g Tobacco
in the Developing World, April 1990).
502555362
BATCo document for WHO 2 March 1999
-4To encourage the agro-tobacco programme sponsors to
actively participate in the editorial policy of the
programme's publications to ensure the objectives are
achieved and the required messages delivered.
Subsequent editions of Tobacco Forum planned for 1991 are:
(July)
"Focus on Europe", including Eastern Europe and Turkey,
in association with UNTTAB.
(October)
"Focus on Economic Contribution", including farm-level,
regional, and national benefits, especially to developing
countries.
In addition, the ITGA expects to publish later this year a helpfill and comprehensive
treatment of the crop substitution issue by David Patchett, an agricultural economist and
consultant to the WHO.
The 1992 publications programme will be determined in the light of lobby programme
needs and opportunities including, for example, the United Nations Conference on
Environment and Development. It is intended that four editions of Tobacco Forum will
be produced in 1992 including a review of tobacco growing in Asia.
502555363
BATCo document for WHO 2 March 1999
During the conference a communication HQ will be set up with ZTA to
issue press statements on behalf of the growers or manufacturers as
appropriate. BATCo to supply company responses to issues on conferenceagenda together with general statement about the conference.
vi)
3.
Government and NGO Relations
The increasing impact of the World Bank/IMF policy in the region together with
the spread of multi party politics has resulted in a need for more focused and
effective lobbying nationally, regionally and internationally.
Action
BATCo to supply lobbying guidelines
All companies to supply information about local NGO representatives for
compilation of regional data base. BATCo to co-ordinate.
4.
-
Briefing paper on World Bank/IMF to be circulated to Public Affairs
Managers.
-
BATCo to re-establish links with African representatives at the World Bank
in Washington.
Corporate Image (Social, Economic and Environmental Issues)
It was agreed that media, government and NGO relations relied heavily on BAT
generated social, economic and environmental stories. Therefore, a more
strategic approach is necessary throughout the region which would result in more
consistent and effective management of issues such as community relations,
donations, sponsorships, economic impact studies and environmental
programmes.
Action
Create a Tobacco Republic model for Africa along the lines of the Latin
American exerase. Using factors such as employment, exports, taxes, land
farmed etc, it is possible to build a country with a population and economy
entirely dependent on tobacco. Once all of these factors are collated for
every country in Africa using existing information an impressive fictional
country can be created to show the important social and economic
contribution of tobacco in the region.
Page 3
BATCo document for WHO 2 March 1999
300565567
A similar exercise has been completed in Latin America and the results used
in local and international lobbying.
BATCo to circulate new donations policy guidelines. Very few companies
in the region operate from donation guidelines.
BATCo to supply a biography of the Panos organisation together with a
summary of the Panos report in Uganda.
BATCo to complete and circulate country reports and Pan African repons
resulting from Minster study.
Summary
This was a very productive meeting. The onus is now on BATCo tn riefiyer rn a
number of areas particularly prior to and during the Harare Conference and in .the area
of government and NGO relations.
B J Brady
30.06.93
BATCo document for WHO 2 March 1999
300565568
Fate 4
from the ITGA, to talk about the soda! and economic impact of tobacco in Africa. We
could work al! of these details out For a two-day conference (see attached note on
logistics) six speakers in total is the idea] number.
30056558!
BATCo document for WHO 2 March 1999
BRITISH-AMERICAN TOBACCO COMPANY LIMITED
25 November 1993
Mr. R. Tate
No. 9 La Panhouse
Kerry Road
Avondale
Zimbabwe
Dear Richard,
This is just a note to say thank you for your participation in our issues seminar in
Harare: it was a pleasure to work with you.
As promised, enclosed is a copy of our ’Smoking Issues: Claims and Responses’
booklet which provides some of the answers to some of the questions you asked. We
will be providing a shortened form early next year which we will also pass on.
At the moment we have plans to provide other materials on the issues discussed,
including videos and pocket cards carrying key arguments, which we will also make
available to you if you would Eke.
In the meantime, please let me know if there is anything else we can do to help and feel
free to call on us at any time for information or any other materials you may require.
With kind regards,
Dr. Sharon Boyse
A »■
*>■■>
0> TXI BAT tSOVITXIIl CXOLT ISAOXXOXATXO IS tOSOOS SO S4B74
BATCo document for WHO 2 March 1999
500892218
KICD Orjici MllUANK KNOWltCutN Siaisu TW18 >DY Fax 0784 455 000 TKLIX 27384ZS BATTOB C
TlUFHOSI 0
*84 480 400
Dear—,
As you are aware, public interest in the controversial issues surrounding the use of
tobacco products is increasing. Unfortunately, those interested in these issues do not
always have access to all of the information that has to be taken into account when
forming a judgement about this debate. In particular, we feel that balanced information
and views about smoking are rarely available to the media.
We would therefore like to invite you to a seminar to discuss the most controversial
issues surrounding the smoking debate. During this seminar, you will hear the views of
international experts from the United States and Europe on various aspects of the
smoking controversy. The subjects discussed will include: smoking and health; other
people's tobacco smoke, or so-called 'passive smoking1; claims that tobacco smoking is
addictive; health priorities and the role of World Health Organisation; tobacco
advertising and freedom of commercial speech, and the tendency to over-regulate and
over-legisiate which is currently prevalent in the USA. The international experts are
respected academics or professionals who are quite independent from the tobacco
industry.
You will also have the opportunity to discuss these issues with members of the local
tobacco industry [or company name],
[Information about location and dales of seminar follows].
300565573
BATCo document for WHO 2 March 1999
BRITISH-AMERICAN TOBACCO COMPANY LIMITED
Joe Green
TO:
CC:
Brendan Brady
FROM:
Dr. Sharon Boyse
DATE:
1 July 1993
SUBJECT:
South Africa media seminars
Further to Brendan's notes on the above based on discussions al the PARG meeting, I
can now tighten up some of the cost estimates for the above event
I agree with Hilary Thompson that four days (i.e. two separate seminars) would be
desirable ifjournalists from countries other than South Africa were to participate simply for reasons of numbers. All estimates below except consultants' estimates are
from Hilary Thompson and of course will have to be tightened up once we have decided
upon a location in South Africa.
Consultants'fees (5 days):
3-50,000 max
Travel expenses, South Africa - India:
5 10,000 (to be confirmed)
Travel expenses, internal:
3 10,000 (to be confirmed)
Consultants' expenses - hotel etc.:
3 4000 (to be confirmed)
’ 3 7.4,600 C- r ~
TOTAL
The assumption is that 50 % of the costs will be borne by South Africa (UTICO and
Rembrandt) for the first seminar, and 50 % by the other B ATCo companies. Assuming a
total cost for the second seminar of 5 37,000, it appears that this would conceptually be
divided between Mauritius, Zimbabwe and Kenya as those three companies that have
definitely confirmed their interest. This means a contribution of 3 12,333 per company.
It is my understanding that Mauritius can bear these costs directly, leaving 5 24,666 to
be covered by Mill bank on behalf of Kenya and Zimbabwe.
There is, however, a possibility that we may persuade Rembrandt to contribute a little
something to the second seminar because of their interests in Zimbabwe but on balance
this is unlikely since they mH be covering the majority of the South African costs
because of the cost splitting arrangements at the Tobacco Institute of Southern Africa.
Rothmans have no interest in participating or costsharing, declaring that this part of
Africa is really down to Rembrandt
MILLBANK KNOWLE GREEN STAINES MIDDLESEX TW18 1DY
BATCo document for WHO 2 March 1999
Appendix III
MEDIA BRIEFING SEMINAR
Objective
Improve the understanding that the media has of the issues feeing the tobacco industry.
Educate the media about our position on issues and provide backup from international
experts. The aim of which is to make the media take our views more seriously and to
increase the chances that they win offer us the chance to comment as issues arise.
The Programme
BAT and Philip Morris have now run a series of briefings in Latin America and the Far
East In Africa, briefings would be supported by Rothmans, Rembrandt and BAT .
We would control the programme.
The most successful have adopted the following format:
i)
A maximum of 15-20 journalists are invited to a seminar during which they will be
addressed by independent experts and tobacco industry experts on a range of
issues including
*
active smoking, ETS, young people and smoking. WHO/health
priorities, economic impact studies, politicisation of science and social costs.
ii)
Location is somewhere pleasant usually a beach resort This motivates the
journalists to attend aswefl as increasing, the chances of having their undivided and
uninterrupted attention South Africa is agreed to be the most suitable location in
the region.
iii)
The briefing session is typically run over two days with a half day of presentations
and a half day free on each ofthe two days.
iv)
The local industry is a totally up front sponsor however it is made clear that the
international experts are in no way representing the industry.
v)
A follow up programme is important to maintain contacts.
vi)
Care should be taken in selection ofjournalists.
BATCo document for WHO 2 March 1999
300565569
Page 1
Cost?
The major costs are>
i)
ii)
Hi)
iv)
Travel and expenses of international experts
Hotel and flight expenses for journalists
Hire of conference facilities, translations, etc.
Meals, cocktail parties, etc.
Because of the size of the region, consideration was given to having 2 x two day
seminars back to back thus maximising the availability of the international experts.
The following agenda and costs were discussed at the meeting and subject to approval
and availability of speakers, appear to be the best option considering the international
experts are due in India on 12 October 1993.
5 October
Group 1 and Experts arrive in South Africa
PM: Welcome Dinner
6 October
AM: First Session
PM: Free
7 October
AM: Second Session
PM: Group 1 return home
7 October
PM: Group 2 arrive
8 October
AM: First Session
PM: Free
9 October
AM: Second Session
PM: Group 2 return home
10 October
International experts fly to India
PM: Welcome Dinner
This is a very ambitious programme however, there was concern that if most African
companies want to partidpaie then there would be too many delegates.
On reflection I fed that two days would be more appropriate and perhaps we should
concentrate on only a limited number of companies, eg. Kenya, Zimbabwe, South
Africa and Mauritius.
Page 2
BATCo document for WHO 2 March 1999
300565570
Of course, the less the number of parn’dpating companies the bigger the cost
The costs calculated for this programme are as follows:
Consultants Fees - SI 0,000 per dav (Team of Six)
x 4 days
$40,000
(2 days travel, 1^2 day seminar)
Travel expenses: South Africa/India $10,000
$10,000
(Hire of planes, transfers, etc and
entertainment).
Expenses for Consultants
$4,000
(Hotel, etc)
TOTAL
$64,000
Travel expenses: Internal
If we include a further two days, an additional S2J000 would be required.
30056557
Page 3
1
BATCo document for WHO 2 March 1999
INDUSTRY BRIEFING SESSIONS FOR THE MEDIA
Objective
The objective of these sessions is to improve the understanding that the media (primarily but
not necessarily exclusively the print media) has of the issues facing the tobacco industry. By
educating them about our position and providing the backup of independent international
experts, the aim is to make the media take our views more seriously, and to increase the
chances that they will offer us the chance to comment as issues arise because they have
learned that we have an opinion worth listening to and one that reflects the views of
international experts. It is not necessarily the aim to engender instant positive press stories,
although this quite often happens as a matter of course.
The Programme
BAT and Philip Morris have now ran a series of briefings in Latin America (2 in Venezuela,
one regional briefing for all Central American companies, and one South American regional
briefing), and BAT has confirmed in the Caribbean. BAT, supported by other members of the
Far East tobacco industry, also organised briefings in Indonesia (for the Indonesian,
Malaysian, Singapore and Hong Kong companies) and in Taiwan. The most successful have
adopted the following format:
-
a maximum of 15-20 journalists
location is somewhere pleasant (e.g. a beach resort), and away from the city where they
work. Not only does this increase the chances of having their undivided and
uninterrupted attention, but it motivates them to attend and they will enjoy it more.
-
to ensure that full advantage is taken of the location and that we do not induce
information overload, the briefing session is typically tun over two days with a half day
of presentations and a half day fiee on each of those two days,
the local industry is a totally up-front sponsor, but it is made clear that the
international experts who attend are quite independent and are in no way representing the
inJusuy.
BATCo document for WHO 2 March 1999
300565582
-
it is equally important to have a follow-up programme by which information and views
can be passed on by the industry to maintain tbe contacts that are developed. We
frequently also find that journalists will contact our international experts directly for a
view.
some care should be taken in selection ofjournalists. Although we have had only one
negative article from the entire series of briefings that have been carried out, this was
largely because the journalist in question was a totally unknown quantity to the local
industry. Obviously, it is not necessary to invite only journalists who are already
sympathetic to hearing a balanced view, but little will be achieved by inviting journalists
who are confirmed anti-smokers and demonstrate little flexibility of thought in this
respect
Briefing topics
ACTIVE SMOKING
We have had something of a conflict in how to handle the primary issue, because on the one
hand we do not have an external consultant that would address the active smoking issue in a
way that would reflect our position. On the other hand it cannot be left out of such a briefing
session because tbe immediate assumption would be that we are ducking the issue, and in
any case it always surfaces in a major way. It simply is not possible to avoid it We have
therefore made an exception to the rule that only independent experts speak on the issues,
and these presentations have been carried out by BAT (S. Boyse) with the full approval of
PM (New York) on the content of the presentation where briefings have been carried out
jointly.
ENVIRONMENTAL TOBACCO SMOKE (HEALTH)
Professor Philip Witotsch from the George Washington University (Washington USA) is the
best presenter here, because of his medical credentials He is, however, expensive. Other
speakers are available.
INDOOR AIR QUALITY
A number of speaker options are available here, including Healthy Buildings International
(Gray Robertson and colleagues).
ADVERTISING
BATCo document for WHO 2 March 1999
Again, there are a number of options here from speakers who will concentrate on the effects
of advertising bans on consumption, and the purpose of advertising in a mature market, to
speakers such as Digby Anderson from the Social Affairs Unit in the UK who speaks very
eloquently on the principles of freedom of commercial speech. The latter is a particularly
effective speaker for the media.
YOUNG PEOPLE AND SMOKING
On occasion we have felt the need to have a more thorough review of why young people
experiment with smoking and what makes young people smoke. Glen Smith of the UK-based
Children's Research Unit is available for this purpose.
WORLD HEALTH ORGANISATION/ HEALTH PRIORITIES
Paul Dietrich, a lawyer from Washington gives an excellent presentation questioning the
priorities of the WHO in targeting tobacco and alcohol when countries in many parts of the
world have different health priorities, and when children are dying in Africa, Latin America
and many countries in Asia through easily preventable diseases, simply through lack of
funding. His analysis of the WHO budget brings out all the best investigative journalism
instincts, and he rarely fails to make an impression on the media. His position on the
development committee of the Pan American Health Organisation (the Latin American
branch of WHO) makes his credentials impeccable. When unavailable, Robert Tollison from
the USA has been an alternative.
ECONOMIC IMPACT OF TOBACCO (REGIONALLY OR AS AN INDIVIDUAL
COUNTRY)
Usually a local presenter or on occasion the local industry make such presentations.
SOCIAL COSTS
On general principles, Bob Tollison from the USA, who has published widely on this issue,
could be used. It does, however, make for a rather technical presentation.
SMOKERS' RIGHTS
For Latin America, this has been carried out by the Spanish smokers' rights group leader, a
well-known journalist We have not used this presentation elsewhere, but from the UK
similarly well-known journalists/cnl nmnistr: may be available to talk about freedoms in
general and the ‘nanny state' concept in particular.
BATCo document for WHO 2 March 1999
300565584
ADDICTION
INDIAN SUBCONTINENT MEDIA SEMINAR
Tuesday 11-Tuesday 19 October
Speakers
Active smoking/ risk priorities:
Dr. S. Boyse
Environmental tobacco smoke (health):
Professor Phil Witorsch,
George Washington
University, Washington
DC, USA
Advertising: effects of bans etc. on consumption:
Prof Jean Boddewyn,
Baruch College, New
York, USA
Advertising: freedom of commercial speech:
Digby Anderson, Social
Affairs Unit, London
World Health Organisation:
Prof R. ToUison, Center
for Public Choice, USA
Addiction:
Prof Ian Hindmarch, ,<
University of Surrey, U®&
"Fear of Living"/ over-regulation:
John Rupp, Covington &
Burling, USA
Costs
Daily rates to have all ofthe above 6 speakers (Millbank is not charging yet!!) would
be US S 9900 per day. They charge working time and travel time. For one two-day
seminar you would therefore be talking probably of around 3-4 days' fees if they were
coming from India; 4-5 days if they were coming from their home locations. This
would put the ballpark figure in the region of S 30,000 - 49,500 for fees, plus travel
expenses. There is a mixture of business and first class here; however, ifwe were
coming from India it would of course be cheaper than if they were coming from their
home location. Travel costs alone for the Indian seminar are S 33,900! You can
probably work out the cost of a plane fere from India to Mauritius (business class or
first) and assume that will be the travel expense, multipCed by the number of speakers.
In theory the subcontinent companies would expect you to share fully in the expense of
transatlantic travel and to share the whole travel bill, but I think we can just forget to
take that into consideration by not mentioning it!
BATCo document for WHO 2 March 1999
300565580
However -1 think you would not need all 7 of the above speakers in Africa. For
example, the freedom of commercial speech, fear of living and addiction arguments
may not be crucial. However, on the other hand, you would need a speaker, perhaps
Dr. Sharon Boyse
Head of Smoking Issues department at British-American Tobacco Co's head o6ce in the UK.
Experience in the smoking and health area: 7 years.
John Rupp
Senior lawyer at the law firm of Covington & Burling, Washington. USA. Considerable
experience in product litigation and legislation, including tobacco.
Philip Witorsch
Professor of respiratory-medicine at Geroge Washington University, Washington, USA
Digby Anderson
Head of the Social Affairs Unit, a 'think-tank' on social issues based in London. Regular
publications on advertising, international organisations etc. Also writes articles on social issues
for major UK newspapers.
Ian Hindmarch
Professor ofHuman Psychopharmacology at the University of Surrey, UK. Considerable
experience in examining the psychological effects of drugs that change mood e.g. anti-anxiety
drugs, anti-depression drugs. An expert on addiction in general.
Jean Boddewyn
Professor of Marketing and International Business at Baruch College, New York.
Expert on advertising and, in particular, tobacco advertising. Author ofwell-known
International Advertising Association report on the effects of tobacco bans; has given many
expert testimonies on the subject in law cases and before government committees.
Richard Wagner
Professor of Economics, George Mason University, Virginia, USA and also at Center for Study
ofPubb’c Choice at same University. Several publications on public choice and policy issues
including study of international organisations such as the WHO.
300565579
BATCo document for WHO 2 March 1999
Media Seminar, South Africa
October 5-7 1993
Tuesdays October
Arrive a: resort
Evening: welcome dinner
Wednesday 6 October
08.30:
Welcome address
Industry
08.45:
Smoking and health: a risk perspective
Sharon Boyse
09.30:
Questions
09.45:
Health claims about environmental tobacco smoke
10.30:
Questions
10.45:
Coffee break
11.15:
The World Health Organisation and Health Priorities
12.00:
Questions
12.15:
Tobacco smoking: habit or addiction?
13.00:
Questions
Philip Witorsch
Bob ToHison
Ian Hindmarch
LUNCH
Afternoon free
DINNER
Thursday 7 October
Tobacco advertising bans and smoking
09.45:
Questions
10.00:
Tobacco advertising: freedom of commercial speech
10.45:
Questions
BATCo document for WHO 2 March 1999
Jean Boddewyn
Digby Anderson
300565575
09.00:
11.00:
Coffee break
11.30:
Tear of Living" and social engineering in the late
twentieth century
12.15:
Questions
12.30:
Closing address
John Rupp
Industry
Journalists depart
300565576
BATCo document for WHO 2 March 1999
F*on
sst cn: p.u.c
7.22.1993
238 E414S41
Facsimile Cover Sheet
To: Dr Sharon Boyse
Company: British-American Tobacco Co Ltd
Fax: 784 448 391
From:
Company:
Phone:
Fax:
Date:
Pages including this
cover page:
* Abdulin
British-American Tobacco (M) Pic
242 4422
241 8552
22 July 1993
1
MESSAGE: Media Seminar October 1993
Dear Sharon
This is to confirm that Johan Mathijs on his return fiom the Strategic Review
meeting in UK, has given his official consent to die proposal that BAT
(Mauritius) contributes US S 12,000 towards the costs of the October Media
seminars. Presumably, Public Affairs Staines will be sending us the appropriate
invoice relating to "conference participarion fees". We are proposing to send up
te_5Joumalists/delegates. Can they all attend the first seminar or do they need to
be split in 2 groups? The issue is the hosting by Mauritius in October 1993 of
the conference of heads of French-speaking states (Francophonie) preceded by
an international meeting of French-speaking journalists scheduled fiom 4 to 6
October which will be a major competing event
With kind regards
KAXDtnJATIF
Public Attain Manager
300565574
BATCo document for WHO 2 March 1999
BRITISH-AMERICAN TOBACCO COMPANY LIMITED
Hilary Thompson - UT1CO
TO:
CC:
Dr. Sharon Boyse
FROM:
DATE:
1 April 1993
SUBJECT:
VISIT TO SOUTH AFRICA
Dear Hilary.
V
Further to our conversation earlier this morning, this is to confirm that I have made the
following reservations:
B
Monday April 19: BA 057 dep. LHR 21.00 arr. Johannesburg 08.35 (April 20)
Tuesday April 20: GM 103 dep. Jo’burg 09.20 arr. Capetown 11.25
*
OR
Tuesday April 20: GM 119 dep. Jo’burg 11.00 arr. Capetown 13.05
Friday April 23: GM ? dep. Capetown 17.40 arr. Jo’burg 19.35
BA 58 dep. Jo’burg 21.35 arr. LHR 07.40 (April 24)
* To be confirmed. I will let you know later today, or Sophia will.
•
Cea'S
3/J1OG
Advertising consultants: Brendan thinks Michael Stewart, who he knows, is a little
unpredictable as a personality. Fm sure you can read between the fines! Luik’s speciality
is government paternalism (see the attached reference) which might not go down too
well with the government of South Africa!! He is not an expert on the consumption/
children data. 1 am sorry yet again to have to put you off the Rothmans suggestions!
Brendan, however, has suggested Dr. Lawrence Hagen, who is based in the UK at the
Henley Marketing Dynamics Centre, part of the Henley School of Management. He has
recently analysed all of the data worldwide on advertising and consumption figures and
so is the most up to date consultant we have in this area. He actually produced .the full
critique of the Smee report that has caused so many problems here in the UK.
MILLBANK KNOWLE GREEN STAINES MIDDLESEX TWI8 IDY
BATCo document for WHO 2 March 1999
304055 I 03
The contact with Hagen is David Hare at the Tobacco Advisory Council in London and
he will not be back until this afternoon. I will get him to ask Hagen whether he would be
available and if he is will call him (Hagen) to brief him on the South African situation.
Brendan will then take over for tomorrow and liaise with you and him on travel
arrangements etc. Should there be anything left unfinished before Brendan goes on
holiday, he will leave you Hagen's contact numbers so that you can brief him further and
advise him of any changes to the schedule.
He is only in lhe office today and tomorrow and then will be on holiday next week, so he
will ensure that he has one of them lined up for you by the end of tomorrow.
The telephone number I gave you in Ireland, should anything change, I now understand
should be connected by Wednesday next week (353 91 71170).
With kind regards.
304055104
BATCo document for WHO 2 March 1999
McJt-fl-dsi
COSTS - AFRICA/ SUBCONTINENT MEDIA SEMINARS
4... —
Consultant
Fees ($)
Fare(S)
Digby Anderson
11400
5 360
16 760
S
Jean Boddewyn
15 000
10 288
tti-L .
11 560]^
11 560j
25 288
S less
Sharon Boyse
:
Total (5)
11560
Ian Rmrimamh
15 600
>o, -~~
John Rupp
27 500
9 581
37 081
5!
<■ ■ C=~
Bob Toffison
22 000
10 288
32 288
£ ritCCD
Phil Wrtorscb
26 000
14 400
40 400
ff arse©
TOTALS
117 500
73 037
190 537
27160
L r6O
300565498
BATCo document for WHO 2 March 1999
S
£
TOTAL
190 537
119 086
INDIA
107200
67 000
83 337
52 086
MAURITIUS
12 500
7 813
MILLBANK
25 000
15 625
_________________________
28 648
45 837
Remainder to be met by Hartley (e.g. S 10,000) and C&B budget
N3. Rupp fees + fere = S 37 081 (+ expenses), leaving $ 8756 to be met + consultant
expenses (hotels etc.)
Jx se
Ct & csz..tr^Sr
/ 33,
300565499
BATCo document for WHO 2 March 1999
LIST OF DELEGATES
7 TO 9 OCTOBER 1993
Amboka Andere
Kenya Times, Kenya
Sure Chimbga
ZIANA, Zimbabwe
Ingrid Gcaba
SASPU, South Africa
Pravin Kaia
BAT Mauritius
Marianne King’ori
Daily Nation, Kenya
Marcia Klein
Business Day, South Africa
Josie Lebrasse
Le Week-end, Mauritius
Antony Mwangi
The Economic Review, Kenya
Tendai Nyakunu
Business Herald, Zimbabwe
Regis Nyamakanga
HnandaJ Gazette, Zimbabwe
Joseph Nugi
The Standard, Kenya
Shabanji Opukah
BAT Kenya
Peter Parirewa
BAT Zimbabwe
Mitradev Peerthum
Le Nouveau Militant, Mauritius
Boris Pierrus
Business Magazine, Mauritius
Hilary Thomson
United Tobacco, South Africa
Zanele Vutela
City Press, South Africa
United Tobacco, South Africa
Sowetan, South Africa
BATCo document for WHO 2 March 1999
300565500
Peter Warring
Musa Zondi
Media Seminar, India
October 12-13 1993
Monday 11 October
Afternoon: arrive at Agra
Evening: Welcome dinner
Tuesday 12 October
08.30: Welcome address
(ITC/VST)
08.45: Smoking and Health: a Risk Perspective
Sharon Boyse
09.30: Questions
09.45: Health claims about environmental tobacco smoke
Philip Witorsch
10.30: Questions
10.45: Coffee break
11.15: The World Health Organisation and Health Priorities Bob Tollison
12.00: Questions
12.15: Tobacco Smoking: Habit or Addiction?
Ian Hindmarch
13.00: Questions
LUNCH
Afternoon Free
DINNER
Wednesday 13 October
09.00: Tobacco Advertising Bans and Smoking:
the Defective Connection
Jean Boddewyn
09.45: Questions
BATCo document for WHO 2 March 1999
Digby Anderson
300565501
10.00: Tobacco Advertising: Freedom of Commercial
Speech
10.45: Questions
11.00: Coffee break
11.30: Fear of Living' and Social Engineering in the Late
Twentieth Century
John Rupp
12.15: Questions
12.30: Closing Address
ITC/VST
300565502
BATCo document for WHO 2 March 1999
Media Seminar, Pakistan
October 16-17 1993
Friday 15 October
Evening: Welcome dinner
Saturday 16 October
08.30: Welcome address
(PTC/Lakson)
08.45: Smoking and Health: a Risk Perspective
Sharon Boyse
09.30: Questions
09.45: Health claims about environmental tobacco smoke
Philip Witorsch
10.30: Questions
10.45: Coffee break
11.15: The World Health Organisation and Health Priorities Bob Tollison
12.00: Questions
12.15: Tobacco Smoking: Habit or Addiction?
Ian Hindmarch
13.00: Questions
LUNCH
Afternoon Free
DINNER
Sunday 17 October
09.00: Tobacco Advertising Bans and Smoking:
the Defective Connection
Jean Boddewyn
09.45: Questions
10.45: Questions
BATCo document for WHO 2 March 1999
Digby Anderson
300565503
10.00: Tobacco Advertising: Freedom of Commercial
Speech
11.00: Coffee break
11.30: Tear ofLiving' and Social Engineering in the Late
Twentieth Century
John Rupp
12.15: Questions
1230: Closing Address
(PTCZLakson)
300565504
BATCo document for WHO 2 March 1999
Media Seminar, Sri Lanka
Tuesday 19 October 1993
Monday 18 October
Arrive Sri Lanka
Welcome dinner
Tuesday 19 October
09.00: Opening Address
CTC
09.15: Smoking and Health: a Risk Perspective
Sharon Boyse
10.00: Questions
10.15: Health claims about environmental tobacco smoke
Philip Witorsch
11.00: Questions
11.15: Coffee Break
11.45: The World Health Organisation and Health
Priorities
Bob Tolfison
12.30: Questions
12.45: Lunch
14.30: Tobacco Smoking: Habit or Addiction
Ian Hindmarch
15.15: Questions
15.30: Tobacco advertising bans and smoking:
the defective connection
Jean Boddewyn
16.15: Questions
16.30: Closing address
500565505
BATCo document for WHO 2 March 1999
Seminar on Tobacco Industry in Pakistan
Dear Participants.
There has been some readjustments in the next two days programme lot the
convenience of our overseas speakers. The programme should Ik- now read
as following:
Saturday 16th. October
Session 11
Smoking and Health: A Risk Perspective
- Dr Sharon Boyse
Question & Answer
09.45
Tear ofLiving" and Social Engineering
Late Twentieth Century — John Rupp
Question & Answer
10.45
•
11.00
Coflee Break
Tobacco Advertising Bans and Smoking:
the Defective Connection — Jean Boddewyn
Question & Answer
Tobacco Advertising: Freedom of
Commercial Speech - Digby Anderson
Question & Answer
™
(19.00
I <>.00
11.20
12.05
12.20
13.05
Lunch
13.15
Visit to Patriata
Tea at Patriata
14:30
16:30
300565506
BATCo document for WHO 2 March 1999
17 th October 1993
Session III
Health Claims about Environmental
Tobacco Smoking — Prof. Philips Wilorseh
Question & Answer
* J ii«'
11
Tobacco Smoking: I labil or Addiction
— Ian Ilindmarch
Question & Answer
in.no
Collee break
11 on
The World Health Organisation and
Health Priorities — Dick Wagner
Question & Answer
I2.<)5
Closing Address - G. Jilani
12.25
Bl 1?
•
ll.2ti
Lunch
13.00
Check out
14.00
Depart for Islamabad
Arrival in Islamabad
14.30
16.30
Journalist from Karachi arc booked on the following flights:
PK309
Departure from Islamabad
19.00 Arrival in Karachi 21.00
PK383
Departure from Islamabad
22.55 Arrival in Lahore 23.50
300565507
BATCo document for WHO 2 March 1999
MEDIA SEMINAR, SRI LANKA
Tuesday, 19 October 1993
9.00 am
Opening address
by Mr. David Bishop,
Chairman and Managing Director,
Ceylon Tobacco company
9.15 am
"Smoking and Health:
a Risk Perspective"
by Dr. Sharon Boyse
10.00 am
Questions
10.15 am
"Health Claims about
Environmental
Tobacco Smoke”
by Dr. Philip witorsch
11.00 am
Questions
11.15 am
Coffee Break
11.45 am
"WHO:No Rm for a Healthier World"
by Dr. Richard E. Wagner
12.30 pm
Questions
12.45 pm
Lunch
2.30 pm
"Tobacco Smoking: Habit or Addiction"
by Prof. Ian Hindmarch
3.15 pm
Questions
3.30 pm
"Tobacco Advertising bans and smoking:
the defective connection"
by Prof. Jean Boddewyn
4.15 pm
Questions
4.30 pm
Closing address
by Mr.David Bishop
300565508
BATCo document for WHO 2 March 1999
(2)
A LITTLE BIT ABOUT THE SPEAKERS....
Dr. Sharon Boyse:
Dr. Boyse is a graduate of the University of Liverpool
where she received a first class honours degree in
Psychology.
She has a Doctor of Philosophy
in
Pharmacology from the University of London. She has
conducted research in specialised studies on
the
effect of drugs on human behaviour when she was on a
Wellcome Trust Research Fellowship, in France and on a
Mental Health Foundation Fellowship, at the Institute
of Neurology, in UK.
She joined British-American
Tobacco Company Ltd, UK in 1986 and now heads the
Smoking Issues Department, she has over 40 papers to
her credit.
Dr. Philip Witorsch:
Dr. Witorsch is a clinical professor of medicine and
adjunct professor of
Physiology
at
the
George
Washington University School of Medicine and Health
sciences. He holds Diplomates in Internal Medicine
and in Pulmonary Diseases in the American Board of
Internal Medicine. He is a Fellow of the American
college of Physicians as well as the Royal society of
Medicine in UK and is a member of over 20 professional
societies. He has written 50 papers and made 30
presentations at international symposiums.
Dr.Richard E, Wagner:
Professor Wagner is the Chairman of the Department of
Economics in the George Mason University in USA and is
a visiting professor at the University of Konstanz in
Germany, and at the Institute for Humane Studies. He
has held senior posts in several American universities
previously.
He serves in several advisory committees
and boards and has authored 16 books and - written
countless
papers
which
he
has
presented
at
international symposiums.
Continued
300565509
BATCo document for WHO 2 March 1999
(3)
Professor Ian Hindmarch:
Professor
Hindmarch
is
Head
of
Hunan
Psychopharmacology at the university of surrey. His
particular
research
interests
relate
to
the
measurement of the effects of pshychoactive substances
on psychomotor performance, cognitive and intellectual
abilities and memory functions.
An author of over 300 contributions to scientific and
medical journals, Professor Hindmarch is currently
working on a meta analysis of drug effects.
He is a Fellow of the Royal Society of Medicine,
British Psychological Society, and an Associate of
Royal college of Psychiatrists.
Professor Jean Boddewyn:
Professor
Boddewyn
holds
a
PhD
in
Business
Administration from the university
of
Washington
(Seattle)
and is the Professor of Marketing and
International Business Baruch College, City University
of
New York.
Besides teaching in the area of
International Business, Management
and
Marketing,
Professor Boddewyn has served as a consultant to
international business firms, the U.S. Government and
the World Health Organisation.
He has published several major journals and books on
management and marketing.
1
3005655 0
BATCo document for WHO 2 March 1999
THE TOBACCO INSTITUTE
OF INDIA
MEDIA SEMINAR
Agra, 12 -13 October 1993
INFORMATION
300565511
BATCo document for WHO 2 March 1999
INTRODUCTION
The Tobacco Institute of India is organising this Media Seminar in
Agra, India, to improve the understanding that the Media has of the
issues facing the tobacco industry. International experts of eminence
have been invited to present the media with an objective and
realistic analysis of a wide range of issues connected with the
tobacco industry. The objective of the Seminar is to interact with
the media to arrive at a fuller understanding of the subject and.
issues, in the best traditions of the inherent - and democratic human right to 'judge for ourselves'.
Participants at the Seminar will find in this booklet an outline of the
programme, brief data on the invited speakers and a note on The
Tobacco Institute of India.
300565512
BATCo document for WHO 2 March 1999
INTRODUCTION
(Cmtd.)
Participants are welcome — both during and after the Seminar — to
remain in contact with the Institute.
The Tobacco Institute of India
316-318, Hird Floor
International Trade Tower
Nehru Place
New Delhi 110 019
Tel
Fax
: 6417096
6479414
: 6446420
300565513
BATCo document for WHO 2 March 1999
: • :"'Jagrq-tobag^qservices •’
12 WINDING WOOD DRIVE • CAMBERLEY ■ SURREY GUIS IER
•.... • A
• ENGLAND ■ TELEPHONED?AX -u <01276 <70(1
3rd November 1993
Mr H B J Ntaba
Chairman
International Tobacco Growers’ Association
Dear Henry,
It is a great disappointment to me that I am unable to be with you in Brazil at this time but,
as you know, I am in Harare assisting our friends at the ZTA with the launching of the
ITGA’s latest publication. As I shall explain later, there are very good reasons why this has
to be done at this time even though it means that I cannot share with you the hospitality
which I know Hainsi and his colleagues will be delivering in generous measure.
Had I been with you I would have hoped to have contributed to what I am sure will be a
most successful meeting. In Malelane last year, you kindly afforded me the opportunity to
provide a perspective on the anti-tobacco climate and the role of the tobacco fanning
community in countering the threats with which it is faced. Allow me to say a few words
here on the same subject which you may choose to bring to the attention of the meeting.
Perhaps the most significant development during the past twelve months, and the one
which presents us with the greatest challenge, is the decision of the United Nations
Economic andSocial Council [ECOSOC] to establish a "focal point" within the UN system
to facilitate a wide ranging debate on tobacco related issues. Up until now, it has been the
World Health Organisation which has prnyi'dffi rhe major thrust in internauonaT
anti-tobacco activities. It has, however, been persuaded that some of the issues particularly those to do with economic, environmental, and social aspects - are beyond its
competence. We can therefore expect a number of UN agencies to get into the act It is to
be hoped that they do not bring to their participation any prejudicial anti-tobacco
sentiments and that we can expect a rational and objective treatment of our common
concerns. The challenge to the ITGA and Its memoers win be to ensure that it and they are
active participants in the process
BATCo document for WHO 2 March 1999
vat registration no. 3»i
u
502555324
PROPRIETOR; DR. M. OLDMAN
Given that the World Bank has already become active, your members might wish to
consider communicating their views on the Bank’s new policy regarding tobacco to the
appropriate regional Executive Directors Whilst it is unlikely that there will be any early
reversal of policy - and, in any case, the Bank’s lending record with regard to tobacco
related projects has been historically very minor - it would be worth ’marking the Bank’s
card’ insofar as it is likely to become more intimately involved in the forthcoming debate.
In April this year I was part of an industry team which visited Geneva and Rome to present
to diplomats from virtually all Latin American and Caribbean countries an analysis of the
economic and social importance of tobacco to that region. Also part of the team was our
longstanding friend from Argentina, Hugo Macedo, who provided the tobacco fanning
element to a programme which was universally well received by our several audiences It
was something of a disappointment, therefore, that in the ECOSOC debate a few weeks
later, none of the countries from whom we had received such a warm response stood up to
support the Malawian Minister of Health in what he had to say in defence of tobacco.
There are undoubtedly lessons to be learned from this, of which I shall say something more
later. What was important, however, was that, given a good story to present, the various
elements of our industry can and do project a formidable argument
But good argumentation is of little value if one cannot secure an appropriate audience. As
you know, David has been pursuing the case for the ITGA to be accredited as an Observer
at the FAO ever since he was appointed to his position. His frustration has reached almost
fever pitch over recent months when faced by the apparent arrogance of the officials in
charge of the matter in Rome. I suspect that, as well as bureaucratic lethargy, we are
witnessing some localised political bias as far as tobacco is concerned; nevertheless, it is
inconceivable to any rational person that the now wider debate on tobacco issues within the
UN can proceed without the farmers’ direct participation, particularly when it is noted that
such worthy bodies as the International Association of Fish Meal Manufacturers and the
International Federation of Margarine Associations already have Special Observer Status!
However, so too does the tobacco industry’s scientific body CORESTA, indicating perhaps
that there is no inherent anti-tobacco bias. I am sure, therefore, that the obstinacy of the
system will be overcome and David’s blood pressure return to normal To provide some
further momentum in this direction, you may wish to consider at this time, Mr Chairman, a
Resolution of the meeting to reaffirm the urgency of your Association’s application to the
FAO for Specialised Consultative Status.
502555325
BATCo document for WHO 2 March 1999
-3The FAO is now but one of the major agencies which have been formally brought into the
tobacco debate arena. It looks as though the UN Conference on Trade and Development
[UNCTAD] has been charged with coordinating the collaboration between a number of
agencies now directed to consider "the economic aspects of tobacco production and
consumption.—' Those agencies include, in addition to the WHO and the FAO, the GATT,
the World Bank, the International Labour Organisation [ILO], the United Nations
Development Programme [UNDP], the United Nations Industrial Development
Organization [UNIDO], and (unspecified) others. We have no shortage of audiences!
As it becomes clearer over the next few months exactly what aspects of'the tobacco
question" each of these groups is going to tackle, so it will emerge exactly what arguments
must be assembled by growers groups’ in order to achieve their goals and objectives. May I
suggest, however, that it would not be too soon if, immediately after your meeting, an
attempt was made to identify in each of your members’ home countries any resident
officials of - and those within your own governments who have contact with - these
organisations. The ECOSOC resolution calls for "individual plans of work, setting out
deadlines and achievement milestones, for (each agency’s) contribution" to be developed
before 31st December 1993. Furthermore, the UN Secretary General has been requested
by ECOSOC to report back to the Council next year on progress made; therefore, it is
essential, I submit, that we are poised to participate in whatever way we can in the various
agencies’ treatment of the issues.
Returning from audiences to argumentation brings me to Harare and the launch of the
latest ITGA publication Tobacco Trade or Aid? But, before saying something about the
timing and objectives or the launch, may I first repeat what I said to’our friends from the
Southern Africa group when we met in Lilongwe earlier this year. That is: please do not be
surprised if the predictions on future production volumes and earnings which appear in the
report do not coincide with your own expectations. Thd analysis which is'contained in the
report is based on information published by the USDA, the FAO, the World Bank, and
others which, whilst it has the necessary credibility, should not be taken too literally.
Had it not been for a certain South African Dr Yach, I would have been sharing with you the pleasures of Southern Brazil As it is. Dr Yach decided that he wouidhold the first All
Africa Conference on Tobacco Control in Harare in November. It became immediately
apparent that, as pan of our attempt to upstage the conference, the opportunity of
502555326
BATCo document for WHO 2 March 1999
launching the ITGA's lari—rr pnhliririnn in th
* pr
r>»(1ing
*
*
w
k*
was too good to be missed.
As you probably know, there will be a significant participation by the 1TGA at the Tobacco
Control Conference - a notable achievement for growers and in no small measure due to
the influence of the ZTA with Zimbabwe’s Minister of Health. Not only does participation
in the conference provide a platform for tobacco fanners’ concerns to be dehareryit—
demonstrates to a wider audience a willingness to actively participate- - even jp a potentially
hostile forum. I have no doubt that this experience will serve our long term objectives well
and consolidate further the position of the ITGA as the authoritative voice of the world’s
tobacco growers.
Looking ahead to 1994,1 look forward to assisting the growers’ cause in a number of ways.
Given the need to address our concerns to a more widely drawn yet more specific range of
audiences, it is, I believe, desirable to equip the membership with more highly focussed
briefing materials. On a number of issues, there is a measure of common interest and
concern which should form the basis of the argumentation we seek to deliver. This can
then be made more locally specific by the addition of domestically relevant material It will
be important, however, that all members are "singing off the same hymn sheet" and to this
end I look forward to helping in the production of a number of Briefing Papers for you all
to use during 1994 and beyond. In addition, there remain opportunities for the occasional
"major" publication such as those produced so far on the Developing 'World, Alternative
Crops, and Trade or Aid. The need for a definitive collective statement on the use of wood
by tobacco farmers has been clear for some time. However, the need is now more urgent,
given the misinformation which our opponents are continuing to promulgate and about
which your Chief Executive can relate at length.
I said earlier that we learned some lessons from our Geneva/Rome experiences this year.
In summary, the "good" points were that, given an interesting story, presented in an
attractive fashion, most people are at least willing to listen. We were reminded, however,
that policy is not made in Switzerland or Rome, save by the Swiss or Italians, and that the
real influence has to be created back at home base. Whilst it will remain important to
cultivate and maintain our contacts at the key international sites, it is more important that
policy makers rather than policy deliverers are targeted for your messages. If this can be
achieved in a coordinated fashion amongst ITGA member organisations, the impact will be
the greater when our concerns are indeed raised amongst the diplomats in Geneva, Rome,
or wherever tobacco issues are being discussed.
502555327
BATCo document for WHO 2 March 1999
-5-
To this observer, the ITGA has come a long way in the year since Malelane. Given the
momentum which participation in the Harare Conference should provide, I believe that
your Association is on the threshold of realizing its full potential. Could it be that 1994, the
10th Anniversary of the ITGA’s foundation, will also be the year in which it achieves the
full recognition it deserves as the single, authoritative international representative of the
world’s tobacco farmers? I shall be pleased to provide whatever support I can to this
endeavour and to assist you and David in our overriding objective: securing the future for
tobacco.
I wish you well with your meeting and look forward to seeing you, Mr Chairman, next week
in Harare when I am sure we shall give those anti-tobacco zealots plenty to think about
Yours sincerely
Martin Oldman.
502555328
BATCo document for WHO 2 March 1999
PHILIP MORRIS
EFTA. EASTERN EUROPA
THE MIDDLE EAST ANO AFRICA REGION
sue Carlson
CAtCTOA COMOAAN aPPmAS
Mr B. Brady
British-American Tobacco Company Limited
Millbank Knowle Green
STAINES TW18 1DY
Lausanne, 23 November 1993
Dear Colleagues,
|jR^:LThird.Worid'TarmerM6biiis'atiohj';-:'-y|l
Referring to our meeting in London on 18 November, I enclose a copy of the
recent Fjnnish TV news that resulted from a media relation visit to ZTA in
Harare.
I am also glad that all companies agreed to join a smaller working group that
looks at the lessons learnt during last weeks' efforts by our Zimbabwe &
Southern African farmer friends in fending off the threat from the WHO
conference. (I also think Lal Taylor and her team deserve a great deal of
‘Thanks' for their hard work!).
_Belgjy,J_have listed a number of possible dates for the tentative working
-session in Harare (I will also communicate the dates to Lal to see which
dates are most convenient to her team for a briefing and a discussion):
:r
Monday, 10 January
xifriday, 14 January^)—
(Wednesday,1)2 February)through taCEriday, 04 February^)
n‘
a-t
Thursday, 10 February and Friday, 11 February
Monday, 14 February
BATCo document for WHO 2 March 1999
502555318
PHILIP MORRIS EUROPE S.A.
PRESS RELEASE
EMBARGOED UNTIL I7,QQhrs GMT.gth NOVEMBER. 1993
Tobacco Trade or Aid?
WITHOUT TOBACCO PRODUCTION MANY DEVELOPING
COUNTRIES WOULD BECOME MORE DEPENDENT
ON INTERNATIONAL AID
HARARE, 9th November - More than two thirds of the world’s tobacco is produced in
developing countries, satisfying a demand that has been predicted by the Food and
Agriculture Organization to grow for the remainder of this century at an average annual
rate of L9 per cent For many such countries, income from the international trade in
tobacco provides a major source of much needed foreign exchange and contributes
significantly to their development And yet, this legitimate and longstanding trade is
threatened. Not only are the livelihoods of millions of fanners around the world at risk but
also the income of governments, already struggling with serious debt burdens, is being
jeopardized by a new imperialism.
Having previously demonstrated
*
that there are no sustainable, economically equivalent
alternative crops to tobacco for the vast majority of tobacco fanners, the,International
Tobacco Growers’ Association commissioned an analysis of the impact which a modest
downturn in global demand for tobacco would have on the economies of six producer
countries. This analysis is reponed in Tobacco Trade or Aid?, launched today in Harare.
/continued
* Reference: Tobacco Farming: Sustainable Alternatives?, Volumes 1 and 2,
International Tobacco Growers Association, 1992
BATCo document for WHO 2 March 1999
Tobacco Trade or Aid? - Page 2
Prompted by the World Health Organisation’s call for a significant reduction in tobacco
consumption by 1995, the impact on the economies of Brazil, Bulgaria, Kenya, Malawi,
Tanzania, and Zimbabwe of a hypothetical 10 per cent decline in demand is examined.
Between them, these countries currently account for more than 30 per cent of the
international trade in tobacco.
In the report, the role that tobacco plays in the economies of each of the case study
countries is reviewed and the future volume of exports and their potential value in 1995 is
assessed. From this basis, the impact of a hypothetical ten percent reduction in demand is
determined and it is shown that there would be a collective loss of almost USS 120 million
across the six countries, arising from an overall decline in export volumes in excess of
59,000 tonnes. A further 23,000 tonnes would also be lost due to the assumed 10 per cent
decline in domestic consumption across the six countries.
In terms of foreign exchange, Zimbabwe’s losses would be greater than those of Brazil and,
at US$41 million, equivalent to more than a quarter of the country’s balance of payments
deficit For Malawi, the loss of ten per cent of projected tobacco export earnings in 1995
would increase its deficit on the current account by more than 30 per cent and would be
equivalent to 6 per cent of the aid received in 1991. Kenya’s loss would be primarily felt in
contributions to government income to which the tobacco industry in 1990 contributed 6
per cent of all central government revenue. Losses in foreign exchange earnings in
Tanzania would be equivalent to 5 per cent of expected 1992 expenditure on education or
7.3 per cent of expenditure on health.
It is clear that any significant reduction in global demand for tobacco would have a major
impact on the economies of each of the producer couintries examined in the report. One of
the most important challenges facing developing countries is determining how to increase
income and food security in a sustainable manner and generally improve’ the living
standards of their populations. It is also characteristic of developing countries that they are
reliant on imports for a number of essentia] inputs and have acquired considerable levels of
external debt
/continued
502555322
BATCo document for WHO 2 March 1999
Tobacco Trade or Aid? - Page 3
Given the bleak prognosis regarding crops alternative to tobacco, the question is asked:
how would economies of producing countries be compensated for the losses which a
sustained reduction in demand for tobacco would provoke? It is concluded that, denied the
dignity of contributing to their own development through foreign exchange earnings from
tobacco, the countries profiled, and many others, would become even more dependent on
the largesse of the aid donor community.
Tobacco Trade or Aid? comprises an introduction, six country profiles, an economic impact
analysis, and a discussion. 20 pages, including 2 figures and 4 tables.
For further information, please contact:
David Walder
Mrs L Burton-Taylor
Chief Executive
Zimbabwe Tobacco Association
International Tobacco Growers’ Association
P.O. Box 125
P O Box 1781
ZTA House
Forest Row
Baker Avenue
East Sussex RH18 5FA
Harare
England
Zimbabwe
Tel:
+44 (0)342 823549
+263 4 727441
Fax:
+44 (0)342 825502
+263 4 724523
502555323
BATCo document for WHO 2 March 1999
PHILIP MORRIS
EFTA. EASTERN EUROPA
THE MIDDLE EAST ANO AFRICA REGION
STIG CARLSON
Oiatcran conpoa«re affaims
Mr B. Brady
British-American Tobacco Company Limited
Millbank Knowle Green
STAINES TW18 1DY
Lausanne, 23 November 1993
Dear Colleagues,
^l^gfi^tiir^/dHtfFarmerMdBilisatiom^^l
Referring to our meeting in London on 18 November, I enclose a copy of the
recent Finnish TV news that resulted from a media relation visit to ZTA in
Harare.
I am also glad that all companies agreed to join a smaller working group that
looks at the lessons learnt during last weeks' efforts by our Zimbabwe &
Southern African farmer friends in fending off the threat from the WHO
conference. (I also think Lal Taylor and her team deserve a great deal of
'Thanks' for their hard work!).
—
■vc r
J3eljM,_Lhave listed a number of possible dates for the tentative working
session in Harare (I will also communicate the dates to Lal to see which
dales are most convenient to her team for a briefing and a discussion):
Monday, 10 January
✓tFriday, 14 January^
______________
(VVednesday'~02 Februaryjlhrough totjriday, 04 Februa~ry~)
Thursday, 10 February and Friday, 11 February
Monday, 14 February'
502555318
BATCo document for WHO 2 March 1999
May I also ask you for input as to the ideal agenda? Here are some of my
thoughts, for discussion:
1.
2.
3.
4.
5.
6.
Countering the Harare conference - lessons learnt and results achieved
in Southern Africa
Harare conference - lessons learnt from a 1st world perspective
Viewpoints on ANC commitment to fight smoking and possibilities of a
constructive dialogue
October 1994 WHO meeting in Paris - the agenda and ideas how
growers can help countering the threats
Possibilities to balance off the anti-smoking policies of the World Bank
Discussion regarding a global forum for discussing how farmers could
defend (their own interests by defending) the rights of the smokers.
Yours sincerely,
Stig Carlson
Coralma Int, Suresnes
Coralma Int, Suresnes
Coralma Int, Suresnes
Mr C. Vonthron"
*
Mr M. Von Blottnitz
Reemstma, Hamburg
Reemstma, Hamburg
Mr A.Castillo
Mr A. Rutherford
Mr M. McKay
R J Reynolds, Geneva
R J Reynolds, Geneva
R J Reynolds, Geneva
Mr N. Buck
Mr P. Van Cauwelaart
Mr A. Jamieson
Mr T. Mozley
**
Mr M. Pavitt
ROPM(I), Aylesbury
ROPM(I), Aylesbury
ROMP(I), Aylesbury
ROPM(I), Aylesbury
ROPM(I), Aylesbury
2
BATCo document for WHO 2 March 1999
502555319
Copies:
Mr M. Katlama
Mr C, Basse"'
Mr D. Lachartre
Memorandum to Dr. Sharon Soyas
December 22, 1992
Page 2
The Spanish edition of the McGill Conference will be
printed and ready for shipment next week.
My work on the Board of the Pan American Health
Organization continues as I try to redirect their priorities
toward disease control rather than life-style Issues.
I also believe the Institute's work will become even
more important over the next few years, given the change in
Administrations and the "stated" extreme anti-smoking positions
of the new Clinton Administration's Surgeon General and Health
and Human Services Secretary. During the Reagan/Bush
Administrations there was always a tension between the White
House and the U.S. State Department (which opposed many of the
policies of the World Health Organization) and the Surgeon
General and Secretary of Health and Human Services (which
generally supported the world Health Organization). Under the
Clinton Administration it is quite clear there will be complete
support from the White House, state Department, HHS and Surgeon
General’s Office with regard to the World Health Organization.
Because of the Clinton Administration change, I believe
the Institute will have to become even more active and vocal in
its constructive criticisms of the World Health Organization and
the support it will be receiving from the U.S. Government.
My general feeling is that because of the change in
Administrations, the tobacco issue will receive more funding and
support from the U.S. Government than it has in the past. Over
the next four years we will witness increased enthusiasm and
activism by the anti-smoking activists throughout the world.
I look forward to discussing all of this with you in
London in January as I begin to finalize the- Institute's
strategic plan for the next year.
Again, thanks for all of your support over the past
year, and if I don't speak with you before the Holidays, I want
to wish you and your family a very Merry Christmas and a happy
and prosperous New Year. Best wishes.
500899120
BATCo document for WHO 2 March 1999
x
F. 32
S-. fci'J’J fSo'-fAV
&.&.
7JL(^^.
W7
fy>»J ft
* £W
°#w
' memorandum
VIA TELECOPIER
TO:
Oil 44-78-445-5000
Dr. Sharon Boyse
British American Tobacco Company
FROM:
Paul Dietrich
DATE:
December 22, 1992
As usual, I am late in sending out my bills. I Just
returned yesterday from Russia and the Republic of Georgia and I
em trying to send out all of my bills by the end of this year.
I am attaching with this memo, a copy of a bill for my
monthly consulting fees from June 1, 1992 through September 30,
1992. During this period of time, please make out your check
payable to Paul Dietrich, 500 4th Street, S.E. Washington, DC
20003.
For the period of October 1, 1992 through December 31,
1992, you will be receiving a bill for my monthly consulting fees
from Squire, Sanders a Dempsey. You should be receiving those
bills within the next 30 days.
I expect to be in London in January and I would like to
discuss with you in some detail, the work that has been done over
the past year by the Institute ,for International Health and
Development as well as our plans for 1993.
You should have received copies of the Institute’s
publications for 1992. However, I received a note from your
secretary asking that copies be sent. I have asked our mailing
house in Pennsylvania to send you additional copies. Our winter
issue of International Health and Development is at the printer
now and will be published and mailed in late January.
My book on the World Health Organization is in the final
process of editing and I expect it will be printed and mailed in
early February.
500899119
document for WHO 2 March 1999
£& i
FAX # ^3^®
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im 'tvtA-f-fA
•sfiT?
inFo ■
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- iW |Mfo.
vTftE INDIAN EXPRESS
From: Information Unit
THE TIMES OF INDIA
THE HINDU
--------------------------------------- -
THE ASIAN AGE
THE STATESMAN
OTHERS
THE HINDUSTAN TIMES -- ------------------
5
06-SEP-1999
r-^Io(n^
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- Vofc.
12=26
Admit Makers Of Marlboro
US tobacco giant Philip Morris admits in a
Texas court that tobacco is addictive just a
few years after swearing under oath that it
was not; says SANCHITA SHARMA
OBACCO companies world ties oftobacco were commonly known to
wide suffered a major setback the public since the time of Christopher
when a federal judge in Mar Columbus. Therefore, the tobacco in
shal, Ibxas, ruled that the fam dustry asserted, McLean assumed the
ily of the ‘Marlboro Man’ cigarette ad risk of addiction and cancer death when
actor could proceed with a wrongful hestarted smoking.
The McLean family's counsel coun
death suit against the the US's top ciga
tered this at the hearing on the motion
rette-maker, Philip Morris Cos. Inc.
Actor David McLean, who had ap by pointing out that the tobacco com
pany
executives had testified under oath
peared in innumerable print and televi
sion. advertisements as the original before the US Congress in the mid‘Marlboro Man’, the image of a rugged 1990s that tobacco was not addictive,
cowboy who promoted Philip Morris’ and that these hearings were nationally
top-selling Marlboro cigarettes, bad televised. So hr, tobacco companies
died of Jung cancer in 1995. He began have been suppressing information on
smoking in real life at age 12 and his the addictive nature and the harmful
widow, Lilo McLean, and their son, health effects of tobacco for obvious
Mark Huth, filed suit for wrongful death commercial reasons.
The McLean lawsuit alleges that the
in 1996.
Interestingly, Philip Morris sought to actor became addicted to tobacco and
have the case thrown out by the judge developed terminal lung cancer from
smoking.
The suit also alleges that the
before a jury trial on the plea that Tbxas
lav/ prohibits suits for addiction and that defendants suppressed information
the "addictive'’ and dangerous proper about the addictive nature of tobacco WELCOME TO MARLBORO COUNTRY: Cigarette hoardings from around the world
T
from the public and the governmer
long after warnings for cancer we:
mandated in 1964.
The other actor and model who h:
dragged his former employers, again
tobacco company, to court is Alan Lai
decs. Landers^who provided the ima(
of a cool smoker as ‘Winston Man’ ft
R.J. Reynolds ads, started smoking :
age 9 and has filed a lawsuit again
Reynolds blaming the company’s cig;
rettes for his health troubles. Hehassu
vived two fights with lung cancer, ha
three of five lobes removed from h
lungs and had.muIlipIe,o|heprnokiAi
related surgeries; ‘-including- heai
surgery, al because ofhis addiction to t<
bacco, the only product, he says, “whic
kills you when used as directed”.
Judge David Folsom made the rulin
■rejecting an industry motion for di< -t
missalonAugustl3inUS District Cour °
for the Eastern District of Ttxas. If th
appellate court upholds the ruling, thtrial couldbegin inearly2000,accordin.
to attorneys for the widowandsonof ac
tor McLean.-Judge Folsom had previ s
ously ruledthatthcAttomeyGeneralo §
the State ofTutas was not barred unde g
Texas law from bringing suit against thi rv
tobacco industry and that suit was subse u
quently settled.
Over81akhpeopledieoftobacoo-re §
lated causes in India every year, that is <s
more than 2,200 people every day. Tb
bacco smoke has more than 4,000 chem -g
icals, of which at least 43, are definite!)
carcinogenic.ItcauseshalfofaJIcancen -J
among men and a fourth among womer.
in our country, where 2.25 new cases
were reported in 1996 alone.
FROM
Toiiaooo h MOcfio&e,
Alternate crops to tobacco
recommended in Andhra
M Enosh Jeremiah
HYDERABAD 6 JULY
TOBACCO farmers in Andhra
Pradesh, who are observing a
crop- holiday during the year 20002001, have been advised to grow
millets, pulses, and oilseeds as al
ternate crops “as they give almost
the same returns to farmers as to
bacco does.”
The advice has been given by a
team of scientists and officials of
the Acharya N G Ranga
Agriculture
University,
Hyderabad, Central Tobacco
Research Institute, Rajahmundry,
Tobacco Board, Guntur, and the
state agriculture ministry.
They studied the best alternate
crops to tobacco and prepared an
action plan.
The team classified important
tobacco growing areas in Guntur,
Prakasham,
East
Godavari,
Khammam,
______ ,
Krishna,
West
Godavari districts into eight ‘situa
tions’ based on the factors like
soil types, rainfall, irrigation po
tential etc.
The eight classified 'situations'
are: black soils, rainfed (well dis
tributed rainfall); black soils, rainfed (late onset of monsoon); black
soils, rainfed (early withdrawal of
rains); black soils, irrigated; red
soils, rainfed (well distributed
rainfall); red soils, rainfed; red
soils, irrigated; and alluvial soil
(inundated up to September).
The recommended crops for
such soils being soyabean, green
gram, sesamum, sunhemp, pillipesara, pigeonpea, cotton, maize,
sorghum, chillies, sugarcane,
turmeric, colocacia, sunflower,
groundnut, b^jra, horsegram, and
fodder seed. “Since tobacco, par
ticularly FCV (flue-cured Virginia) .
tobacco, is an important commer
cial crop, we have taken care to
recommend only such alternate
crops which give almost as good
returns, if not better, as tobacco,"
the agriculture ministry officials
told ET.
According to Dr A Padma Raju,
director of research, Acharya N G
Ranga Agriculture University, who
was also a part of the team, the al
ternate crops have been short
listed after carrying out extensive
research, as also consultations
with various concerned institu
tions.
“Besides, we have also involved
tobacco fanners in deciding on the
alternate crops as it is ultimately ^,-1
they who have to get convinced of ><'
the usefulness and effectiveness
'
of those crops,” he said.
U T U S A N
• Simplify your life
—n
• Slow is beautiful
■■■ ■ ■■■
Eg
h HHRR H KK How the government and tobac-
Bkw
OPIUM
WAR
WilwF co corporations in the U.S. came
to a “global settlement” to con
trol smoking at home and more
aggressively push death and
disease to developing countries
such as Malaysia.
any more people
in
developing
countries such as
Malaysia will die of smokingrelated diseases as a result of a pro
posed settlement between the government
and tobacco corporations in the United
States of America.
About 250 international health leaders
signed a petition recently, urging U.S.
President Bill Clinton to scrap the deal.
Amongst the, signatories, were delegates to
4 -the-Tecentlydfeia^
on ■
Tobacco or Health in Bering, where senti
ments against the tobacco pact ran strong
and deep.
Though known as the “Global settle
ment”, the pact says nothing about the
global operations of US tobacco companies
and does nothing to restrict their activities,
on the other hand, it gives free rein to the
companies to export death and disease.
An aggressive exploitation of the peoples
of developing countries by the tobacco cor
porations, in collusion with the U.S. govern
Whether it’s held in your hand
ment, and a silencing of any opposition to
or kept in your pocket, your
the peddling yf their drugs can only be
multi-purpoaBjdisposable ...
expected.
lighter is a ?live bomb” that
The deal will also close off foreign tobac
can blow up and injure or kill!
co victims’ access to U.S. courts and effec
Such lighters have been linked
tively end £he disclosure in the U.S. of
to numerous cases of death
damning internal company documents.
and injuries in several coun
It will provide virtual immunity for the
tries in the past. — 5
tobacco industry from future legal action ■
and from paying any penalty for past
wrongs.
QUESTIONABLE COSMETIC CLAIMS
This scenario is so reminiscent of the
19th century Opium War, when Great
“Natural”. “Cruelty free”. “Unscented”. "Fragrance free”. “OU
free”. "Noncomedogenic”. What do these claims on cosmetic
Britain forced China to open its doors to
products mean? What’s thef truth behind these claims? Are prod
the British-controlled opium trade.
/
ucts with such claims as gentle and caring as they sound? The
The unsettling settlement — on pages /
answers may well surprise you. — Centretpread
M
EXPLODING
LIGHTERS
2, 3, 4 and 13.
'
' /.
'.iscusses
the Godavari
various operational
activities
connected with tobacco cultivation and the .
in the West
district of Andhra
Pradesh.
SPECIAL
-rt.xvlabourers
JL ±k-cUl/u»
skills required on the part of the labourers. In the absence of adequate supply
of skilled
examines from
one such
regarding
the an
introduction
light soil
Flue Cured
Jgfafea, they irk,
are imported
areassituation
where there
is already
establishedof
tradition
of tobacco
culti- .
j^a^and where tobacco cultivation has declined. This stream of migration which tends to be job
discussed
in
detail.
such skills in other areas move to the new areas of ■ development. The present paper,
L-Development and Labour Migration
'The part played by government agencies and certain companies in the development of tobacco
^tighas been significant. While the farmers get east/ credit, fertilisers, technical help and marketing
j&^he labourers are left to themselves. Wage rates are low, the camping labourers live in miserable
dopment demands a large supply of labour having new skills. The labourers who have
medical facilities are poor and inaccessible
MSA and
Rao and there are no educational opportunities for
‘ii'children who migrate along with the parents. There is no voluntary organisation or union which
rgmises labour for a better deal. A plea is made in the paper for planning for labour development and .
-M&e.as an inte^ Part °f ^le programme of tobacco development.
J
ining for Labour Welfare and Development
“IL
THVATION of flue cured Virginia
the light soils demands a
.jJtSDPpiy’ of labour having
new
.,&t‘.’Often labourers who have al, ..4$acquired such skills in other
1 rahnigrate to the new areas of deveLni'nb .Planners tend to ignore the
-tdMf migrant labourers in planning
nearly 120.000 hectares yielding about Godavari district in Andhra Pradesh
100 million kilograms. Government of stands at the top in terms of hectarage
India gets a revenue of about Rs 390_ (ILTD 1970). During 1977-78, culti
crores by way of excise duties.
Ap vation of FCV tobacco in new light
proximately 90 per cent of the total soil areas had extended to over 21,300
foreign exchange earnings from tobac hectares far exceeding the target
of
co exports comes from FCV tobacco^ 12,000 hectares. The total light soil
Exports during April-December 1977. coverage during 1977-78 amounted to
; tobacco development. The present reached an all-time record crossing 80,000 hectares (Hindustan
Times,
i^^aocuses
its attention ■ on the
the Rs 100 crore mark, (press release,
New Delhi, March 20, 1978).
«®J&r~ planning for labour welfare Tobacco Board of India, Guntur).
In 1978 light soil FCV tobacco was
^.^development as an integral part
Tobacco provides employment on a grown on 8,905 hectares in the upland
i tobacco- development. * The specific large scale at different levels. It em- area of West Godavari district and a
sjshcal situation pertains to the in- ploys 705 lakh farmers and provides small part of Khammam district. This
ftsduction cf Light Soil Flue Cured
employment to more than 30 million includes
whole of Polavaram
taluk
i'm^jjLrobacco in the West Goda- people in such
activities as curing, except the Godavari banks, about half
of Andhra Pradesh.
grading, redrying, packing and jn~6Fdi of Kavoor taluk, and a few villages in
Tofeccd is one of the important cash and cigarette industries (Muralidhara Chintalapudi,
Elur and Kothagudam
'India and its cultivation forms Rao 1977). '
taluks. There are 2,743 barns in ope
portant aspect • of agricultural
While the introduction of FCV to ration in this area, according to ILTD
hent Although country tobac- bacco in 1929 was a great landmark in records. The present paper is confingrown on the west coast since tobacco cultivation, the introduction of . ed to this upland area where light soil
h.^century, Flue Cured Virgi- light soil FCV in 1960 was a greater FCV tobacco is grown. It is based
V) tobacco was introduced in event as it is considered to be the best on field work (which is still in. pro
However, it was only in 1929 exportable quality fetching the highest gress) in this area for two months,
at'FCV tobacco was successfully cul- price. Currently (1978) the price of January to March 1978". We shall des
■'■ated,'first in Andhra Pradesh. While X-l quality of light soil FCV tobacco cribe below the various' processes in
SWranks third among the countries is Rs 1,250.00 per quintal. There are' the cultivation of FCV tobacco and the
educing tobacco, next to USA and three regions in India where light soil nature of demand for and supply of
lima,' it occupies
the fourth rank FCV tobacco is grown: West Goda labourers having varied levels of skills..
along the • countries producing the vari district, Andhra Pradesh ' (Nor
■Light soil FCV_tobacco cultivation is
^iobacco next to USA, Japan, and thern Light Soil), Prakasam and Nellore the most labour intensive of all the
Districts, Andhra Pradesh (Southern varieties of tobacco. From raising the
Wdal . India accounts for about 11
lucent of the total area and 8 per Light Soil), and Mysore, Hassan and nursery to marketing, it is one con
cetf£; of the world tobacco production. • Shimoga Districts in Karnataka, (Kar- tinuous chain of operations
needing
>©975 FCV tobacco, was grown in nataka Light Soil); Of these;— West labourers ail through. Light soil FCV
1183' ■. ..
July 22, 1978
tobacco in West Godavari is raised by
irrigation during October-April.
The
fields are ploughed and
made ready
for transplanting in October. After re
gular watering .for three days in the
beginning, it requires watering once a
week. After 20 days of transplanta
tion inter-cultivation...and _weeding are
done.
Fertilisers are applied once,
and pesticides are sprayed twice in the
season. The caterpillars do not auto
matically die with spraying. They will
have to be picked, individually, and -kil
led. When the plants flower, they are
removed by topping, and after a few
days suckering is done.
In January
the cropjs ready for harvesting. The
leaves are picked, from the bottom,
once a week, and they are transported
by bullock carts to the bams where
they are tied to bamboo sticks and
stacked in 'the barn for curing. Nor
mally there are ten pickings of leaves
for the season beginning from-January.
After the leaves are
cured which
takes about six days per barn, they
are removed from the sticks and bulk
ed. Sometime in February the far
mers start the grading and baling ope
rations, as soon as the market opens.
The cured leaves are untied and grad
ed into three or four majbf lots. They’
are baled ’and transported to the buy
ing points of various companies. It is
estimated that the labour required per
acre for all the operations from plough
ing to marketing is 304 man and wo
man days. This excludes the more
skilled labour required in curing. Each
bam needs one curer and a fireman
for a period of three months. One
barn can cure leaves from six to seven
acres.
Apart from the demands made by
the farmers on the labour, the buyers
(companies) need
a large army
of
women labourers for gradin~g~an~d~~fedrying. A large buyer employs thou
sands of women in grading and redry
ing during
late February
to May,
depending on the amount
of stocks
that the company has been able
to
buy.
For instance, ILTD alone has
employed 17,589 workers in grading and
redrying operations in the 1978 season.
This excludes workers employed ,.Jn_
the manufacturing of cigarettes
and
chut'tas ’ (correspondence 21-4-978).
IF is necessary to distinguish diffe
I
. ECONOMIC AND POLITICAL WEEKLY'
reaping and tying of the leaves to the male workers migrate to the grading
sticks are considered to be skilled jobs. centres of the companies which ' are
Not only the right
leaves are to be located at different places. There are
and
picked but also it has to be done with about twenty major companies
considerable swiftness. Similarly, tying some of the big ones among these
the leaves to the sticks with speed is have four to nine grading centres,'
a skilled job. Six to seven acres of employing thousands of females in each
,
tobacco fields will give one bam ItJSd • of them.
We have thus far
considered the
ot leaves. The picking will have to
be done before noon and tying before magnitude of the demand for labour
the evening. About 800 to 1,000 sticks and the nature of skills required- (in
will be loaded into the barn.
This the cultivation and processing of Ugh;
crucial task of reaping and stringing soil FCV tobacco. We shall now con
is generally done by a gang of twenty sider the social composition, organisa
tion and conditions of work and living
persons, on a contract basis.
",
The local labourers have learnt these of the migrant labourers.
We have noted that there are 274?
skills only recently. The farmers have
not developed confidence in them bams in the Northern light soil area!
especially in regard to dependability, Approximately 220 migrant gangs or
authenticity
and
swiftness. Hence 4,200 workers from Guntur and Krish-1
na districts are working on the toba®
they invite gangs of labourers consist
ing of adult males, females, boys and co fields in the current season. Each
gang (banta) is headed by a leader.
girls from Guntur and Krishna districts
where there has been a tradition of (maistri) and consists of 18 to 20
labourers. I have interviewed labour
FCV tobacco cultivation. In fact, FCV
tobacco was first introduced in Gun ers in twenty-two gangs spread over
tur district in black soils, and Guntur five villages — one in Kovoor taluk
and Krishna districts enjoyed the and four in Polavaram taluk. I give
virtual monopoly of its cultivation for below an account of the social com
a period of about thirty years until the position, age and sex and place -.of
introduction of light soil FCV and origin of the migrant workers. . ' !%;•
canal irrigation (Nagarjun Sagar) in
Twenty one out of 22 gangs .have
the early sixties. While tobacco culti
migrated from Guntur district' and'
vation declined in Guntur and Krishna one gang has come from Krishna'
districts as a result of the combined
district The distance varies from 150
effects of canal irrigation and lack of to 250 kilometers. Out of the:2I'
market for black soil FCV, it picked gangs which have come from Guntur
up in the upland area of West Goda
district fifteen have migrated front' 1
vari district. The introduction of new
Sattanatpally taluk, three from Macharhj
*
|
light soil FCV tobacco in West Goda
two from Narasaraopet and one frija. j
vari district further •- increased the Tenali. There are in all 377 migrant' r|
demand for expert gang labourers from labourers in the 22 gangs. While 317. I
Guntur and Krishna districts, during are adult labourers above the age rf I
the time of harvesting, i e, January to
16, 60 are child labourers between’ tlx. .i
end of March or beginning of April.
ages of 15 and nine. There are NO
Often farmers will
have some acres non-working children including baht
*
j
under late plantation which mature in
Out of 317 adult labourers, 179 (“j'M
the first and second .weeks of March males and 138 are females and out 41
and harvesting will go on till the mid
60 child labourers, 23 are malesi *
4 J
dle of May, in which case the migrant
37 are females. The 377 labourenlffi
gangs are kept busy until the middle distributed
over 149 househoIdsJSS
of May.
longing to seven castes.
large^j
jority of them (nearly 95 per^jSS
Another highly skilled job in FCV
belong to two major scheduled' Qg; «
tobacco processing is curing.
Once
— Maias (262) and MadigasM?5j >
again curers from Guntur and Krishna
♦
districts are invited by ‘ the farmers Thirteen labourers belong
scheduled tribes —. Yarakulas'.
in West Godavari district. Approxi
i
mately there are 800 migrant curers in Boyas (5). Only 3 labourers
.
the 1978 season. ■ Grading is also con the peasant caste Kapus and"(ji
rent levels of skilled jobs connected sidered to be a semi-skilled job for
the washerman (Sakali) and
’
with light soil FCV tobacco cultivation which only women are employed. The
cowhered (Golla) castes.
t
Thus the migrant labourersj^^^j
and the CPY specific tack-s in nr-rier tn ' JacaL_labo.urers_haye._picked up this
- -understand -- the- demand—for-specific-.^ -skill and the farmers mostly depend
consist of Maias and Madiga^'X’ '
majority of them-are Christian^^L , ,
. skilled jobs. -In the. whole-series of upon them. The
companies which
operations connected with tobacco buy tobacco need female labourers for
a large number of them are
■
kj;
cultivation and processing, weekly
grading, on a large scale. Hence fe- • ral labourers ar the places PyMK
1184
S&a... -ejwC
*,.
.. X •
.f
ECONOMIC AND political weekly
July 22, 1978
tarthen pots and fuel for cooking and
baby to the
place where the 4
■; a few of them are engaged in weaving Then they return to their hut, wash the
g coarse doth of forty counts and be- and relax. But the women will have mother is working. But this is' pos
low. The labourers normally move in to cook their food and feed the ba sible only when the place of work is
a
near the hut Fourthly, there is ab
K units of households consisting of hus- bies, Cooking is done only once
solutely no provision for medical care
■ band, wife and
children, or brother day in the evening.
On an average, the gang labourers of the migrant labourers. If a 1'aboui • and sister, or mother and daughter. .
■ There are also many single member work 12 hours a day. All the labou rer falls sick, he will not only lose a
migrants who attach themselves to one rers including child workers are con day's wage but will have to suffer
sidered to be equal in terms of work without medicine. When he is having
•j.. or the other kitchen unit.
Each one gets Rs 5 a high temperature, he cannot possibly
The leader of the gang first establi- and wages.
materials
for with
building
largeeither
hut,
day. Farmers pay Rs 100 (which is walk two to three miles to reach a
J.; shes
contact
the one
fanners
■ personally or through correspondence. the current rate) per day per barn government hospital to get the medi
LA group of farmers having a total of work. The leader of the gang keeps cine. There will be no one to get him
9 .. six bams will invite the
leader to account, for each worker, of the ad the medicine. If any one of the gang
'..come with his gang.
The unit of vances made for buying
provisions, will have to go to get the medicine,
operation for one gang is six barns, cheroots and bidies and going to cine he will also loose a day’s wages. The
their
and six to seven acres per barn. The ma. He also keeps the muster of at farmers do not feel that it is
'armers give one way train or bus fare
tendance. If a labourer is not well and responsibility ' to give the workers
for coming,
bamboo and thatching does not work, he will not get the • medicine. Hence only when the tem
wages for the day. Similarly if- for perature subsides after a day or two,
any reason the fanner has no work for will the worker walk to the govern
the gang labourers, they will not get ment hospital and get the medicine.
the wages. Although in theory the He will lose again one day’s wages
leader is free to work for another far to get the medicine. Thus he will
lose three days’ wages if he is' sick.
mer outside the
contract, he learns
about lack of work for the next day Under conditions of open air camping,
only a few hours before the night, and non-nutritious food and overworking,
he will not have enough time to make cases of illness are frequent.
Fifthly, the non-working children
an alternative arrangement.
not
The farmers in the contract will not who accompany the parents do
make full cash payment
every day. get any schooling ■ facility. Out of 101
They only pay a little sum of money non-working children in the sample, 30
to the leader to enable him to
buy are below the school-going age. Seventyprovisions for his gang members. -All one children who are above five years,
the accounts are settled at the end of have to waste their schooling
days
season when
the farmer
gets cash
because
of the absence
of school
payment for the marketed tobacco. If facilities.
Besides the non-working
the product is good, and if the farmer children, the working children between
the ages of 15 and nine, and the working
is happy, . he may give some extra
money as bonus for the leader of the adults can also be educated informally
gang. Otherwise the leader will have in the evenings. Ninety per cent of
to be satisfied with the agreed wages,
the gang labourers are illiterate. The
i e, Rs 100 per day’s work.
state of illiteracy will be inherited by
The foregoing account of the con- the children in the absence of educa
te the barns.
The labourers accom- ditions of work and living of the mig tional facilities in the place of work.
1 Way the bullock
carts and
unload rant labourers shows
that these are
It is necessary to stress that migra
< teree or four carts at the bam. They far from satisfactory. Frst, the con tion is a way of life with the gang
> bardly take half an hour- off for hav- tract wages are lbw, the labourers get labourers, not only among the tobacco
■ iaj their midday meal. Usually they Rs 5 for 12 hours of work. Second, workers but also among all types of
d? so only if their huts are near the the housing is very poor. All the mem contract workers. Hepce it is necesfcrn. Otherwise
they continue to bers of six to eight households com
. sary to plan for the provision of basic
*“t, without a break.
prising a gang live in one hut. The needs of shelter, medicine and nutriSjjftround 1 pm they start stringing
thatching material provided
by the tion, and education wherever they
*es
■S
to the sticks. This is team- farmers is so poor that if it rains in move. Who should provide these faci
wtk. each team having three members:
the night, they will have
to collect lities? This is the basic question in
2®? to hand in leaves and
one to their babies and belongings and rush
the exploitative system.
Jteg them up. This operation takes to the nearby (often one furlong) farm
It is evident that the planners and
five hours. Then the labourers house or farmer's house. Thirdly, the promoters,’ both government and pri
B“ad the sticks with cured yellow mothers do not get
time to breast vate, have not taken the needs of the
*
Bfc
from the barn putting them on feed their'babies. .Although it is left labourers
...
r
o agricultuxaL
..o
in
planning
Rjstand in the open, and load the
to the leader to organise the work in. development im-general and light soil
fe. with the sticks with the green
----.
r-------------- -- ._
t
This operation—-takestzabbtit—so-much .that the-mothers do not get
BgLhourr't'Thus. it’-is-onlv by aboirt
*"
time to return to. their hut to care for
BSm'that the gang labourers will" tHe'babies. Occasionally an eight-year
■nle to complete their day’s work,
old girl who is -baby sitting will carry
cannot be gainsaid that labour is an
important input in the. productive, sys
tem, and therefore the planners and
promoters should plan for labour deve1185
' -'Hidol of Tobacco-related Cancers and Other Diseases.
International Symposium, 1990. Prakash C. Gupta, James E. Hamner, HI
tsnr.R. Murti, eds. Oxford University Press, Bombay, 1992.
Communication strategies for intervening in the
tobacco habits of rural populations in India
Mira B. Aghi, P. C. Gupta, R. B. Bhonsle and P. R. Murti
Sasic Dental Research Unit and WHO Collaborating Centre for Oral Cancer Preoention,
Tata Institute oj Fundamental Research, Bombay, India
A 10-ycar prospective intervention study was conducted in three rural areas among 36 000
tobacco users in India with the objective of bringing in behavioural modification and habit cessa
tion. This was a complex exercise, considering that the study population was diverse, illiterate and
non-voluntary, coupled with characteristic life styles, beliefs and perceived notions on the medic
inal importance of tobacco. In-depth studies and pilot surveys were conducted prior to the plan
ning of intervention. On the basis of these studies, several communication inputs were designed:
(i) personal communication, (ii) films, (iii) posters, (iv) folk-drama, (v) radio programmes, (vi)
cessation camps, (vii) denial treatment and (viii) newspaper articles. These were pretested and
the population was exposed to them in measured doses. These approaches were found suitable
and brought about habit cessation in 14% of the tobacco users. Personal communication which
afforded one-to-one interaction was the most preferred input by the population.
INTRODUCTION
Oral cancer is a common cancer in India (1),
and voluminous data demonstrate the causal
role of tobacco in this disease. It has also been
established that tobacco habits are strongly
associated with various oral prccancerous le
sions and conditions, and that oral cancer in
most instances originates from precanccr (2-5).
Motivated by these findings, an intervention
trial was undertaken among 36 000 tobacco
users in three rural areas in India, namely,
Bhavnagar district in the State of Gujarat,
Ernakulain district, Kerala, and Srikakulam
district, Andhra Pradesh. The broad objectives
were to: (i) motivate people to give up their
tobacco habits, and (ii) measure its impact on
the incidence of oral precancer. This paper
describes the planning, design and implemen
tation of communication strategies in pursu
ance of the first objective of the study.
study population
The target population consisted of 12 000
tooacco users aged 15 years and over in each of
the three districts. The tobacco habits preva
lent in these areas included smoking cigarettes,
bidis, hookli, chutta and reverse chutla; tobacco
was also chewed by itself, or more often in pan,
i.e., betel quid. The populations in these areas
differed in their life styles, languages, diet,
educational level, socio-cultural set-up, atti
tudes, beliefs and perceptions, and they were
non-voluntary.
PLANNING OF INTERVENTION
The first step in the planning of intervention
was to understand the habits — how were they
taken up, how they are continued and how
they fit into the life style of the habitues —
what perceptions they have about the virtues
or ill-effects of these habits and finally what
will make them quit the habits, if at all.
Very little information was available on
the above factors for planning the strategy.
Therefore, a series of in-depth interviews with
individuals, and short surveys of the pop
ulation were done in each area. These studies
304
Aghi el al.
also investigated what kind of communication
inputs the population needed or would be
receptive to. These studies showed that al
though people generally thought that tobac
co use is not good, they were not aware of its
harmful effects. Accordingly, the focus of the
intervention revolved around health educa
tion, reinforcement, motivation, suggestion of
methods of cessation, and advice on combating
withdrawal symptoms.
The following communication strategies
were designed, pretested and used with peri
odic up-dates on the basis of feed-back.
Personal communication: Personal communi
cation was provided by examining dentists,
social scientists and other members of the
team. The type of information to be given by
each communicator was predetermined. Per
sonal communication was usually given in a
one-to-one or one-to-two ratio and was done
with a view to sorting out doubts and learning
behaviours that would result in abstension
from the habit. The steps in personal commu
nication were worked out in a logical order,
keeping in mind the dynamics of human psy
chology and what it takes for people to make
decisions and change their attitudes and be
haviour. Visual aids, like pictorial booklets or
a set of photographs, were utilized. Personal
communication accorded an opportunity for
the people to establish trust and confidence
so that their individual problems regarding
tobacco habits could be discussed. Methods of
tobacco cessation and means of combatting
withdrawal symptoms were a part of the per
sonal communication.
Films: Film is a very powerful medium for cre
ating awareness, especially among non-literate
and semi-literate audiences; and when it is
utilized effectively, it works in motivating
behavioural changes. Its advantage is that it
gives information to many people at the same
time. Besides giving a uniform message to
everyone, it can present information by dram
atizing situations that haVe human appeal.
Communication strategies
Two films were produced in local languages
specifically for this study. The objective of the
first film was to give information and create
awareness about the relationship between to
bacco habits and oral cancer; the second film
was intended to point out how habits are taken
up, continued and how they can be given up?
To derive maximum benefit, the film was
screened according to a set format, it was
shown to small groups at a time; in Kerala,
screening was always done in a room, while
in Gujarat and Andhra Pradesh this was not
always feasible. The screening was preceded
by an explanation of the film by social scien
tists and followed by a group discussion.
Posters: Specially designed posters wcr-1 dis
played to serve as a reminder to the target pop
ulation that they ought to be reconsidering
their tobacco habits. Two kinds of posters were
utilized, one with a written message and the
other with pictures. Slides prepared from these
posters were projected in movie houses around
the villages. In addition, hand-written posters
summarizing the findings in the village were
put up.
Folk-drama: Plays were produced to correct
the prevalent superstitions and misconceptions
about tobacco with the objective of discussing
and perhaps explaining them. Folk-drama was
used in Srikakulam district because buna hatha,
a form of folk-drama with songs and music is
popular in this area. The format of buna xalha
was well-suited for conveying interver tion
messages as it had three characters: the first, a
clown represented the viewpoint of the vi lag
ers and conveyed their misconceptions and
beliefs; the second character represented the
examining team, and dispelled the misconcep
tions; and the third coordinated the infoi ma
tron in the right perspective. A special scri-1 on
tobacco use and oral cancer was written in
folk-drama style.
Radio programmes: These were utilizer to
create an environment that would heH the
target population to think about their tobacco
habits and act as reminders in between exam
inations. The programmes were made in the
form of talks, interviews, dramas, documenta
ries and spots.
Cessation camps: At a particular time, cessa
tion camps were conducted in the villages on
request of the target population, who volun
teered by saying that they believed what was
said about tobacco and would like to give it up
but needed help and support. In cessation
camps, detailed discussions were held to sug
gest solutions to the problems of discontinuing
the tobacco habits. Regular daily folloW-up
was maintained for a few days until people felt
they could abstain on their own.
Dental treatment: Pre-planning surveys re
vealed that a majority of the people, and most
women, began to use tobacco for its perceived
medicinal value for tooth-related problems
(see paper by Bhonsle el al., this volume). It
was decided to address this problem by setting
up temporary dental clinics in the villages so as
to eliminate at least one of the reasons given for
practising the habit. This opportunity was also
utilized to conduct exhibitions on tobacco hab
its and organize group meetings, with a view to
encouraging the target population to ask ques
tions and to discuss their feelings and doubts.
Newspaper articles: Although literacy was
low, with the exception of Ernakulam (65% in
1980), newspaper articles were published in all
areas under study to inform and educate peo
ple on the subject of oral cancer and interven
tion. It was hoped that school children and
other literate members of the community
would read and convey this information.
METHODOLOGY
The intervention procedures were integrated
and matched with routine examinations of the
305
population. The examinations were done dur
ing a base-line survey and 10 annual follow
ups. In each area, oral examinations, inter
views and intervention were conducted by a
team consisting of dentists, social scientists,
interviewers and other supportive personnel.
The social scientists were trained in conduct
ing in-depth interviews and in interacting with
the population in a considerate and friendly
manner. They were also given requisite infor
mation on oral cancer and prccanccr.
The study population in each area was
spread over many villages, and the examina
tion procedure lasted 3-10 days in each village,
each year. During this period, the social scien
tists and other members of the team interacted
with the population, delivered personal com
munication, screened the film and fixed the
posters.
EFFECTS OF INTERVENTION
Il was gratifying to note that the intervention
procedures adopted were easily understood by
the villagers and the concept of intervention
was well received. This was borne out by the
results. For example, in Ernakulam at the end
of one year of intervention, 2% had discontin
ued the habit (6); 9.4% had discontinued after
five years (7), 12.3% at the end of eight years
(8) and 14% at the end of 10 years (see paper
by Gupta et al., this volume). A ‘rank ordering’
of the inputs by the target population as per
their preference indicated that personal com
munication had been the most helpful to them,
perhaps due to the one-to-one interaction that
it afforded (9).
Acknowledgments
This study was supported by funds from the
National Institutes of Health, USA, under
Indo-US Fund Research Agreement No. 01022 N.
' 306
Acm el al.
References
1.
2.
3.
4.
5.
Indian Council of Medical Research. National
Cancer Registry. Annual Report 1985. New
Delhi, 1988.
Mehta FS, Pindborg JJ, Gupta PC, et al.
Epidemiologic and histologic study of oral can
cer and leukoplakia among 50 915 villagers in
India. Cancer 1969; 24:832-49.
Mehta FS, Gupta PC, Daftary DK, el al. An
epidemiologic study of oral cancer and precancerous conditions among 101 761 villagers
in Maharashtra, India. Int J Cancer 1972;
10:134-42.
Bhonsle RB, Murti PR, Gupta PC, el al.
Reverse dhumti smoking in Goa: an epidemio
logic study of 5449 villagers for oral precancerous lesions. Indian J Cancer 1976; 13:301-5.
Gupta PC, Mehta FS, Daftary DK, el al.
Incidence rates of oral cancer and natural his
tory of oral precancerous lesions in a 10-year
follow-up study of India villagers. Community
Dent Oral Epidemiol 1980; 8:287-333.
6.
7.
8.
9.
Mehta FS, Achi MB, Gupta PC, et al. An
intervention study of oral cancer and precanccr in rural Indian populations: a preliminary
report. Bull World Health Organ 1982; 44:
441-6.
Gupta PC, Mehta FS, Pindborg JJ, et al.
Intervention study for primary prevention of
oral cancer among 36 000 Indian tobacco
users. Lancet 1986; ii:1235-9.
Gupta PC, Mehta FS, Pindborg JJ, et al. A
primary prevention study of oral cancer among
Indian villagers. Eight-year follow-up results.
In: Haka.ma M, Beral V, Cullen JW,
Parkin DM, eds. Evaluating Effectiveness of
Primary Prevention of Cancer. IARC Scientific
Publications No. 103, Lyon. International
Agency for Research on Cancer, 1990, pp.
194-56.
Aghi MB. Psychosocial aspects of acquisition
and cessation of tobacco habits in India. World
Smoking Health 1987; 12:4-7.
Commercial Capital and Agrarian Relation;
A Study of Guntur Tobacco Economy
Nata Duvvury
P
This paper discusses the dynamics of tobacco cultivation and trade in Guntur region. Flue-cured Virginia tobacco
was introduced in India by a subsidiary of the British American Tobacco Company, the leading cigarette con
glomerate. In the initial phase, the company closely supervised and controlled cultivation. This control was achieved
by its monopoly of the new technology and a system of contracts between the company and the cultivators. The
author examines the impact of the new crop on the agrarian structure—how it strengthened the upper stratum
of the peasantry.
’
..
The contract form of marketing gave way to the unregulated system of marketing around depots opened by
the traders in the villages and the rich ryots found a lucrative source of accumulation in the intermediary posttions opened up by the depot system.
;.
Finally, the author discusses the present-day crisis in the tobacco economy and the introduction of the system
of compulsory auctioning in the marketing of tobacco. The analysis reveals how the possibilities and potential \
for accumulation in the tobacco economy are bounded by the choices and decisions of international capital, such .
as the position it has allocated to the Guntur tobacco in the international blending hierarchy, specific cultivation
practices it has promoted or the alternative areas of tobacco supply it has chosen to develop. As a consequence,
there has been a shift awayfrom Flue-cured Virginia tobacco in the Guntur region and a search for a new profitable^
crop that would partly sustain the process of accumulation.
THIS paper attempts to analyse the
dynamics of tobacco cultivation and trade
in Guntur region. The role of external capital
in initiating and sustaining commercial
.... agriculture in Third World countries has
been widely recognised. The history of flue• _ cured Virginia (hereafter FCV) tobacco is
. particularly interesting in this context as it
was introduced direaly in the majority of
/■.. the present-day producer countries by some
of the leading transnational cigarette
- conglomerates.
In India the crop was introduced by a sub
sidiary of a leading cigarette conglomerate,
. namely the British American Tobacco Com... pany (hereafter BAT). Unlike the operations
of BAT in China, where they depended on
a landlord moneylender combine to spread
tobacco cultivation,1 in Guntur they pre
ferred to deal directly with the peasants. An
understanding of the pre-tobacco agrarian
economy of Guntur (Section I) becomes
relevant in this context. In the initial phase
of FCV tobacco cultivation in India, the
company closely supervised and controlled
. the cultivation. This control was achieved by
j
its monopoly of the new technology and a
system of contracts between the company
and the cultivators (Section II). We shall
■ examine the impact of the new crop on the
agrarian structure—bow it strengthened the
" • upper stratum of the peasantry (Section II).
■;. The contract form of marketing gave way
1I... to the unregulated system of marketing
around depots opened by the traders in the
villages. The chief characteristics of the
depot system were: (a) absence of any con. traaual relationship between the trader and
cultivator, (b) price formation on the basis
of personal negotiation, (c) complete
absence of any regulation either on the price
or mode of payment, and (d) a proliferation
ixz-Of various categories of intermediaries. The
The present Section is devoted to a des
cription of the spread of commercial cultiva
tion and the consequent changes in produc
tion relations in Guntur district upto the end
of the 1920s. Our presentation highlights the
facts that Guntur agriculture was already
highly commercialised and that the agrarian
structure was stratified on the eve of the
entry of FCV tobacco.
Guntur was a rain-fed district prone to
S^.PE-46
Economic «nd Political Weekly Vol XXI. No 30
■ Reviewof Political Economy, July 26, 1986
rich ryots found a lucrative source of
accumulation in the intermediary positions
opened up by the depot system. Thus, even
the scale of cultivation shows no tendency
to increase (in fact declines) during the
period though the scale of operation
increases. These are the issues that are
dicussed in Seaion IV.
In the final Section, we shall discuss the
present-day crisis in the tobacco economy
and the introduction of a system of com
pulsory auctioning in the marketing of
tobacco. Our analysis reveals how the
possibilities and potential for accumulation
in the tobacco economy are bounded by the
choices and decisions of the international
capital such as the position it has allocated
to Guntur tobacco in the international
blending hierarchy, specific cultivation prac
tices it has promoted or the alternative areas
of tobacco supply it has chosen to develop.
The consequence of the above has been a
shift away from FCV tobacco in Guntur
region and the search for a new profitable
crop that would partly sustain the process
of accumulation.
Agrarian Economy of Guntur
District Prior to FCV
Tobacco Cultivation
drought and famine with an average rail®
fall of less than 40 inches. This was comg
pounded by the fact that the district relief!
on the vagrant north-east monsoon for more;;
than one-third of its rainfall. The construc|f
tion of the Krishna dam in 1855 eased thgi
situation somewhat bringing irrigation ®
two taluks of the district. Our discussion®
however, is limited to the dry taluks of thak
district where FGV tobacco became a prg|
dominant crop.
Around the same time as irrigation wagl
introduced, the ryotwari system was adopted
in the region, closing a long chapter q
agricultural anarchy and degeneration of th
district caused by ad hoc revenue policies c
the British. The significant features of th
ryotwari-system were that the revenue assess
ment was settled directly with the individut
landholder and that it was based ,on3
uniform money rate. This form of revenu
settlement paved the way for a certai
dynamism in the agrarian structure. First!
it removed the zamindari intermediary clas
from the agrarian scene. Secondly being;?
money rate it compelled all seaions of th
peasantry to part with a part of their pre
duce thereby stimulating commodity pro
duction. At the same time being a uniforr
rate it provided incentive for a cultivat
who had the capability, to grow high-valu
cash crops. Apart from the compulsions '
incentives of the tax system, one may a
consider the impact of the demograp
pressures on the agrarian system. In the <
of Guntur, the worsening land-man ratio
not result in the intensification of subsist
agriculture. On the other hand, it
couraged a shift to cash crops given’
possibility of food imports and the m
ment of relative prices in favour of
crops?
It is seen, therefore,Jhat Gun
■ECONOMIC.'AND POLITICAL?WEEKLY
experienced a significant expansion in commercial cultivation in the seven decades
between 1865 and 1930 (see Table 1).
The most striking feature that emerges
; from Table 1 is the expansion of area under
‘cash’ crops at the expense of foodgrains.
< Further, the composition of commercial
> crops changed dramatically over the period
along with changing market conditions. It
may be noted that a part of the grain pro1 duction was also meant for the market and
by the end of the twenties more than 42 per
cent of the rice production was marketed.3
Even the cultivation of fodder, which is
included in ‘other crops’, came to be a com
mercial venture with the decline of food
grains in the dry taluks of the district. The
upland cultivators imported rice as well as
fodder from the delta area.
This expansion of commercial agriculture
i was accompanied by the development of
L ag^hrocessing industries.4 The processed
f. an^^mi-processed agricultural products
I. were not only traded within the district but
.- were increasingly exported. Exports of com: modities from the district increased nearly
g- eight-fold between the 1880s and end of the
1920s.5
f.
‘
!
’•
• The rapidly expanding commerce in agri> cultural products was controlled by a long
s' chain of intermediaries at the apex of which
i were the English firms such as the Volkart
Bros and Ralli Bros, who controlled much
of the export trade in cotton, indigo and
groundnut,.and the wealthy Indian Marwari
j'' or Chetty firms, who controlled significant
i.' portion of the internal trade in rice, chillies,
? turmeric, etc. The lower level of inter& mediaries, from the village dealers to the
K established wholesalers in the market towns,
'- . whose relative autonomy vis-a-vis the
' superior in the hierarchy varied according
to the trade conditions as well as the type
of crop, had been traditionally filled by the
Review of Political Economy July 1986
local trading caste of Komatis or by the
Marwari immigrants.
An interesting aspect of the commer
cialisation process in the district was the
emergence of a stratum of peasants who
entered the commodity markets and rapidly
prospered at the lower level of inter
mediaries. They traded not only rice but also
various dryland crops. For example, it was
observed that in the case of desi tobacco that
rich cultivators turned merchants were able
to dictate terms to wholesalers/manufacturers.6 This stratum of peasantry also
invested in agro-processing industries.7
Interestingly, we also notice that the richer
peasants, who had amassed surplus from
commercial cultivation given the bouyant
agricultural prices of the early decades of
the twentieth century, increasingly displaced
the traditional village moneylending castes
from the rural scene. A post-Depression
enquiry revealed that 87 per cent of the
moneylenders in Guntur were agriculturists
themselves.8
But the dynamics of accumulation did not
get reflected in any marked increase in land
concentration. While there were increasing
land sales,'there are no adequate data to
indicate that land was passing primarily into
the hands of the rich peasants. It may even
be argued that the returns possible from land
being not commensurate with the increase
in land prices,’ it would have been a serious
discouragement for the surplus amassing
rich peasant stratum to acquire landed assets
as a further means of accumulation.
were not significant in Guntur and, in fact, '■-■'zt
mostly landholders were the ones who were
-;i
active in the lease market.11
The commercialisation of agriculture in ■
Guntur also affected the agricultural ’.'gg
labourers, the lowest strata in the agrarian
hirearchy. An important change was the rise ‘
of money payment. In 1912, it was found
that only 40 per 'cent of 541 villages
surveyed, covering 56 per cent of the rural ■
population of the district, paid a purely
grain wage.12 There were also tendencies
towards greater capitalisation of employment. There was a significant increase in the
• £
number of agricultural labourers and by the • >2
first decade of this century, their class border .
had crossed the traditional agricultural
labour caste. With the expanding commer- 1
cialisation of agriculture,.the immiserised of'
the peasantry, the. jobless artisans and
growth of population swelled their ranks to
claim a quarter of the workforce in the
agriculture
■
'if’i
In case of the land lease market, there is
evidence to indicate that land was being
leased out by traditional non-cultivating
landlords such as Brahmins and Vaisyas.10
More importantly many of these non
cultivating proprietors, mainly Brahmins,
were migrating to urban areas. There is
evidence to indicate that landless tenants
Tobacco was an important non-food crop 'JS;
grown in Guntur district in the nineteenth' •.
century (see Table 1). It consisted of various
types of desi leaf used for cheroot, cigar and
snuff. Cigarette leaf, or Virginia tobacco, was ’
cultivated only on an experimental scale in . • ;Sa‘the nineteenth century. The rapid expansion .
of Virginia tobacco followed the import
tariffs on cigarettes and cigarette leaf in
- ?
1910-11 that made cigarette production and . "
cultivation of Virginia leaf in India attractive.
V
Table 1: Cropping Pattern for Guntur District. 1865-66 to 1930-31
(Percentage of total cropped area)
Crop
1865-66
Other inferior cereals
.. Pulses
Foodgrains
Oilseeds
‘Codon
critivited area (acres)
**
S
T
' -
12.28
31.65
30.62
79.16
2.43
0.85
1.40
0.90
1881-82
1900-01
1930-31
‘
16.04
25.36
3.56
31.84
3.79
2.63
72.50
5.01
3.30
3.01
3.97
0.01
1.65
The above discussion has highlighted the ; -f
fact that the agrarian structure in Guntur
was in the process of change Traditional
' •bonds were beginning to break down. More
■
importantly a surplus amassing rich peasant
_:
stratum had emeged. These trends were.
•?
further strengthened with the introduction ’ tfr&
of FCV tobacco in Guntur district.
'
11
Introduction and Expansion of
FCV Tobacco Cultivation
This phase.also coincided with the entry
of British American Tbbacco Company
(BAT) into Guntur. BAT had been formed
;
in 1902, by the two leading cigarette manu- 3K.
facturers of the US and UK, as the sole
agency of these two companies for the
exports and production outside the US and >fs.F
UK. However, by 1911, BAT had come to ?
represent mainly the British interests as i
the American parent company was dismembered following an anti-trust action. In
India BAT took over the pre-existing trading
network of its two parent companies. It
11,68,479
18,18,167
21,09,015
Peninsular Tobacco Company (PTC) that
started cigarette production in Karachi
Pro?
* din»1 N° l62«, March9, 1870; Gordon Mackenzie, "A Manual (1905), Monghyr (1908) and Bangalore
*
Outnct'
(Madras: Lawrence. Asylum Press, 1883); "Scheme Report of (1914).
(1913). some
Some other
other manufacture
manufacturers like_ Godfrey-Phillips.also-started-mani
.started manufacture 'jcW
P’su’ct”’ Board of Revenue (Settlement, Land Records of_
,=-|SS^3^No-463rDecember-17,-1903; and "Scheme Report of Resettlement around the same time. .'a -"
, Jtevaiue Department, G O No 1390 (Con), July 29, 1936.
The cigarette consumption in India
I*7^ &om "Rcport on the Settlement of Guntur Division of Krishna District”,
PE-47
’
increased from 1,000,000 pounds inl900-01
to 5,000,000 pounds in 1909-10. In the next
decade, despite the agitations against foreign
goods, cigarette consumption increased four
fold to 20,000,000 pounds in 1928-29.13
Initially the production of cigarettes, was
based on the import of flue-cured Virginia
leaf from America. Later better qualities of
desi leaf and Indian-grown Virginia was used
in the manufacture of low-priced cigarettes.
By 1928-29 two-thirds of the leaf utilised in
cigarette production was Indian leaf.14 The
PTC in 1908 established a separate leaf
purchasing agency called Indian Leaf
Tobacco Development Corporation (ILTD)
Guntur was one of the important purchas
ing centres of ILTD.
But it was soon found that desi leaf
deteriorated in quality during the ageing pro
cess (a process crucial to cigarette manufac
ture). In addition imports of American leaf
were becoming increasingly difficult with
tariff increases, especially in 1925-26. These
developments coincided with the interests of
British manufacturers who were anxious for
the development of alternative sources of
American leaf because World War I had
amply demonstrated the havoc that could be
caused by a disruption in transportation.
From the 1920s the British government
actively encouraged the development of
American leaf in its colonies by granting an
imperial preference for tobacco grown in
these areas. The stage wastset for active
promotion of American leaf in India.
Experiments on American leaf had been
conducted under the auspices of the Im
perial Council of Agricultural Research at
PUSA from the early 1900s. After the
formation of ILTD, this company esta
blished ties with PUSA for encouraging
experimentation on American leaf. In the
early phase, experiments were conducted
throughout India to determine which area
would produce the best leaf at the lowest
cost. Guntur was one of the areas where
ILTD undertook experimental cultivation.
“... trials of this type (type 28-an American
leaf) made at Guntur ... resulted in the pro
duction of tobacco which according to the
Company, will be useful in the manufacture
of cigarettes”15 The company, therefore,
was willing to make a big entry into the
Guntur area. The interest in Guntur was also
due to the fact that the cost of production
was lower in the district than at other places
where trials had been conducted and more
significantly, there “were large supplies of
labour which was relatively easy to handle
.. .”16 The area under tobacco in Guntur
district increased from nearly 40,000 acres
in 1902-03 to 57,000 acres in 1912-13 and to
70,000 acres in 1925-26. More than 20 per
cent of the increase in the latter period was
accounted by cigarette tobacco.
Even though the ILTD was the major
buyer of Guntur tobacco there were a
number of other purchasers, representing
domestic manufacturers of cigarettes as well
as importers in Europe, operating in Guntur.
All of them relied on local brokers and
intermediaries for their supplies. The
increased competition and the manipula
tions of the middlemen led to price rises, the
price of 500 lbs of sun bright tobacco in
creasing from Rs 60 to Rs 80 between 1915
and 1925.17 The prospects in the trade of
tobacco attracted the bigger ryots to enter
into trade directly. It was noted by an
observer:
The bigger ryots have begun, from 1916, to
buy up large quantities of tobacco at the time
of harvest, at very low prices, from the other
smaller ryots and store it up in anticipation
of a rise in prices. As the competition
between the merchants has increased the
cultivators of tobacco have almost given up
their former practice of going in search of
prospective buyers. It is now the merchants
or their agents who have to go in search of
the producers. These village dealers are thus
able to dictate their own terms ...18
The ILTD attempted to introduce a ‘direct
purchase system’ in order to reduce the costs
and reassert its control that was being
eroded by the increasingly assertive inter
mediary class. The attempts at direct pur
chase were not fully successful as the richer
ryots exercised every option available to
strengthen their own bargaining position. It
was in'this rather fluid situation that ILTD
began to encourage the cultivation of FCV
Table 2: Area and Production of FCV Tobacco in India. 1927-28 to 1949-50
Period
1927-28 to 1929-30
1930-31 to 1934-35
1935-36 to 1939-40
1940-41 to 1944-45
1945-46 to 1949-50
Average Acreage
(hectares)
2
Average Production
(’000 kgs)
3
Average Yield
(kg/ha)
4
198
7,717
24,895 .
40,486
52,875
304
3,263
12,670
31,436
37,904
510
433
501
*
782
717
-
.
Note : a The sudden jump in the level of yield in the forties is partly due to better cultivation
practices and partly due to improved estimation methods of yield and production.
Sources-. Indian Central Tbbacco Committee (Ministry of Food and Agriculture, Government of
_ India). “Indian-Tobacm Statistics, 1939-59" (Madras Government Press, I960) and Indian
Leaf-Tobacco Development Corporation Ltd, “Indian Tobacco Leaves” (London:
ILTD, 1944).
PE-48
tobacco. The peasantry responded favourably
to the crop. The dramatic increase in the area
under cultivation and production of FCV is
shown in Thble 2.
The success of the company’s efforts had
a two-fold effect: Firstly, it freed the Indian
cigarette industry from the need to import
American tobacco and, not before long,
assured the international cigarette interests
of an alternative source of supply of FCV
tobacco in the international market. Secondly,
it enabled the Company to establish com
plete control over the tobacco economy in
Guntur.
The introduction of FCV tobacco did not
merely depend on a new American seed. It
required detailed experiments as to soil and
climate and appropriate cultivation practices
or otherwise the subtle special characteristics
of aroma and colour which make FCV
tobacco desirable, would be vastly altered.
Further it required the import of new ,
technology perfected in United States for
processing of the crop, namely, the flue
curing technique. The traditional Indian
cigarette tobacco was cured by sun or rack
process. Only a company of ILTD’s status ,
with international connections could import .
the new technology and necessary technicians and adapt it to Indian conditions, i
It took nearly a decade-long experimen- ;!
tation for the company to perfect the prac- S
tices suitable to the Guntur agro-climatic .!>
zone. It started a small farm of eight acres s
for experimental cultivation in 1921. By 1923 a
the area under the company’s direct cultiva- g
tion had increased to 750 acres. The com- «
pany’s experimental farms acted as demon- i
stration centres whose impact rapidly spread s
among the cultivators due to the persuasive!
methods of the company. The interested'
farmers were encouraged to grow American 1
tobacco with promises of finances, seedlings:
and fertilisers. The company entered into
formal contractual relationships with the
farmers. Farmers would be supplied with all •
the necessary inputs and in return ensured j
produce to ILTD at the specified price. The ;
value of inputs provided was deducted from J
the price at the time of the transfer of the:
produce. Initially the company bought the,
green leaf (on a per acre basis according to
some rough grades) for further processing. 19
With the spread of FCV tobacco cultiva-'
tion, the contract system became the pre-j
dominant form of relationship between the
trading capital and the producer. ILTD had!
already direct contacts with a section of the
cultivators under the ‘direct purchase system’!
previously mentioned. And FCV tobacco
being a new crop with significantly different,
cultivation and processing practices implied
that the farmers had to be trained in them-:
The company
.
. through the contract system,;
could exercise significant rnniml in-thA-fielj
itself.. In the words of one compan)
f -1- ...
. seedlings
...
>
manager:
“—
The
were
grown-and®
distributed by the company, free of charge,
ECONOMIC AND POLITICAL WEEKLY
e
|
j
5
•
;
;
to the cultivators who grew the tobacco,
topped and suckered it under our supervi
sion. 20 Initially the curing was also done
solely in the barns of the company. That the
technology, seeds, and marketing were con
trolled by ILTD ensured dependency of the
cultivators on the company and allowed
exploitation at the time of the transfer of
the produce, grading of the tobacco being
the most common method of cheating. With
flue-curing, grading was increasingly done
by the cultivators who usually opted to grade
under the supervision of a m'aistry from the
company for whose services the cultivator
had to pay. This grading was quite crucial
as the company could refuse an entire lot of
tobacco if it was not in the specified grades
or could undergrade,the tobacco at a lower
pg^kthan that stated in the contract.21
Tiwth the contract system provided an
assured market for the cultivator, it also
enabled the company to intensify the exploitation of the cultivator—on an average,
the cultivator received only 30 to 40 per cent
of the export price.22
?he company had a monopoly control
over the seeds and know-how of FCV
tobacco. But why should the peasant enter
into any contract to cultivate tobacco, a new
crop with heavy capital investment and
uncertainties? He could very well choose to
continue to cultivate the traditional crops.
Unlike in the early poppy and indigo cultiva
tion in North India, classic cases of forced
commercialisation, the company had little
non-economic coercive powers over the
peasantry. Times had changed. As the
Guntur Tobacco Market Committee put it:
None other than the better financial promise
should have been responsible for prevailing
upon the dry land ryot of the district to grow,
than those usually handled by him, a
t^^whose technique of raising and whose
markets are little known to him.23
“When the tobacco prices went down he
(ryot) cultivated groundnut. If the price of
groundnut goes down he could grow
tobacco, chillies, etc”, stated a ryot-merchant
to the Banking Enquiry Committee.24 The
correctness of this statement is proved if one
statistically examines the price respon
siveness of tobacco. The correlation between
the price of tobacco relative to jowar and
the relative share of area under tobacco to
jowar was found to be .7211, significant at
001 level for the period 1921-22 to 1953-54.25
Review of Political Economy July 1986
of credit drying up, a phenomenon widely
noticed27), the contract offer of the com
pany which assured them of the material in
puts and a guaranteed market for their pro
duct must have appeared as a heaven-sent
blessing. The price offered by the company,
even while providing it with super profits,
contained a premium ensuring a relatively
higher return to the peasant than the returns
from other crops in the region. By various
accounts, tobacco was relatively more profit
able crop in the region.28
»
The above favourable situation was facili
tated by a steady increase in the demand for
FCV tobacco. On the domestic front,
cigarette consumption had rapidly risen
from 11 million pounds in 1931-32 to about
28 million pounds in 1937-38. 2’ By the end
of the thirties, there were cigarette factories
located at Bombay, Sukkur, TUUender,
Allahabad, Calcutta, Saharanpur, Monghyr
and Bangalore, indeed widely spread across
the country. The impact of this expansion
in the cigarette industry on FCV tobacco is
reflected in the fact that by 1937-38 nearly
50 per cent of the Indian leaf utilised for
cigarette production was FCV tobacco and
that the quantity of FCV tobacco used more
than doubled between 1934-35 and 1937-38.30
Through the forties and upto the mid-sixties
the quantity of FCV cleared for home con
sumption nearly doubled as can be seen in
Table 3. Cigarette production continued to
rise though there was a slight deceleration
in the rate of increase by the late fifties.31
On the export front, exports which had
constituted only six per cent of production
in 1932-33 rose to nine million kgs, con
stituting about 44 per cent of production in
1936-37; by the forties nearly 60 per cent of
the production was exported. The dramatic
increase in exports of FCV tobacco from the
mid-forties is highlighted in Table 3, Of all
exports of unmanufactured tobacco, the
share of FCV tobacco increased from about
20 per cent in 1937-38 to about 85 per cent
by the end of the forties.
We shall now turn to an examination of
the impact of the expanded cultivation of
this new crop on the agrarian structure.
Ill
Agrarian Structure and FCV
Tobacco
An examination of the impact of FCV
It should be borne in mind that FCV
tobacco on the agrarian structure is rendered
tobacco entered Guntur during the Great
difficult by the regional localisation of the
Economic Depression years when the prices
crop to a few taluks32 and the lack of dis
of other crops in the area were sharply
aggregated data. The area under tobacco
declining. On the other hand tobacco prices
cultivation comes to around only 10 per cent
remained relatively stable.26 Tobacco must
of the cropped area when the district as a
have been an attractive substitute in the
........ ......
whole -is considered
and,............
therefore, ....
the
Depressjgn_gloom. Further,-to-th&peasantrv-—influences-of-tobacco-crop- tends to get
— pushed to the verge of ruin due to the fall
submerged in the district level data. However,
in prices, arrears in debt payments and
certain tentative conclusions are possible.
exhausted working capital (with the sources
Cultivation of tobacco implied, more than
that of any other crop at that time, increased
market interaction. Even the seedlings had
to be purchased from nurseries, as Virginia
tobacco seedlings had to be raised on special
sandy soils. The various material inputs,
such as the seedlings, fertilisers, pipes and
other metal accessories required for the
barns and the coal and firewood for the
curing, that tobacco cultivators had to
purchase from outside, came to around 40
per cent of the total cultivation costs.33 In
1946-47 it was estimated that nearly two
crore rupees annually were spent on the
above material inputs alone by the tobacco
cultivators in the district.
It implied a phenomenal expansion in the
markets for agricultural inputs and credit.
But for the seed, the conipany was only too
ready to give away the market for the inputs
to the “progressive cultivator” an euphe
mism used by it to characterise the' rich
peasant-trader-usurer whose emergence we
have noted earlier. They were the target
group that the company sought to ally
with in the countryside. The “progressive
farmers” were given preferential treatment
even in matters of pricing and grading of
tobacco.34 They were to be the
demonstrators of the new technology in the
countryside. Thus for example the company
had initially constructed barns on their own
lands to process the tobacco. However, not
before long, a company official could
express the satisfaction: “We ... induced
one or two of the progressive cultivators to
erect a barn. The cost of roofing, furnaces,
flues (iron pipes) and coal was provided by
our company and we recovered the money
when the cultivator sold us his produce.”35
The diffusion of technology was surprisingly
Table 3; Demand for FCV Tobacco.
1945-46 TO 1979-80
_________________________ ('000 kgs)
Average Average
Home Exports
Consump
tion
1946-50
1951-55
1956-60
1961-65
1966-70
1971-75
1976-80
11730
10800
NA
24560
51396
43280
44060
20982
34660
35525
46020
41140
62060
62600
Average
Total
Demand
of FCV
Tobacco
32712
NA
NA
70580
92536
105340
106660
Sources. Compiled from "Report of Tobacco
Expert Committee, 1956-57”
(Faridabai Government Press, 1957);
“Indian Tobacco Statistics, 1939-59”;
Government of India, Directorate of
Tobacco Development, “Iridian
Tobacco Statistics, 1975" (Madras;
Government Press, 1976; and Indian
Tobacco Journal, various issues..
PE-49
ECONOMIC AND POLITICAL WEEKLY i
Review of Political Economy July 1986
rapid. As the process of flue-curing became
more familiar, there was a dramatic increase
in the number of barns built by cultivators.
In a period of ten years from 1930 to 1940
the number of barns increased from 200 to
6,000.36 Who controlled these brans? Con
centration was a definite possibility given the
capital requirement for the construction of
a barn—in 1947 the construction of a single
Katcha barn was approximately Rs 1,225.37
Moreover, as we have seen, the company
pursued a “progressive cultivators” strategy
to encourage barn construction and cultiva
tion of FCV tobacco. These cultivators in
turn encouraged the spread of new cultiva
tion but kept a stricter control on barn con
struction. In 1945 in Tadikonda, a leading
tobacco village, out of 250 bams more than
100 barns were owned by about eight rich
ryots.3S Another 20 barns were owned by
an outsider who bought green ieaf from
small cultivators through a broker in the
village and sold the cured leaf to exporters;
he was known as a “curer capitalist”.
That this was not an isolated phenomenon
and that these “curer capitalists” and rich
ryots were powerful is brought out in the
representations made to the Madras govern
ment regarding its legislation to tax tobacco.
One provision of the legislation was that any
Table 4: Distribution of Leased-in and
Leased-out area
(Percentage)
Size-Class’
(acres)
Leased-in
Area
Leased-out
Area
1
2
3
Upto 5 acres
5 - 10 acres
10-20 acres
20 and above
10.72
21.13
38.91
29.24
100.00
34 09
21.20
21.64
23.07
100.00
Note: a The size-class refers to operated area for
column 2 and to owned area for
column 3.
Source: B Saweswara Rao and K Nagabhushanam, “Report on Socio-economic
Survey of the Nagariunasagar Project
Area", Pan II, Census Thbles
(Hyderabad: Government Press, 1972).
person purchasing and curing green leaf not
grown by him had to be licensed. At a
meeting of growers, brokers, commission
agents and merchants of Guntur district, a
resolution was passed that curers should be
treated as growers because “small growers
had to purchase green leaf for an efficient
operation of the barn".39 The Revenue
Department, in its discussion of this resolu
tion, remarked “It would be very wrong to
give this concession to wealthy ryots of
Guntur ... We had these cases in mind
when we drafted the Act ...I’40 These
“curer capitalists” came not only from the
ranks of rich ryots but also from urban
middle-class sections (including lawyers and
others) who were seeking a quick profit.41
Some of these people built barns and leased
them out each season. Thus, the spread of
tobacco cultivation opened new avenues for
accumulation for. the rural elite.
The dependence of poorer peasants on the
intermediation of the rich peasant also
increased. By the middle of 1940s, it had
.become a common practice that a rich ryot
'would get credit of one or two lakh rupees
from traders and disburse amounts to
smaller peasants. However, it should be
emphasised that the domination of the rich
ryots in the credit market was far from com
plete.42 Other village moneylenders were
always an alternative source of credit. With
the coming of Independence, institutional
credit channels grew in importance. Further.
the middle and poor peasants could always
bypass the rich ryot and contract directly
with the ILTD or other traders.
Whatever sketchy information we have on
land market indicates the acceleration in the
alienation of lands of the poor peasants.
Between 1931 and 1940 land sales increased
by 1'/: times from 30,849 sales in 1930 to
47,046 in 1940.43 The average value per sale
dropped from 658 to 433 in the period; in
the context of rising land values after the
depression this implies that smaller pieces
of land were being sold. This is confirmed
by Sayana’s study in which he showed that
average size of land sold was about one acre.
Sayana also points to the increasing pur
chases made by ryots and traders who had
made big profits in the cultivation and trade
of tobacco.44
The more striking development since the
introduction of FCV tobacco was the crea-I
tion of an active lease market for land. Once
again the data are sketchy; however, it is a i
phenomenon that was widely reported to us i
in the villages of tobacco region during our i
enquiries. It was commented by a con-1
temporary observer that the profits were;
inducing the “monied middlemen in theI
villages and small towns to compete with the
tiller of the soil and the grower of the
tobacco crop in respect of rentals of land and
barns”.45 In a study by Sayana, in one
tobacco village of Guntur 24 per cent of the <
land cultivated was leased. The more;
interesting finding was that landless tenants I
constituted only 11.9 per cent of the total
number of tenants and that the number of
lessors was more than triple the number of
tenants (945 lessors compared to 286
tenants).44 Taken together these two facts
imply that smaller landowners were leasing
out land and that only those ryots with some
land were leasing in land—or some form of
commercial leasing was taking place, a
phenomenon which became predominant in
the fifties and sixties.
A study in the late fifties to which we have
already referred had the same finding as
Sayana’s that the number of rent receivers
(521) was greater than the number of tenant:
cultivators (384). Furthermore it was found
that landholders owning upto 5 acres alone
accounted for 34 per cent of the leased-out
area (see Table 4). It is also evident that the.
larger cultivators account for significant pro- •
portion of the leased-in area (Table 4column 2).
The economies of scale in cultivation of
tobacco47 and in its processing, should have
led to an increase in the operated size of the
landholdings. Optimal functioning of a bam!
necessitated around 10 acres of tobacco crop..
This was the background of the activisation
of the land lease market. In fact it is our con- j
tention that in the tobacco region the rich
cultivators preferred to lease-in land rather
than purchase it for tobacco cultivation. The :
reason lies in the fact that tobacco with con- ■
tinuous cultivation is a soil exhausting crop,i
a characteristic that is going to assume an I
important role in our analysis in Section V. ,
Table 5: Distribution of Households by Livelihood Classes and First Subsidiary Means of Income
Livelihood Class
Owner cultivator (OC)
Tenant cultivator (TC)
Agricultural labour (AL)
Rent receiver (RR)
Industry
Commerce
Transport
Other
Total
Source. Same as Table 4.
PE-50
Percentage of Household with First Subsidiary Means of Income as
AL
RR
OC
TC
Industry
Other
4
7
■6
5
9
Percentage
to Total
2
3
28.48
2.77
34.62
5.91
14.55
3.89
8.85
38.64
5.43
28.74
24.00
20.97
30.39
25.48
27.23
24.64
22.54
23.49
23.20
24.27
12.83
—
3.17
1.82
2.36
2.76
1.70
14.72
1.55
—
13.82
42.24
13.26
17.23
2.19
17.05
5.77
—
6.06
9.94
15.05
100.00
. . 29.21 7. .
17.88
5.48
13.95-
—5.29
24.30
16.28
32.77
17.82
18.23
15.53
“
22.01
'
Total
1
10
1
9.32
12.46
4.91
20.00
4.88
1.22
0.74
100.00 ■
100.00 '
100.00 4
loo.oo i
100.00 4
100.00 <
100.00 j
‘ 6.18
iod.‘op“5
ECONOMIC AND POLITICAL WEEKLY
At the end of the fifties, in seven villages operations labourers had to be brought in
of the tobacco region, it was found that 35 from outside the district.
per cent of the village households earned
The introduction of FCV tobacco techno
their income primarily from agricultural logy and the consequent reorganisation of
wage labour. Another 14 per cent had the labour process in the agrarian and agro
agricultural wage labour as secondary work processing sector marks a qualitatively new
(see Table 5). The data also reveal that the stage in the evolution of the agricultural
agricultural labour and the industrial labour class. The elements of attatchedness
households (i e, of workers in tobacco rapidly disappeared and casual labour
factories) constituted 50 per cent of the rural employment became the norm. Given the
households. To this if one also adds house- high demand for labour, the mootah
' holds deriving their secondary income from labourers, especially the curing workers, were
wage labour, the incidence of wage labour able to assert themselves. By the end of the
reaches a very high proportion. Evidently a forties there were numerous strikes by agri
significant proportion of the poorer cultural labourers in Guntur for better wages
peasants were taking to wage-labour. As can and at times against the arbitrariness of
be seen from Table 5, 15 per cent of the mootah leaders. Tobacco villages of Guntur
owner cultivator households derived secon came to be known as “belt of red pallis”.
dary income from agricultural labour and
25
p^knt from work in tobacco factories. Our discussion has focused on the accen
PtH!el to the process of concentration was tuation of the stratification in the agrarian
the process of proletarisation. Tobacco is not society with the advent of tobacco cultiva
only capital intensive but also fairly labour tion. The rich peasants increased their scale
intensive. The level of demand for labour in of operations leasing-in significant amount
the case of tobacco cultivation is nearly two of land and controlling the curing barns.
to three times higher than for other dry crops They also extended their activities to the vast
■suchipas jowar and groundnut.48 Peak input market created by the FCV tobacco.
labour demand is for the operations of However, one important source of accumu
transplanting, de-pesting and harvesting. lation, the trade in tobacco, was closed to
Both transplanting and de-pesting are opera them due to the monopoly of the 1LTD over
tions for which it is possible for the small the tobacco trade. Some of them were able
and middle peasant to rely on family and/or to develop as brokers and commission agents
exchange labour. De-pesting is specifically for the rivals to the ILTD in the tobacco
amenable to family labour as the require market like the BITC50 and the other
ment is uneven and spread over nearly one cigarette manufacturers in India. A few even
and a half months. On the other hand, the managed to grow into small-scale exporters
demand for harvesting and curing labour is to the new UK markets. However, till the end
on the basis of barn size rather than land of the thirties the ILTD continued to control
size If a small cultivator sold his leaf green 70-80 per cent of the cultivation of tobacco
then the person curing would hire the labour. through contractual relationship with the
The labour for these operations was gang cultivators. In the forties, though the area
labour; a gang (called mootah) of 25 to 30 under contract system declined, war time
pconl^vould harvest the leaves, string the conditions and regulations enabled the
leavJ^Bad and unload the leaves from seven ILTD, in fact, to increase its monopoly of
barnsTfhe entire process for a barn would tobacco trade. The Indian traders realised
take one day, so the mootah would work that their role and function was entirely sub
continuously night and day for seven barns sidiary to the ILTD—through their specula
for roughly three months.
tive activities they cleared the market of the
It is seen that all size classes of cultivators excess stocks and bore the brunt of market
employed wage labour and wage labour con fluctuations. The entry of the rich ryots into
stituted the predominant form of labour tobacco trade and the emergence of an
input for farm size classes above one acre.49 unregulated market system is the theme of
During the peak season of agricultural the next Section.
Review of Political Economy July 1986
IV
Rich Ryots and Tobacco Trade:
The Unregulated Marketing
System
The demise of the contract system and the
emergence of unregulated markets in
tobacco was a response to changes both in
trading as well as production conditions.
The overall demand for FCV tobacco in
the first two decades of Independence reveals
a stable upward trend. The exports which
averaged 34
* million kg during 1950-51 to
1954-55 increased to around 46 milllion kg
during 1960-61 to 1964-65 (see Table 3). It
accounted for 70 to 80 per cent of the total
exports of all unmanufactured tobacco from
India. During the subsequent five years,
exports stagnated at around 41 million kg.
Internally the growth of the Indian cigarette
industry resulted in a four-fold increase
between 1950-51 and 1969-70 in FCV
tobacco cleared for home consumption.
Equally important for our analysis was
the diversification of the export markets for
Indian FCV tobacco (see Table 6). The share
of UK declined from about 80 per cent
during the pre-Independence period to 35-40
per cent. Soviet Union, Japan. East Euro
pean countries and China developed into
important export markets of Indian FCV
tobacco.
The diversification of the exports opened
up new possibilities for the aspirants in the
tobacco trade. The growth of many of the
leading Indian exporters can be traced to the
close links they were able to forge with the
state trading concerns in USSR, Japan and
China. In 1961 there were 21 companies
solely exporting to the USSR. The total
number of exporters increased to around 120
from around 16 in the 1930s.;1 Most of
them were of course only marginal exporters
who made an occasional consignment to the
foreign countries. The decline of the mono
poly of the ILTD in the leaf market and the
emergence of alternative marketing channels
made it increasingly difficult for the
company to supervise the contractual
obligations.
At the same time, with the expansion of
area under FCV tobacco and the diffusion
of cultivation and curing practices, the ILTD
found it unnecessary to operate the contract
(percentage) system in order to ensure a steady supply for
its requirements. The area under Virginia
Country
Average
Average
Average
Average
tobacco in India expanded rapidly in the
1954-55 to
1960-61 to
1965-66 to
1970-71 to
post-independence period. From around
1958-59
1964-65
1969-70
1974-75
54,000 hectares in 1949-50 the area increased
UK
45.25
35.61
43.73
34.19
to more than 1,50,000 hectares in 1969-70.
USSR
.
3.60
32.09
23.01
29.88
The Guntur tobacco region continued to be
Japan
2.52
2.40
5.52
6.56
the most important centre—accounting for
West European countries
11.47
19.40
4.92
5.24
60 to 70 per cent of the total area under
East European countries
_
g 72
7.07
2.93
Virginia^As can be seen from Table 7 the
Othgs
. .
— ------- 4:18----- .
. .15.75----- r-------- 21.20
_ area..under. Virginia tobacco in Guntur
increased by one and half times from 50,000
-flote: 9 China accounts for 22.27 per cent of the exports during this period.
Source: "Indian Tobacco Statistics, 1975”.
hectares in the mid-fifties to more than
Table 6: Distribution of Exports of FCV Tobacco by Destination
PE-51
Review of Political Economy July 1986
ECONOMIC AND POLITICAL WEEKLl
91,000 hectares at the end of the sixties. The
growth of FCV tobacco was mostly at the
expense of other commercial crops, especial
ly desi tobacco, so that the former’s share
in the total area under non-food crops
increased from 17 to 33 per cent between
1955 and 1970. Tobacco continued to be
relatively the most profitable of the com
mercial crops in the district.52
The new exporters made their purchases
either directly or through intermediaries at
the village level and thus developed an
unregulated market for tobacco leaf. The
ILTD responded by withdrawing the con
tract package scheme they were operating.
While formally ending the contract system,
ILTD initiated what was called Master
Farmers Scheme to ensure the supply of the
desired quality of tobacco through field
demonstrations. The “Master Farmers” were
supplied with quality inputs, advice and
supervision by ILTD staff in implementing
the improved techniques in farms “with the
built-in safety clause of the company assum
ing full responsibility for the results of the
implementation of such an advice”53 and
guaranteed prices for the graded crop.
However, that the scheme was not crucial to
the company’s busing strategy can be
inferred from the fact that the area under
the scheme declined from 20,000 acres in
1955 to 200 acres in 1964.54
The smaller companies also open their
buying platforms in different vantage areas.
They engage professional ‘buyers’ on salary
or contract basis to make the purchases
during the season. Some of the companies
also send touring representatives to the
villages to make barn level purchases.
There is no official date for the opening
of the market. Normally the crop is ready
for sale by the end of January. By custom,
the ILTD or one of the larger companies,
will commence buying and set the initial
market rates. This would mark the beginning
of a hectic buying season of less than two
months in which more than 100 million kg
of FCV tobacco changes hands.
The farmers bring the tobacco to the
depots graded into six katcha grades, a crude
grading system popularised by the ILTD in
the forties. Having no relation to the final
export grades the katcha grading, based on
no scientific principle, is a source of
abuse.56 If the farmer agrees to the price
offered a voucher for the sale amount is
given. The final settlement is made in course
of time, often only during the next marketing
season. Given the perishable nature of the
crop, the farmer has little option but to
accept the offer made by the buyers at the
depots.
as extension officers establishing links with
cultivators.
Some of the dealers not only fine graded
the leaf but had it further processed, packed
Over time there was a proliferation of the
intermediaries under the depot system as the
The new market system that evolved was cultivation of tobacco expanded over a larger
known as the depot system named after the geographical area. Some of these inter
depots—the buying points opened by the mediaries were also small exporters who
traders in the villages during the purchase enter into and exit from the export market
season. All the important trading firms have year after year. However, most of them were
at least a few permanent buying points pure dealers who operated at the village level
known as branches with adequate facilities making their purchases at the platform or
for grading and at times processing of FCV at the barn site. Some of them worked solely
tobacco.55 During the harvest season tem for certain firms and were virtually the
porary depots, that is thatched structures brokers or commission agents of these firms.
with long halls for inspecting lots of tobacco, Most of them acted independently. They
purchased tobacco ungraded or katcha
are opened—one for every 20 to 30 villages.
Besides 14 permanent depots, ILTD opens graded from the growers. The dealers fine
50
to 70 temporary depots. During the offgraded the tobacco before selling to the
season, the permanent depot staff function exporter and/or manufacturer.
Table 7: Area under Virginia Tobacco. 1955-56 to 1978-80
(hectares)
Year
Average All-India Area Average Guntur Area
under Virginia
under Virginia
Tobacco
Tobacco
Percentage of Guntur
Area in AU-India
Area
1
2
3
4
1956-1960
1961-1965
1966-1970
*
1971-1975
1976-1980
77880
105140
138480
157720
154380
50224
69342
91166
102678
72837
64J
66.0
65.8
65.1
472 •
Note: a Guntur district was bifurcated in 1970 into Guntur and Prakasam districts. A part of
the tobacco growing area was taken into Prakasam. Tb maintain continuity we have added
the area under Virginia tobacco in the two districts.
Source-. Compiled from “Indian Tobacco Statistics 1975” and. “Season and Crop Reports of
Andhra Pradesh", various years.
PE-52
and baled ready for export before supply^,.
ing the leaf to the exporter. This group
generally known by the title packers, balec|’
servicing firms, etc. Some of the exponen t
who made direct purchases would also subjj.
contract the processing work to thesfsv
packers/balers. There were around 24(u.
authorised packers in 1964. There were
small number of pure redrying firms thafpe
rented out their facilities to small exportetL01or packers/balers.
|jtS(
The established traders came to accemscl
these smaller intermediaries as an importatjtj,,
link in the market network performing twj
important functions. Firstly they provides
a cushion against the fluctuations in mark
*
™
demand and supply. The intermediaries'n
mostly bore the brunt of market fluctuj? de
tions. With their close contacts with the se
peasants, drawn as they were from the sang ‘
class, they could intermediate better in timtg S1
of distress.
» ‘T
Secondly, these establishments enabled the2 5
large exporters to economise on capital, td p
lessen managerial problems of supervising
a large workforce and reduce the cost ® 5
processing. As the number of exported
increased the competitive compulsion t£
reduce the cost mounted. Purchasing
through the dealers, sub-contracting the
processing and partial mechanisation of tbg
processing sector were the response of tbffi leading exporters to the challenge" from th® S
newcomers in the export business. It wa»
estimated that nearly 30 per cent of the fiiuS demand of the ILTD, GTC, and NTC, th|
top three firms, was purchased indirect®
through intermediaries.57
*
With the proliferation of the inter?
mediaries, the abuses of the depot systeaj
such as the delayed payment, the practice effi. i
down grading, etc, mounted. All attempt® :
of the authorities to regulate the marketing
ended in failure. The most important
these was the fiasco of the attempt
.
introduce auction marketing from 1951E .
season. It has been well documented how thes
manipulations of the ILTD and the othaV
leading firms were responsible for the failuift .
of the scheme.58
It is understandable why neither the ILTI
nor the other exporters were keen on ti>
auction system. With the rapid expansion o
area under cultivation, a buyers’ marke
situation existed in tobacco. It was cheape
and more convenient for the traders to won
through local level intermediaries or villa®
depots. The ILTD, with its Master Farmer
Scheme, its majority share in the market anj
control over the export of higher grades 0
tobacco, could act as the price leader. Trad
saw no reason for the need for any goverh
ment regulated auctioning system. ~
- The Guntur Tobacco Market Committ?
as well as the Ryots - Association als
demanded the withdrawal of the auctioj
scheme that had proved to be a failure’
Interestingly, public auction system i>
Review of Political Economy July 1986
ONOMIC AND POLITICAL WEEKLY
lacco marketing had been a demand
sed by them in the forties. In the changed
cumstances of the post-independence
■iod the upper stratum of the peasantry
d lost all enthusiasm for the auctioning
item. The depot system provided them
th the possibility of acting as brokers or
pot agents themselves. They turned the
asant’s dissatisfaction with the inefficiency
the auction system against the system
elf rather than the trade interests who were
ittling it consciously; so the demand of
e growers to suspend the scheme.
The rich cultivators filled the ranks of the
ral dealers and the mushrooming servicg firms. In fact the balers/packers often
scrib^fcunselves as growers “with zeal to
■11 thJ^Bacco at remunerative prices” or
i,rower(s) with wider operations and procestg”.60 With the establishment of grading
quiring nothing more than a long thatched
ed they entered and existed according to
>e winds of trade. Many of the factories in
srchoopTangutur and Throvagunta were
tablished by large landowners. For exrnple, the ten firms in Tangutur in 1958 were
tablished by the ten leading cultivating
milies of the town who each owned more
than 100 acres.61 The geographical spread
of the tobacco establishments shows that the
lure of trade must have attracted the rich
ryots all over the tobacco belt.62
Our field enquiries revealed that the
majority of the new crop of exporters rose
from the ranks of the richest stratum of
tobacco cultivators. Of the ten largest ex
porting firms apart from the traditional
[LTD, NTC and GTC, five were owned by
erstwhile large cultivators.63 The owners of
the other five firms, though Komatis, were
also large tobacco cultivators. Navabharat
Enterprises, owned by a member of Kammas,
has now expanded into cigarette manufac
turing with Russian collaboration. Further,
with the decline of the contract system, the
share of the ILTD’s supply of tobacco inputs
in the total input requirement of the tobacco
region had declined considerably.
The lure of profits must have been the
chief attraction of the cultivators into trade.
Unfortunately, we do not have the trade
margins for the various tiers of inter
mediaries in the input and output markets
of tobacco. What fragmentary data we have
pertain to the export margins. Various
official reports have estimated the exporters’
Table 8: Distribution of Tobacco Holdings (1977-78)
(percentage)
■ize of Tobacco Holding
(hectares)
Guntur
Number
Area
Prakasam
Number
Area
1
2
3
4
5
0- 1
1 - 2
2- 5
5 - 10
25.59
29.99
34.72
8.08
1.12
0.50
7.34
17.95
42.69
19.55
5.11
6.76
17.46
24.91
46.20
10.13
1.27
0.03
4.58
13.42
56.92
19.21
5.58
2.39
margin (ie, profit + sale value) at 2.4 per
cent (1958), 6.7 per cent (1969) and 7.4 per
cent (1980).64 According to Annual Survey
of Industries, the rate of profit on total
capital employed was as high as 25 per cent
and trading margin above 50 per cent for
tobacco processing factories. At the same
time, the decline in profits in cultivation is
a frequent theme in the literature.65 We
shall take up this aspect in more detail in the
next Section.
It must be noted that increasing the scale
of cultivation became less attractive due to
labour supply problems. There was hardly
any technological change in tobacco cultiva
tion and processing, except the introduction
of the tractor, till very recently. At the same
time, with increasing local availability of
barn materials it became common for the
smaller farmers to erect and operate joint
barns. With this organisational innovation
the smaller farms became more viable.
It is seen that there are hardly any largescale cultivators operating more than 20
hectares at present. Such large-scale farmers
do not account for a significant proportion
of the tobacco cropped area. More than 50
per cent of the area is accounted by farmers
operating two to five hectares. However it
must be cautioned that the data presented
in Table 8 refer to only the tobacco holdings
and not to the total operated area of the
cultivators.
Crisis in Tobacco Economy and
Introduction of Auctioning
System
In the seventies, the overall demand for
Indian FCV tobacco stagnated at around
105,000 tonnes (see Table 9). The period was
also characterised by a high degree of fluc
100
100
100
100
tuations in yearly exports. In the past it had
Total
(4815)
(12847 ha)
(31554)
(86539 ha)
been the expansion of demand by the Indian
tourcet Tobacco Board, Guntur.
cigarette industry that had neutralised the
fluctuations in exports. But as can be seen
Table 9: Index Numbers of Inputs. Yield and Prices in Tobacco Cultivation
(base 1970-71 = 100) from Table 3, the tobacco cleared for home
consumption also stagnated in the sesenties.
Coal
Fertiliser Pesticides Yield of
Year
Wages of Agri
Maximum
The deceleration of the Indian cigarette
Virginia
cultural Workers
Price of
industry is due to increased incidence of
Male
Female Katcha IV
Tobacco
excise duties.66 Further, various leaf sat ing
techniques are being introduced by the
2
4
3
6
1
7
8
5
industry.67
100
100
970-71
100
100
100
100
Despite the stagnation in the western
102
101
971-72
130
102
114
98
cigarette industry,68 international trade in
111
106
972-73
104
109
FCV tobacco has continued to expand at the
122
. 114
973-74
117
125
expense
of other varieties of tobacco leaf.
144
203
■974-75
210.5
130
130
124
156
However, India’s share in the world trade of
184
215
(975-76
232.2
147
116
178
128
FCV tobacco has stagnated at 12 per cent
198
187
1976-77
232.6
86
169
between 1960 and 1980.69 India failed to
199
177
1977-78
234.2
103
166
take advantage of the exit of Rhodesia, the
212
175
1978-79
257.2
122
176
second largest exporter next to the US. from
— 167__ —318.8 — ----- 1H------1979-80___
200___
348
the international tobacco market in the early243
1980-81
346.9
133
- 251
217
’210
432
sixties, as well as theTharp decline in US
274
1981-82
380.2
136
245
export in the seventies. It is countries like
yotr. Index is average of weeks.
frazil, Malawi, South Korea and Thailand
Soumer Indian Economic Survey, various years, “Season and Crop Reports”, various years.
who made significant advances. Brazil, who
0 - - rA
O +
PE-53
Review of Political Economy July 1986
entered the international trade at the end of
the sixties has today overtaken India in the
exports of FCV tobacco (in 1980-81 Brazil’s
share in world FCV exports was 16 per cent).
The relative prices do not explain the
export performance of Indian FCV tobacco.
An examination of the average value of fluecured leaf imported into UK has shown that
Indian leaf is not only relatively cheaper
than its competitors’ price but also the rate
of increase has not been disproportionately
higher.70 We hold that the stagnation in
Indian exports can be explained only with
reference to the oligopolistic structure of the
world cigarette industry and the control of
the world leaf market by a small number of
tobacco conglomerates.
The top seven tobacco conglomerates
directly control over 60 per cent of cigarette
production outside the centrally plannedeconomies.71 In addition, it has been
estimated that about 90 per cent of the inter
national leaf trade is controlled by the
transnational corporations. These trans
national corporations regulate and co
ordinate purchases through global strategies
for leaf procurement. They mould the pro
duction in different countries to suit their
requirements either through direct inter
vention as in--India or through various
market mechanisms. Thus the fluctuations
in the performance of any one country
would have to be located in the context of
the global policies of these conglomerates.
Therefore, a more fruitful line of enquiry
would be to link it with the international
operations of BAT. The fortunes of Indian
tobacco were determined by the position it
was allocated in the blending hierarchy of
BAT as part of its global strategy for leaf
procurement. It was this same company that
was responsible for the choice of soils as well
as quality of tobacco grown in India as well
as Rhodesia, India’s chief competitor in the
UK market before the mid-sixties. Whereas
the Rhodesian flue-cured leaf was con
sidered as a feasible substitute for American
leaf, the Indian leaf grown on black cotton
soils was considered only as a good blender.
Even though the price of the Rhodesian leaf
was more than 50 per cent above the price
of Indian leaf and the relative difference in
the prices continued to widen, the Rhodesian
exports to UK increased at a faster rate than
India’s exports did upto the mid-sixties.72
ECONOMIC AND POLITICAL WEEKLY
tries for many years past”.73 BAT which
today controls 80 per cent of the Brazilian
cigarette industry has been largely respon
sible for the Brazilian success. Interestingly,
BAT’s intervention in Brazil is akin to the
contract system prevalent in India in the pre
Independence period.
It is now accepted that leaf comparable
to Brazilian varieties can be grown in the
light soil areas of Andhra.74 But it was on
the heavy black cotton soil of Guntur that
the choice of BAT fell. We argue that, given
the nature of the soil and the desired quality
of the leaf there are severe limitations to rais
ing the yield of FCV tobacco through con
trolled variation of inputs such as irrigation
or fertiliser.73 Similarly many of the cultiva
tion practices promoted by ILTD have been
detrimental to the increase in the yield.76
Not only has the Indian yield stagnated but
it is one of the lowest in the world.77 At the
same time continued cultivation of FCV
tobacco over the last 50 years with minimal
crop rotation has exhausted the soil and crop
pests have become endemic. The problems
of soil exhaustion have been compounded
by the indiscriminate felling of trees as fuel
for curing purposes. As a result problems
of salinity in the black soil have increased
since the mid-sixties. The ecological degra
dation has tended to push up the costs.
The rise in the cost of cultivation and the
stagnant yield on the one hand and the in
adequate rise in price on the other has
resulted in a decline of the profitability of
the crop. As can be seen from Table 9, the
prices of coal, fertiliser and pesticides,
accounting, for more than a quarter of the
total cultivation costs, have increased three
to four-fold during 1970-71 and 1981-82. The
labour costs have also more than doubled
during the period. At the same time the
prices received by the farmers increased by
two and a half times and the yield has not
risen significantly. The cost of production
of FCV tobacco (excluding interest charges,
rent payments and transportation charges)
has been officially estimated to have in
creased from Rs 4,390 per hectare in 1977-78
to Rs 7,472 per hectare in 1981-82.18
ing profitability of-tobacco has prompted
many of the farmers to shift to more profit
able crops like cotton. As can be seen in
Table 1 the area under Virginia tobacco in
Guntur has declined by about 30 per cent
in the latter half of the seventies. A signi-’
ficant part of this cropped area was outside
the traditional black cotton soil tabacco belt."
Thus for example in 1982-83 out of 88,000.
hectares under Virginia tobacco in Guntur.
and Prakasam districts, 36,000 hectares were
in the new light soil areas. Cotton is develop-^
ing as a major crop in the black soil
region.”
Another important response of the;
farming community to the crisis in the:
tobacco economy has been agitations to;
redress their grievances. In the latter half of
the sixties, the farmers generally joined.
hands with traders to demand state interl
vention to clear the excess stocks. Later the ;
traders became the target of farm agitations’
By the end of the seventies, it became
customary for the farmers’ organisations to.
demand minimum prices for the crop at the:
beginning of the season. The agitations for
the minimum prices often involved violent"
disruptions of the tobacco markets and con
frontations with the traders. In 1983 in one"
such incident three persons were killed in
police firing.
The recurrent agitations by the tobacco; .
farmers and the attendant law and order
problems made a comprehensive state interJ
vention, in order to resolve the crisis in. the ,
tobacco economy, imperative. The" introduce
tion of auctioning became an important”
element of the package schemes to save the
tobacco economy from the present morass! p
This opinion has found support from an.
unexpected quarter, both from ILTD and the.
leading exporters, who in the fifties scuttled, I
an attempt to introduce auctioning. It is not >•
difficult to understand this change io: ■
attitude
1 ,
It is expected that the introduction o3 ,
auctioning would enable the exporters »' [
significantly reduce the marketing cost, shift ■
the labour intensive export quality grading :
to the farms and reduce the stock holding f
and establishment charges.80 Auctioning; t
would also strengthen the hold of the leading
exporters in market by eliminating the !
smaller rivals. In addition the trading capita .
has been wary of adverse political fall-out- :
with slogans of nationalisation of expo's
trade being raised by farmers and ooliticMafc ,
parties. The auction system was introducejE.-."
in the Guntur region in the 1985 season, S®.
is too early to say to what extent the expect
*®.tions raised by the new system will
■
fulfilled.
The problems of farmers have been aggra
vated by the abuses of the unregulated
market system as well as by the periodic gluts
in the market. A significant increase in the
production in any year would "result in
In the background of the embargo on accumulation of stocks, distress sales and
Rhodesian tobacco, BAT began to develop plummeting of growers’ prices. 1964-65 and
new sources in Latin America and Africa.
1968-69 were two such years of excess supply
The efforts gathered momentum after the during the sixties. In the next decade the
dilution of shares in ILTD with the imple years 1972-73, 1974-75, 1978-79 and 1979-80
mentation of FERA regulations. According
were again years of over-production. The
to a report in World Tobacco, an important
packers and dealers and other petty inter
To conclude, this study has attempted jjMF-:factor in explaining the interest of inter- mediaries were often wiped out by the
national tobacco conglomerates_in—the—burden-of-aceumuiated stocksr~Rare^to a~ expucitly consider internal and extenS|B|S
Brazilian tobacco was “the political stability -system of- delayed payments it also meant" factors that have impinged upon the produ^®;w
tion
and marketing of FCV tobacco jS®'."
of the country in a world where buyers feel a loss for the
' farmer.
'
In essence the fanners
more uneasiness about continuity of supply were not only financing the tobacco trade Guntur. The nature of the exchange relatiojg®;.
from a number of tobacgo exporting counbut also bearing the risk of the trade. Declin between tobacco cultivation and the tobac^fflE ,
PE-54
4
trading firm is not something which is
and “Scheme Report of Resettlement of
Ibid, p 34.
| unilaterally determined by the latter. It has
Guntur District”, 1936.
15
“Report on the Progress of Agriculture in
1 been conceived and shown to be the resultant
6
See the study by N G Ranga, 'Some Facts
India, 1920-21” (Calcutta Government
Concerning the Development of the
Press, 1922), p 21.
of the interaction between the two.
Tobacco Trade of Madras’, Indian Journal
16
“Tobacco Production and Consumption in
of Economics, Vol III (1926-27). p 34.
India”, p 16.
7
See Evidence of M K Hanumantha Rao in 17
4
Notes
Ranga, “Some Facts Concerning Develop
“Report of the Indian Industrial Com
ment of Tobacco Trade in Madras”, p 36.
mission”, Minutes of Evidence, 1916-17
18
Ibid, p 36.
<
‘*’1 1 See Cheng Hang Seng, “Industrial Capital
(Calcutta: Government Press, 1918), p 78
19
W E Nicholson, ‘A Short History of the
and the Chinese Peasant: A Study of the
and N G Ranga, “Economic Organisation
Indian Leaf Tobacco Development Com
-I
Livelihood of Chinese Tobacco Cultiof Indian Villages”, Vol II (Bombay:
pany Ltd”, unpublished, 1955, in the files
)j
vators”, (Shanghai: Kelley and Walsh Ltd,
Taraporevala Sons and Co, 1921), p 104.
of LTC Ltd, p 6.
rj
1940).
8
W R S Sathyanathan, “Report of 20 Ibid, p 6.
el 2 For example relative price of cotton to jowar
Agricultural Indebtedness” (Madras:
21
“Report on the Marketing of Tobacco in
.i
moved in favour of cotton by about 60 per
Government Press, 1935), p 38.
India and Burma” (Simla: Government
I
cent (see Table A). Foodgrains were
9
See Adapa, op cit, p 64.
Press, 1931), p 202.
4
available from the neighbouring districts of
This was an observation by the Collector 22
Ibid, p 203.
I
Krishna and Godavari and also from the 10
of Guntur District in “Report on the Set 23
Guntur Tobacco Market Committee
*
delta taluks of Guntur district itself. See
tlement of Land Revenue in the Districts of
(GTMC), Bulletin, (December, 1942), p 1.
£•
Satyanarayana Adapa, “Agrarian Relations
Madras Presidency”, Board of Revenue Pro 24
Evidence
of tobacco ryot/trader; “Report
under the Impact of Colonial Rule in
ceedings No 72, dated March 5, 1907, p 15.
of Madras Provincial Banking Enquiry
|
Madras Presidency, 1900-1940: A Case
It was observed that mostly landholders who
Committee”, Vol II (Madras: Government
^fedy of the Andhra Districts”, Ph D thesis, 11
owned a pair of bullocks leased-in land. See
Press, 1930), p 229.
|
Wrprecht Karl Universitoot in Heidelberg,
“Report of the Economic Enquiry Com 25
For price of tobacco, as no proper price
1983. p 22.
mittee", Vol I-III, (Madras: Government
series is available, we used the unit export
B
3 This figure is calculated on the assumption
Press,
1931)
and
Ranga,
“
Economic
value
of all unmanufactured tobacco. The
|
that all exports from the district were rice
Organisation
of
Indian
Villages
”
,
Vol
II.
trend
in the price of FCV tobacco would
only and did not include paddy.
pp 53-55. Also Census data indicate that
ha-.e been reflected in this unit export value
I
4 Between the first and third decade of the
Guntur had a significantly lower incidence
as it came to dominate unmanufactured
20th century the number of rice mills inof cultivating tenants who primarily would
tobacco exports.
I..
'Greased from 17 to 92 and of cotton ginning
consist of landless tenants.
26
See Table B for price indices of jowar,
and pressing factories from 17 to 38. There
cotton, tobacco (desi and flue-cured) during
were also 37 groundnut decorticating mills 12
“Census of Wages in 1911”, Board of
depression
period.
and 38 oil mills in 1930-31. See “Scheme
Revenue (LR, Sett and Agri) Proceedings
27
See
evidences of witneses from various
Report of Resettlement of Guntur District”,
No 3037, August 26, 1912.
Andhra districts in the “Reoon of the
G O No 1390 (Confidential) Revenue
13
United States Department of Agriculture
MPBEC”.
Department, July 29, 1936, p 32.
(Foreign Agricultural Circular) “Tobacco
28
One study has estimated that profits from
5
For the expansion of trade see “Scheme Production and Consumption in India”,
Virginia tobacco were higher than for any
December, 1939, p 34.
Report of Resettlement of Guntur District”,
other crop. See K Sankaraiah ‘Cultivation
Out of a utilisation of 1,75,00,000 pounds
Board of Revenue (Sett, LR and Agri) 14
and Marketing of Virginia Tobacco’. Madras
of leaf, Indian leaf was 1.17,00,000 pounds.
Proceedings No 463, December 17, 1903
Agricultural Journal, Vol XXIX.; October
1941), pp 393-399. The returns were
estimated as Rs 40 per acre in 1940 and
Table A: Relative Price of Cotton and Jowar
Rs 122 per acre m 1941.
1916-1920
1897-1900
1906-1910
1911-1915
1901-1905
29
“Tobacco Production and Consumption”,
Price of cotton
Pnc^^ jowar
RelaW price (££)
14.02
2.77
5.06
15.27
2.11
7.24
21.90
3.05
7.18
20.47
2.98
6.87
41.47
5.11
8.11
Note: * Prices of both cotton and jowar are for the Guntur market.
Source-. Calculated from Prices and Wages in India (Calcutta: Government Press, 1915 and 1923).
Table B
(1929-30 = 100)
Year
Jowar
Cotton
1924-25
119
1929-30
100
1930-31
79
1931-32
57
1932-33
46
1933-34
59
1934-35
63
1935-36
66
1936-37
64
1937-38______________ _______ 62
171«
100
71
53
5j
102
59
70
66
66
Desi Tobacco
100
97
105
100
73
100
84
Flue-cured
Virginia
100
90
109
112
98
105
98
139
30
31
In 1934-35 45,00,000 pounds of Indian fluecured leaf was utilised and by 1937-38 this
figure increased to 98,00.000 pounds. Ibid,
Production of cigarettes:
Period
1948-49 to
1951-52
1952-53
1953-54
1954-55
Average
1955-56
1956-57
1957-58
Quantity
(million
pieces)
Index
20,000
18,329
19,577
21,190
19,699
23,779
27,324
28,865
•00
98
106
99
119
1'36
144
Source-. Government of India. Agricultural
Marketing Adviser, “Repon on the
averages and we have placed the 1929 annual average figure- ___ ____ (NagpurLGovernmentPress,-1960).----- ——Guntur District, 195O-51”(Hyderabad: Government Press, 1953);
aga ,n India' various issues and “Tobacco Production and Consumption
32 The three taluks of Guntur, Ongole and
Narasaraopet have on the avera ge accounted
for more than 70 per cent of the area under
PE-55
ECONOMIC AND POLITICAL WEEKLY'
Review of Political Economy July 1986
Part I, Chapter Three. The relative profit- •
FCV tobacco in the district.
Marketing of FCV Tobacco in Andhra
ability of Virginia tobacco is also confirmed
This is based on information supplied by
Pradesh”, Ph D thesis, Agricultural College
by the Guntur Market Committee. See their
the Indian Tobacco Association and quoted
and Research Institute, Coimbatore, 1970.
Administration
Reports, various years.
in NCAER, “Export Prospects of Tobacco”, 48
Based on the average estimate for south
ITC Ltd, ILTD Division, “Contribution ■
(New Delhi: NCAER, 1967).
zone in 1952-53 during the sixth and seventh 53
to Ipdian Cigarette Tobacco Industry”, J
34
“Report on Marketing of Tobacco”, p 303.
rounds. See NSS, “Some Aspects of Costs
(Guntur: ITC Ltd, 198)), p 14.
\
35
Nicholson, “A Short History”, p 6.
of Cultivation”, Report No 32 in three parts,
54
T V S Rao, “Marketing of Tobacco in |
36
Number of Barns in Guntur District:
5th to 7th rounds, 1951-53.
Guntur District”, p 23^.
j
49
In a survey of seven tobacco villages it
55
See
ITA,
“
Amendment
and
Incorporations
was found that for even those operating
Year
Number
Year
Number
proposed to Clauses in Central Excise Bill I
between land three acres hired labour
1969”, Files on Excise, ITA, Guntur. They ,
1932
251
1940
6500
accounted for about 65 per cent of the total
included proposals to alow the storing and I
1933
692
1941
7737
labour requirement. The extent of hired
grading of tobacco in matched sheds and ;
1934
1375
1942
9332
labour increased with operated area. See
avoid the putting up of pucca structures at i
B Sarveswara Rao and K Nagabhushanam,
1935
1599
1943
8798
all the buying points. This was to give |
“Report of the Socio-Economic Survey”,
1936
1867
1944
8574
greater flexibility to the trader to open |
Part II, Census tables.
1937
2345
1945
8743
purchase platforms in a -rider area with less |
50
BITC, British Indian Tobacco Company,
1938
5096
1946
8915
permanent ’ investment.
was established as the purchase wing for
1939_______ 6447
1947
996
The final export grades or Agmark grades *
cigarette manufacturers in UK who were 56
Source: D Almstead, “Report of Court of
are based on certain accepted international 1
outside the combine of Imperial Tobacco
Enquiry into Labour Conditions
characteristics. Minimum export prices are j
Company of Great Britain and Ireland.
in Beedi, Cigar, Snuff, Tobacco
given for these grades. Most cultivators are ?
51
This number is based on the listings in
Curing and Tanning Industries”
unware of the final Agmark composition |
Indian Central Tobacco Committee,
(Madras Government Press, 1949),
of their tobacco and therefore have no basis c
“Indian Tobacco: Directory of Exporters”,
p 96.
to dispute the price offered by the trader, j
(Madras: Government Press, 1960).
Recently the Tobacco Beard has introduced *
52
The survey by Sarveswara Rao and Naga
37
Cost of Barn Construction:
an 8 grade schedule winch is supposed to |
bhushanam found that the profits from
proximate the Agmark grades. From |
Virginia
tobacco
cultivation
was
Rs
155
per
(Rupees)
1980-81 indicative prices are being issued fca i
acre whereas the return from country
these grades at the beginning of every i
Size
Single Furnace Double Furnace
tobacco was Rs 66 per acre, chillies Rs 90
season by the Tobacco Board.
per acre and groundnut had negative return.
Katcha Pucca Kutcha Pucca
This estimate is based on an estimate of the 4
See Sarveswara Rao and Nagabhushanam, 57
16' x 16'
1225
1850
final demand of these companies and the |
“Report on the Socio-Economic Survey”,
18' x 16'
1300
2000
20' x 16' 1500
2150
20' x 20'
2000
2000
Table C: Distribution of Credit according to Source
33
Source: Almstead, “Report of Court of
Enquiry”, p 94.
38
Source
Number of Farms Average Borrowing
Per Farm
in Debt
(Rupees)
Percentage Distri
bution of Total
Farms in Debt
according to Source
of Borrowing
From oral interview of two rich ryots and
traders in Tadikonda in April 1983.
GO No 3114, Revenue Department,
1
3
4 '
2
November 22, 1934, p 3.
40 Ibid, p 35.
524
14.1
Co-operative societies, etc.
18
41
See TVS Rao, “Marketing of Tobacco in Village moneylenders
813.44
48
37.5
Guntur District", PhD thesis. University of Agricultural moneylenders
920.08
48.4
62
Poona, 1965, pp 311-312.
Total
128
100.00
42
This is very evident from Table C.
43
From Government of Madras. “Admini Source: B Sarveswara Rao and K Nagabhushanam, “Report on Sodo-Economic Survey of the
Nagarjuna Sagar Project Area” (Hyderabad: Government Press, 1972), Part III, Survey
stration Report of the Registration
tables.
Department”.
44
Sayana found that nearly 35 per cent of the
Tabled
total sales in the period 1930 to 1945 in a
(new pence/kg exclusive of duty)
tobacco village were from small landowners
Malawi
Brazil
India
S Korea
Thailand
to big ryots. V V Sayana, “The Land System
Year
USA
in Madras Province”, PhD thesis, Univer
4
6
3
5
7
2
1
sity of Bombay, 1947, p 191.
45
“Report of the Minimum Prices Sub Com 1970
62
77
66
56
64
110
mittee of the Guntur Tobacco Market Com 1971 '
64
86
53
68
no
66
mittee”, 1947, in files of Indian Tobacco 1972
84
62
62
60
115
Association, p 2.
71
97
1973
130
73
75
46
V V Sayana, “The Agrarian Problems of 1974
86
88
121
S3
152
99
iMadras Province”, (Madras: The Business 1975
104
132
124
112
181
119
Week Press, 1949), p 91.
1976
118
170
114
167
232
136
47
A study by J V L Prasad has shown that 1977
141
186
152
140
250
in
there are significant economies in curing. 1978
188
132
154
114
218
163
The curing cost was Rs 323 for those
__ operating below 5 acres, Rs 223 for those- - Sources^Compiled from P-Purushotham,“MarkrtBehaviour of Cigarette Tbbacaf
*ICd£mt«mr^|
operating 5-10 acres and Rs 190 for those
Rainbow Publications, 1981), p 200 and W G Walunjk, N Rajendran and M Seethamina, *
operating above 10 acres. See J V L Prasad,
‘Tobacco Situation and Outlook in the United Kingdom’, Indian Tobacco Journal, *
"A Regional Study in Production and
Vol XI (January-March, 1980), p 10.
39
PE-56
The not-so-silent persuaders
Advertising works. When you see star MP Vinod Khanna endorsing
a gutka brand, you might be tempted to try it. Cigarette ads
unabashedly tell you they are selling a lifestyle. Should India follow
the West’s stringent control over tobacco advertising?
Malathy Iyer checks out
UST study the contrast.” says
Viji Venkatesh of the Cancer
Patients’ Aids Association,
handing out two foreign maga
zines. On the backpage of the
Asian edition of Newsweek is the
macho Marlboro man ready with
his- perfect lasso. However, the
same advertisement for the
American market has a promi
nent rectangular box, a white
blotch that detracts from the ad
stylist’s visual line. This is the
warning issued by the US
Surgeon General, and it states in
categorical terms that ‘smoking
can cause cancer’. In Ireland, the
warning is totally unqualified:
smoking causes cancer.
“Why can’t we have a legisla
tion that forces our tobacco
industry to carry prominent warn
ings instead of the vague, micro-
J
lic place?" In the US, smoking is
banned in all public places, includ
ing restaurants, offices and aero
planes. The European Economic
Community has banned chewing
tobacco in all its 15 member
states. Last week it ratified a bill
seeking to ban advertising as well
as sponsorship of events by the
tobacco industry over a time
frame of 10 years. Belgium, China,
France, Italy, Malaysia, Portugal
and Singapore have totally
banned tobacco advertisements.
“If advertising wasn’t so power
ful an influence, why would any
one advertise?” asks FDA com
missioner Anil Lakina, who is in
the forefront of the battle to ban
gutka and other brands of smoke
less tobacco. “Once you take
away these silent persuaders,
awareness of the risks will filter
S-Annual turnover of the chewing tobacco industry — Rs L500
crore (up to May 1997)
S Number of tobacco farmers in India — 6 million
a Number of retailers and panwalias — L5 million
n Smokeless tobacco enjoys a 28 per cent market-share in the
Indian tobacco industry
S There are 70 manufcctarers of gutka in India, with just 10
marrafacturers cornering 60 per cent of the market
iscopic ‘Smoking is injurious to
|health’?’’ demands Viji. The truth
;in the land of Red & White
■ Bravery Awards and Gold Flake
Tennis Open, is that there arc no
substantial laws to govern the
multi-crore tobacco industry.
Here, heavyweights such as
Ashok Kumar, Shammi Kapoor,
Zeenat Aman. MP Vinod Khanna
and Govinda lend their star status
to various brands of smokeless
tobacco — that is gutka and the
like. Social commitment is sadly
as ambiguous as the statutory
warning on the tobacco products.
The zero-control situation
recently provoked an American
visitor to a super deluxe hotel in
Mumbai to ask in astonishment:
“All the ash-trays in the lobby arc
filled with cigarette butts. How
can they allow smoking in a pub
down even to the rural areas
where traditional forms of tobac
co are popular,” he adds. In fact,
even the traditional forms of
tobacco such as misri, snuff,
khaina etc. are being packaged
and heavily advertised in the
urban centres.
Wide protests by health
activists in India have so far only
yielded a voluntary code drafted
by the Advertising Standards
Council of India (ASCI) to gov
ern advertising by the tobacco
industry. Coming into effect from
October 1,1998, it will ban public
personalities from endorsing
tobacco products, and disallow
ads that attribute a better life to
the intake of tobacco. The code
also seeks to clamp down on sur
rogate ads. Wills cricket gear is,
thus, out. “Our code is an attempt
to see that youngsters and nonsmokers arc not attracted to the
habit by aggressive advertising,”
says ASCI vice-president Bharat
Patel.
According
to
Madison
Advertising's Sam Balsara, also a
member of ASCI, “When an
agency is asked to work on an ad
campaign, we give it our best shot.
However, now that we have a set
of guidelines, we know where to
draw the line.”
But not everyone secs the code
as the ultimate answer. “A volun
tary code will never work; the |
ASCI is a self-regulatory body
with no powers to punish an
offender,"
points
out
Viji
Venkatesh. “I am against adver
tisements which promote prod
ucts which arc carcinogenic, ” says
Lakina.
While Lakina believes that only
a ban on smokeless tobacco will
work, Venkatesh believes that
public awareness and self-disci
pline by the tobacco industry and
role models will help. “Akshay
Kumar recently admitted that he
had agreed to do the cigarette ad
years ago only because he needed
the money. He says he won't do it
now. Similarly, Samcer Malhotra,
who appears in the Esteem car ad
and works with the CPA A, turned .
down a Rs 3-lakh offer by a tobac
co company,” she says.
It is not as if no city or municipal
ity in India has attempted to ban
cigarettes, gutka and other
smokeless tobacco products.
Delhi has banned tobacco adver
tisements in public places. Titus,
unlike Mumbai’s Marine Drive
which has huge hoardings of
Benson & Hedges and 555
cigarettes, Delhi has none. The
Kochi Municipal Corporation
banned the sale of pan masala
satchels
five
months
ago.
Unfortunately, the banned items
are available in many shops. As
for the effectiveness of the ban in
Delhi, a story goes that when the 1
tobacco giant 1TC found that it
could not sponsor a badminton
tournament in Delhi, the event
was transferred to Nagpur — to
its university grounds!
The many forms of smoke
Packaged:
Non-packaged:
■Creamy Snuff
■Dry Snuff
■Lal Dantmanjan — contains tobacco;
sold as dentifrice
■Zarda — chewing tobacco with aromatic
substances and lime
■Gutka — tobacco (nicotine), arecanut,
aromatic flavours, sawdust, magnesium
'.. carbonate
nMPan Masala — arecanut, aromatic
flavours, sometimes saccharine
Source: Dr P.C. Gupta, TIFR
■Mishri — tobacco roasted and grinded into
a black powder; most common in Mumbai
■Tobacco flakes with chuna (lime) — the
lime aids in better absorption of nicotine
taKharra (Vidarbha) & Mawa (Gujarat) —
tobacco with lime and areca-nut
■Khimam — tobacco paste with aromatic
substances
■ Gudakhu (Bihar) — tobacco paste with
molasses
■Betel Quid with tobacco
-3 Mfly
"THE
Times of uvoiz)
(gomanyj
ESS
•
Advertising
April 6-19, 1998
MVS^’
Breathing fire over smoke xx,av“ "d more “
The tobacco industry has been thrown off balance by a
stringent new advertising code released by asci
t had to happen. The tobacco indus mated to account for over 67 per cent of
try saw it coming for a long time. all cigarette advertising. Already
India's anti-tobacco lobby had been exposed to bat's stringent code after its
gaining momentum, propelled mainly tie-up to produce and market Benson &
by consumer bodies and health work Hedges (b&h) and 555 State Express, rrc
ers. After 18 months of deliberation, the has already begun to revamp its adver
Advertising Standards Council of India tising pitches.
Bkci) last fortnight released a tough
Godfrey Phillips, which has a share
new set of guidelines for tobacco adver of about 13 per cent of the market,
tising that will come into effect from 1 declined to comment on the implica
October.
tions of the code while it is being stud
Even as ad agencies and tobacco ied by its legal department. With
companies frown over the code, brands like Panama and Chancellor,
consumer activists are peeved that the
restrictions don't go far enough. "We
need a code that can bite, not just bark,"
says consumer activist and lawyer
Shirish Deshpande. But then, as Bharat
Patel, vice-chairman of asci (also chair
man and managing director, Proctor &
Gamble) says, "We simply cannot
please everybody."
In short, asci says that ads may not
suggest that tobacco products lead to
health, safety, success (in business, rela
tionships, sports, sex), machismo,
ng, courage, emancipation, testilials from well-known personalities
or heroes of the young. There's more:
people featured in ads should "clearly
appear to be over 25 years of age", no
more than a third of
persons featured shall
ASCl's objectives
be shown smoking, no
Ads should not:
tobacco ads may be _ • Encourage minors (below 18)
released
in
media | to use tobacco products
• Induce non-users to take to tobacco
targeting children.... = • Suggest that the use of tobacco products leads
Where does this leave g to extraordinary success in various areas
of human endeavour
advertisers of tobacco § • Resort to surrogate advertising for tobacco
products? More impor- S products, by circumventing the provisions
GTC Ltd, with an
of Law, Rules or Code
tant, do they really 5
ad budget of Rsl9
have to comply with
crore, says it will
this code, especially since asci has no try to comply, though total compliance
statutory powers?
will take a couple of years, and even
The industry's biggest player, itc, then only "if legislation is passed". But,
says that it will comply but not insists Ved Berry, marketing director,
overnight. It is quite clear that all the gtc, "It is a voluntary code and cannot
smaller companies are waiting to see be enforced. " The company has just 6
how itc reacts to the code. Not surpris per cent of the cigarette market and is
ing, given that rrc is estimated to have currently a bipr case. VST, with 13 per
a market share of about 67 per cent. Its cent of the market and an adspehd of
ad budget, Rs 173 crore last year, is esti- Rsl5 crore, will be less affected. It has
I
A will, and many ways
Tobacco monies keep virtually every ad
agency in Calcutta in business.
BatesClarion, for instance. Apart from
itc's Gold Flake account, the agency
also handles new entrants b&h and 555
(Bates' accounts internationally), b&h
and 555 ads are not expected to run
afoul of asci as they are already
designed to pass the UK’s code, which
is even more stringent, asci's own stan
dards are based on the UK's code.
A number of current campaigns are
now going to be no-nos. Like the one
that features actor Akshay Kumar in a
daring rescue of damsels trapped in a
cable car between puffs of his Red &
«
CBD* This photo oopy la being supplied
pOCfO^y for your personal reference and study
White cigarette. Out go macho ads like
Vinod Khanna and his Baba Zarda or
the recent Wills clip showing four
youngsters discovering the Wills logo
in a cliff amidst Aztec ruins. Philip
Morris' Malboro man, in the wings for
some time now, may never enter the
Indian market in its current avatar.
Where tobacco companies are
expected to dig their heels is in their
sponsorship of events. Already, an
Indian court has ruled that the mere
display of a logo does not constitute
• IN ESS
INDIA
.
April 6-19, 1998
advertising and asci has reiterated this.
"Our standards have to stay within
what is legally permissible," says Patel.
"As long as the law permits it, we will."
The European Commission failed to
ban sponsorship of events by tobacco
companies when it appeared that
Formula One motor racing and the
World Rally Championship would
collapse completely.
itc has emerged as the biggest
sponsor of sporting events in India
over the last decade. These include the
kWills World Cup in cricket and Clas
sic's links with equestrian events and
golf, Gold Flake in tennis and
billiards, and Bristol in foot
Ad-spends
ball. What of itc's investment
(Rs crore)
in sponsoring tennis stars
Leander Paes and Mahesh
Bhupathi? Interestingly, Sam
Balsara, chief executive, Madi
son Advertising, and a member
of asci's board of governors,
says this campaign is also a
clear no-no, even if it does not
exhort viewers to actually
smoke the brand.
specifies that merchandise like ciga
Despite the ban on surrogate adver rette holders, tobacco filters, etc,
tising, other smokescreens will pass,
cannot be broadcast "in proximity to
simply because they do not contra children's programmes". Moreover,
vene the letter of asci's code. On sale says Sainath Iyer, zee tv's vice-presi
soon will be Jack Nicklaus golf clubs
dent, marketing services: "We also
brom Classic and footballs from Bris follow all Indian rules and regulations."
tol. Wills has long marketed books,
"Ninety-nine per cent of the time we
diaries, videos, clothes etc. If such
would reject an ad that offends asci's
merchandise is produced and sold in
codes," admits the marketing director
large numbers, aski says it's fine, itc's of a publishing house a little wistfully.
vice-president Kurush Grant main
"True, we have no statutory authority
tains that the Wills brand is being
but our members realise that if we don't
advertised rather than the cigarettes in
regulate ourselves, somebody will regu
most advertising material.
late us," says Sopariwala. The rationale
What will asci do if tobacco compa
has worked so far, and asci has never
nies simply decide that they do not
really faced any major problems about
want to comply with its code? At stake compliance from its own members, but
is about Rs257 crore from cigarette
if the tobacco industry took a tough
advertisers alone. Dorab Sopariwala,
stand, the issue may well be the first real
chairman of asci, explains that 80-90
test of aski's mettle. Balsara admits that
per cent of the press media are asci
there have been problems with liquor
members and most often they would advertisers, but asci expects tobacco
choose to abide by asci's suggestions
companies to be more responsive.
and reject ads that go against its rules.
Despite asci's best attempts, there is
All major tv networks are asci
plenty of scope for discretionary inter
members. Even though channels like
pretation under the new code. Obvi
Star and Zee are beamed from outside ously, its complaints cell is in for a great
the country, they are subject to_ the deal of hair-splitting with tobacco
standards and practices of I long Kong,
companies and anti-tobacco lobbies
from where they are beamed. A look at
interpreting the code completely
Hong Kong's code is telling, it even
differently. But then, says Sopariwala,
rpOST-CBD: This photo copy la being supplied
DOCtu
for your personal refarenas and atudv
Advertising
B&H ads may pass the test, but will Gold
Flake's new campaign with its youth idols?
you simply cannot write the definitive
code; "it is also open to change."
Patel agrees that the most problems
with compliance will come not from
cigarette companies, but from small
time manufacturers of beedis, gutkha,
zarda, kiwani, ghadaka, hand-rolled
and chewing tobacco. Unlike the cigarettewallahs, such manufacturers did
not even respond to asci's proposal to
discuss formulating the code, itc
chairman Yogi Deveshwar has been at
pains to point out that cigarette smokers only consume about 20 per cent of
the nation's tobacco. He feels that pick
ing on companies like nc would be
counterproductive and would drive
consumption underground.
So who will the government side
with on the issue? A tricky question.
Even as a number of states have intro
duced no-smoking laws for public
places, the government has a healthy
respect for the fact that tobacco sales
account for about 10 per cent of excise
collections (with cigarette sales alone
contributing 90 per cent of this
amount), which are more than Rs4,500
crore. The next few months promise to
be interesting, for they will test the
ingenuity of ad agencies, the PR of
tobacco companies, the ethical
compulsions of the media and the vigi
lance of the anti-tobacco lobby.
♦ NiEKI.E ALMEIDA, MAI) I LUM 111 A BOM
medico friend
circle
bulletin
NOVEMBER 1983
HEALTH PROBLEMS OF TOBACCO PROCESSING WORKERS
Some Impressions
Dhruv Mankad
by constant sprinkling of the tobacco zarda
with water is a problem added to the risk of
constant skin contact.
The tobacco processing industry of Nipani
(Karnataka) employs around 6,000 workers,
most of them being women. Given the apalling
conditions under which they work and live - the latter not being very much different
from that of other workers of the unorgani ed
sector -- it would be unscientific not to
suspect the presence of a variety of workrelated diseases amongst them.
When I started working for a dispensary run
by an Institution in close association with
their Union
Chikodi Taluka Kamagar Mahasangh, I began to look for correlations between
the symptoms presented by the workers
and the nature of their work. After working
for around two years what I observed is
a distinct pattern in the diseases and health
problems that afflict these workers. .Although
I have not done any systematic study as
yet, I have been able to form some impressions
which I wish to share.
The process of converting raw tobacco into
processed zarda or beedi zarda consists of
a number of part-manual, part-mechanical
operations of winnowing, sieving and pounding.
At times all these are done with the help of
machines. Finally, various grades and kinds
of tobacco are _blended into a mixture as
required for a particular brand of beedi. The
whole__ process, particularly winnowing and
blending, causes' a lot'of fine tobacco dust to
fly—up~into~the 'air of the closed rooms that
pass-off~ as—. factories. For a newcomer it
is impossible to stand there even for half
a minute without retching or getting a bout
of coughing and sneezing. New recruits often
feel-giddy and vomit while working. The
whole'"process also ’entails direct contact
of the skin with tobacco. During the blending
which is done with legs, the heat- generated
Initially, my colleagues and I had formed
tentative ideas about the work-related diseases
(I hesitate to call them occupational diseases
for want of any evidence of correlation
between the work and the disease) we were
likely to come across. We expected that
,the workers would be suffering from the
following :
(1) Respiratory diseases t Chronic bronchitis,
emphysema, bronchial asthma etc. due to
constant inhalation of tobacco dust.
- Malignancies of the respiratory tract.
- Laryngitis, Laryngeal tubercle etc.
- Increased proneness to tuberculosis.
(2) Skin diseases like contact dermatitis and
allergic disorders.
Although based on my subjective experience,
I can say with some confidence, and relief
too, that some of the conjectures were pro
bably wrong :
a)
Respiratory disorders like chronic bronchitis,
emphysema etc. are not as widespread as
we had expected, though probably more
common than encountered elsewhere.
b)
We have not come across any patient with
malignancies of the respiratory tract, which
is somewhat perplexing as constant contact
with tobacco in other forms have been
associated with malignancy. We had three
patients with oral cancer but they had a
history of tobacco chewing.
c)
Bronchial asthma too, does not seem to be
any more common than elsewhere. But
in at least two out of eight patients taking
regular treatment from our dispensary, the
onset could be correlated directly with the
work.
d)
Tuberculosis too, does not seem to be any
more widely prevalent than in other areas.
In fact, 11 of the 13 T.B. patients under
our treatment so far, have been beedi
rolling workers or their family members.
Only one woman patient was working
in a tobacco factory and the other was
her daughter. This is a very perplexing
epidemiological
fact requiring further
investigation. Many occupations involving
inhalation of various kinds of dusts make
the workers vulnerable to T.B. e.g., slate
pencil industry, stone breaking etc. It
is also a well known fact that beedi workers
are more prone to T.B. No causative factors
have been identified as yet, though.
i)
Laryngitis is quite common especially
after the mixing operation which as
mentioned above causes a lot of tobacco
dust to rise. In may women and men
voices have changed and some even
lost them altogether.
ii) Skin problems like dermatitis, urticarial
rashes etc. are quite common. Many
women complain of fissures in the soles
of their feet, causing great discomfort.
Many problems not considered earlier have
been encountered :
a)
b)
The incidence of dyspeptic symptoms,
hyperacidity and we suspect even peptic
ulcer may be quite high. Almost all the
tobacco workers who have attended the
dispensary have one time or the other
suffered from these symptoms. One factor
which we have not considered is the habit
of tobacco chewing which is quite prevalent.
The commonest complaint that the workers
have is low _backache_and_ pain between
the shoulder blades. This problem seems
almost universal
amongst the tobacco
workers. To this, one can add the problem
of painful _and stiff knee joints. Many
operations like pounding and sieving require
the worker to squat on her legs for hours
together. This awkward posture must take
its toll. That most of these problems
are caused by muscular strain is borne out
by the fact that relief is obtained by
massaging the affected part with or without
a counterirritant. Liniment turpentine is
perhaps the most frequently used drug in
the dispensary. Of course, low nutritional
status, housework and frequent child birth
cannot be ruled out as other possible
causative factors without a thorough study.
This problem seems to be more acute
in beedi-rolling workers. They complain of
pain and stiffness of neck, too. They sit
in even more awkward position - with
straight back and legs stretched out in
front of them and stooping over the tray
containing tobacco and beedi leaves kept
over the legs.
c)
Chronic dacryocystitis seems to be more
Common than encountered elsewhere.
It may be because of chronic inflammation
as a result of tobacco induced irritation,
blocking the nasolachrymal duct, or as a
result of physical blockage of the duct by
tobacco dust.
The experience so far raises certain ques
tions which we are trying to solve by a syste
matic study of some of these problems :
1) What are the relative incidences of the
diseases noted above in the workers and
control subjects - sexwise and age group
wise. If the results confirm the subjective
experience so far then,
2)
Why is the incidence of both pulmonary
tuberculosis and malignancy of the respira
tion tract so low? Has it anything to
do with the fact that most of the workers
are women?
3)
Are the muscular problems related to
posture during the work or are they due ta
other causative factors rioted above ?
It is a matter of regret that there is
not a single study on the health problems
of the workers of an industry involving mate
rial whose hazards are well documented. The
National Institute of Occupational Health
could help me with only a single reference
to a study on hazards to agricultural workers
involved in tobacco farming. Dr. Gupta of
Department of Occupational Health, Central
Labour Institute, Bombay did promise to
initiate a study on an official request from
the Medical Inspector of Factories. In turn
the Medical Inspector of Factories has passed
over the responsibility of producing a "prima
facie evidence" on to us.
(continued on page 8)
RN. 27565/76
mfc bulletin i NOVEMBER 1983
Regd. No.P.N.C. W-96
FROM THE EDITOR'S DESK
TOBACCO SICKNESS
We present in this issue an article by
Dhruv Mankad on health problems of tobacco
processing workers.
Dhruv Mankad needs
to be congratulated for the systematic work
he has undertaken. The article is based on
his personal experience. Although he is careful
to say this is not a systematic study, his
results compare very well in those reported
by the National Institute of Occupational
Health, Ahmedabad (NIOH).
The symptoms described such as nausea,
vomiting, dizziness, headache etc. belong to
a syndrome known as green tobacco sickness.
This was first reported by Gehlback from the
U.S. (JAMA 229, 1880, 1974). This was descri
bed in those who work on tobacco fields in
North Carolina state and hence the name
green tobacco sickness. The authors stated that
though the symptoms were known to the
workers for many years, they were never
described till then in medical literature. This
was considered to be of a recurrent, self
limiting nature. Symptoms occured a few hours,
after starting work and was described as a
combined dermal-respiratory exposure. • Gehl
back also found that smoking protected against
the symptoms, perhaps due to an increased
tolerance to nicotine.
In our country, tobacco is mainly cultivated
in Andhra Pradesh and Gujarat. There were
said to be 1.2 lakh workers in the organised
tobacco industry as of 1974. Studies by NIOH
on
those
harvesting
tobacco "as
well
as handling cured leaves confirmed the findings
of Gehlback. They also described difficulty in
breathing, breathlessness, dry cough etc.
(continued' from page 2)
Is this callousness on the part of the authori
ties due to the fact that these workers
belonged till recently to the so-called un(contlnued from.page 4)
it was legalised). A suggestion made at the
meeting to ban these tests for private practi
tioners and restrict their availability to only
2 or 3 recognised government hospitals could
provide a certain degree, of control over the
abuse. Women's organizations and consumer
associations would have to keep a constant
vigil to see that these tests are not being
used to eliminate female foetuses
Between using a pill or another contraceptive
and between abortion of female foetuses
through sex determination lies not only a com(Editorial Committee:
I Anant Phadke
| Padma Prakash
I Ravi Narayan
i Shlrlsh Qatar
Ulhas Ja|oo
Editor
Kamala Jayarao
In 1980 NIOH did a study on tobacco processing
workers in Nadiad, Gujarat. The work included
pulverising dry leaves, sizing and fillingup in the bags. Symptoms__ were found in
70 per cent of the workers but most commonly
only after heavy dust exposure or during
ho.t summer months. Symptoms persisted
only for a few hours and were considered
by the investigators to be mild in nature.
The NIOH study also found a slight increase
in the incidence of tuberculosis and also
hypertension. Dhruv Mankad has raised the
question as to why the incidence of tuber
culosis and cancer were not high in those
studied by him. As far as tuberculosis is
concerned, unless the incidence in the general
population is known, it is difficult to state
why there is no increased incidence in the
beedi workers. After all tuberculosis is an
infectious disease and other factors described
by Dhruv can only be precipitating factors.
As far as cancer is concerned, it is not so easy
to find a correlation between occupation
and the disease. A large number of workers
have to be studied, their ages known and
also the length of exposure to tobacco should
also be known. Therefore, by a small study
like this one cannot categorically say whether
the incidence of the two diseases is high
or not in these workers.
I am glad that Dhruv has given us these find
ings on an industry regarding the health
problems of which, as he rightly says, we do
not have much information. I also hope this
will enthuse other members to share their own
experiences, although the studies may not
always compare with those taken up by
established research workers and centres._______
organised sector or is it because most of
them are women ? I do not think any syste
matic study is required to answer this parti
cular question.
__________ _____________ _____
parison of the developments of science and the
increasing choices available to the indivi
dual but a whole series of issues concerning
social relationships between men and women in
the family and society, the control of and
access to technology, the kind of technology
being developed and how much choice a
socially
discriminated
group
like
women
can exercise in such a situation. Today
we have dowry demands as a condition
for a girl's marriage, tomorrow another
condition
for
marriage
could
well
be
an
undertaking that she will only produce
sons!
Views and opinions expressed In the bulletin are those of the authors and not necessarily of the
organisation.
Annual Subscription - Now rates from July 1981 - Inland Rs. 15/-. For Foreign Countries - By Sea
Mall US t 4, by Air Mall - Asia US $ 6, Europe, Africa - US $ 9, U.S.A., Canada - US $ 11.
Edited by Kamala Jayarao, A-9, Staff Quarters, National Institute of Nutrition, P.O. Jamel Osmanla,
Hyderabad 500 007. Xerox-Offset by Padma Prakash at Abhyankar's SAT InaL, Bombay 400 004.
Published by Anant Phadke for Medico Friend Circle) 50 LIC Quarters, University Road,
Pune - 16, INDIA.
r
<^>£tXV
•
II? ( fta
r
T( JBACUO::
■
‘
Major Slates: 1990-91 - 1997-98;,
•
Major States by Area
India
Andhra Pradesh
Gujarat
Karnataka
Uttar Pradesh
Bihar
West Bengal
Maharashtra
Orissa
Tamil Nadu
Assam
1990-91
411.0
1G6.8
109.6
46.1
15.5
15.3
12.7
10.1
15.0
10.4
2.6
1991-92
427.0
205.5
85.3
52.9
14.7
15.2
14.0
9.7
. 14.9
.
7.3
2.2
1992-93
418.5
173.5
105.5
58.4
14.5
16.4
11.7
10.2
12.9
8.4
2.1
1993-94
384.8
149.1
96.7
61.2
16.6
13.9
12.0
9.5
10.0
9.2
1.8
1994-95
381.7
130.5
113.4
59.4
16.7
14.9
12.6
9.8
10.3
7.2
1.7
1995-96
394.6
136.2
121.8
59.6
13.1
18.2
13.3
9.4
9.1
8.6
1.6
(’000 ha)
1996-97
1997-98
•:<
428.0 ,
463.5
..
202.0
'
'
163.0
112.6
111.0
69.5
’
70.3
22.3 I .
'|
17.1 ■
20.5
’'kW
17.2
11.8.
10.7.
9.5
9-3
9.3
8.0 .
' 'S.
5.4'.: : H
11.8
1.6 ______ 1-6
■
Major States by Production
India
Andhra Pradesh
Gujarat
Uttar Pradesh
Karnataka
Bihar
Maharashtra
Tamil Nadu
West Bengal
Orissa
Rajasthan
UP
GUJ
RAJ MAH TN
1990-91
556.0
187.0
192.9
78.8
31.0
12.7
10.4
16.0
12.8
8.1
4.9
HP
1991-92
i 584.4
256.8
154.3
70.3
44.7
'
8.6
j
8.0
11.1
13.7
10.8
2.2
KER ARU MIZ
1992-93
596.5
236.4
172.1
76.7
52.9
9.3
11.8
12.2
9.3
9.9
2.4
1993-94
562.9
188.2
179.2
94.1
46.0
7.4
13.0
13.5
9.5
6.1
2.4
1994-95
566.7
164.5
213.2
90.7
45.2
7.7
12.8
10.7
10.0
6.0
2.7
1995-96
535.2
170.3
196.0
61.1
48.8
10.4
13.5
13.0
10.4
6.7
2.1
1996-97
617.9
184.2
211.5
105.5
57.0
11.7
10.8
17.6
9.1
5.5
2.4
(’000 tns)
1997-98 . .
646.0 .
197.2'
183.9
152.4
60.8
14.7
13.7.
7t9
.
6.1
5.0
1.9
AP
- c/m/£,a<4Ricul7uR£ secsoK
SeM-cv ig SomA/w
>
.
HA< 'co:
1 >rl uils: I’hu
i
•
1970-71
1971-72
1972-73
1973-74
1974-75
1975-76
1976-77
1977-78
1978-79
1979-80
1980-81
1981-82
1982-83
1983-84
1984-85
1985-86
1986-87
1987-88
1988-89
1989-90
1990-91
1991-92
1992-93
1993-94
1994-95
1995-96
1996-97
1997-98
Assam
Andhra Pradesh
Area Production
Yield
Area Production
(Kg/ha) (’000 ha)
('000 tns)
(’000 tns)
(’000 ha)
8.4
6.3
222.1
144.0
650
860
8.7
205.0
6.6
238.1
163.2
730
8.0
6.0
222.7
237.1
1000
7.1
5.5
236.5
6.9
5.1
159.4
900
177.1
4.9
156.2
129.6
830
6.6
4.9
188.4
133.2
6.7
710
900
6.0
4.3
290.7
262.8
960
5.3
3.9
198.7
190.6
3.7
154.9
900
5.1
171.6
5.7
4.0
169.4
164.0 <
970
193.4
1050
5.5
3.7
183.9
3.3
253.2
270.2
1070
5.0
3.6
185.6
990
5.3
186.8
5.4
3.5
177.9
170.6
960
4.5
2.9
149.3
145.5
970
2.4
152.0
1040
3.9
146.5
3.4
2.1
105.0
980
107.0
1230
3.0
1.7
151.0
186.0
2.9
1240
1.6
203.1
163.5
1.4
1120
2.6
166.8
187.0
256.8
1250
2.2
1.3
205.5
236.4
1362
2.1
1.2
173.5
188.2
0.9
. 149.1
1260
1.8
164.5
1260
130.5
1.7
0.9
136.2
0.8
170.3
1250
1.6
184.2
163.0
1130
1.6
0.8
197.2
976
0.8
202.0
1.6
0.45 ■
0.40.350.30.25 ■
0.20.15 0.1 •
0.050.0J
0.3-
Assam
(.'<r Share in Cropped Area
0.3
0.25
i
0.15 -
0.2-
0.1-
0.1
Yield
(Kg/ha)
890
990
410
450
810
1060
830
830
970
920
780
880
940
1000
1010
1200
1200
1270
1190
1020
830
570
570
530
520
570
680
717
Bihar
*'< Share in (’rapped Area
0.2
0.1
0'05
1
1970-73
\griculture, Centre for Monitoring Indian Economy
Bihar
Area Production
Yield
(’000 tns)
(Kg/ha) ('000 ha)
12.0
750
13.5
12.4
760
12.5
5.4
750
’ 13.3
13.2
6.0
780
j 9.1
7.4
740
740
11.0
11.7
I 15.7
13.0
730
9.8
720
: 11.8
1 10.9
740
10.6
'
12.7
11.7
730
700
12.5
9.7
670
13.9
12.3
660
; 13.7
12.9
13.4
13.4
680
16.1
650
| 15.9
640
12.7
15.3
620
| 14.1
16.9
620
15.0
19.0
670
14.5
17.3
550
15.5
15.8
540
: 15.3
12.7
15.2
590
8.6
570
1 16.4
9.3
500
13.9
7.4
530
| 14.9
7.7
18.2
10.4
500
500
i 17.2
11.7
500
14.7
20.5
C
■
1996-98
1970-73
1996-98
September J 999
'Tobacco: Statewise Details: 1970-71 - 1997-98
1970-71
1971-72
1972-73
1973-74
1974-75
1975-76
1976-77
1977-78
1978-79
1979-80
1980-81
1981-82
1982-83
1983-84
1984-85
1985-86
1986-87
1987-88
1988-89
1989-90
1990-91
1991-92
1992-93
1993-94
1994-95
1995-96
1996-97
1997-98
Area
(’000 ha)
86.9
65.6
87.2
90.6
88.5
78.6
99.2
81.5
74.6
114.7
121.5
113.0
110.6
108.3
108.4
106.2
110.4
81.5
90.0
112.6
109.6
85.3
105.5
96.7
113.4
121.8
112.6
111.0
Gujarat
Production
(’000 tns)
113.0
116.4
110.1
131.0
127.4
116.6
164.6
125.3
153.6
174.9
185.2
209.5
197.1
186.9
173.5
167.8
jl82.8
121.8
151.0
182.9
jl92.9
154.3
172.1
179.2
213.2
196.0
211.5
183.9
Karnataka
Yield
Area Production
(’000 tns)
(Kg/ha) (’000 ha)
43.0
21.0
1300
1360
40.0
17.0
1260
37.0
20.0
1450
38.0
18.0
1440
36.0
19.0
1480
38.0
23.0
1660
27.0
36.0
42.0
31.0
1540
44.0
30.0
2060
1520
45.0
27.0
52.0
34.0
1520
29.0
1850
50.0
50.0
38.0
1780
29.0
50.0
1730
31.0
1600
49.0
47.2
31.9
1580
37.4
46.7
1660
33.4
1490
43.8
51.0
41.0
1680
50.5
34.5
1620
31.0
46.1
1760
52.9
44.7
1810
58.4
52.9
1630
61.2
46.0
1850
45.2
59.4
1880
48.8
59.6
1610
57.0
70.3
1878
69.5
60.8
1657
Kerala
Yield
Area Production
Yield
(Kg/ha) (’000 ha)
(’000 tns) (Kg/ha)
0.8
490
1.6
, 2130 I
1.7 ~
430
0.8
2130
0.7
540
1.5
2140 ;
2070 "
0.7
1.4
470
530
0.8
1.3
, 1630 <
610
0.8
1.5
2030.
1940.1
1.3
750
0.7
740
0.4
0.8
2000 •
2000 <
0.4
0.8
680
0.4
600
2000
0.8
0.4
2000 \
0.8
650
580
0.5
2000
1.0
760
0.5
1.0
2000 .
0.6
1.0
1670
580
2000 J
630
0.5
1.0
0.9
680
0.5
1800
0.4
' 0.8 . ,.:.2000i
800
0.4
1750
760
0.7
1500;
0.4
0.6
800
680
0.4
0.7,
1750
0.4
0.7
1750 J
670
0.6
2000
850
0.3
20001
0.2
906
.
0.3
*
3000
0.3
750
0.1
1500?
0.2
0.3
760
0.2
0.5
2500
820
1000.;
0.1
811
0.1
1000
875
0.1
0.1
3000-1
Karnataka
Index 1980-81 = 100
2000-
1500 ■
1000500-
o80-81
86-87
-- Prod
0.9
0.8
0.7
0.6
0.5
0.4
0.3
0.2
0.1
1970-73
1996-98
92-93
— VoP
Karnataka
Share in Cropped Area
0.6
1996-98
97-98
Tobacco: btatewise lie tails: I'tZtl
1970-71
1971-72
1972-73
1973-74
1974-75
1975-76
1976-77
1977-78
1978-79
1979-80
1980-81
1981-82
1982-83
1983-84
1984-85
1985-86
1986-87
1987-88
1988-89
1989-90
1990-91
1991-92
1992-93
1993-94
1994-95
1995-96
1996-97
1997-98
!)S
Maharashtra
Orissa
Madhya Pradesh
Area Production
Yield i
Area Production
Area Production
Yield
(’000 tns)
(Kg/ha) (’000 ha)
(’000 tns)
(’000 ha)
(’000 tns)
(Kg/ha) (’000 ha)
1.2
520
13.2
460 .
.14.2
12.3
6.1
2.3
2.4
540
13.3
6.6
500 ■
14.0
11.8
1.3
420 |
13.2
2.4
1.1
460
10.6
4.4
15.3
2.4
1.2
500
12.7
5.9
15.4
12.4
460 ;
460 j
5.8
15.4
11.1
. 1.9
0.9
470
12.7
560
11.2
5.2
2.7
1.5
460
16.7
11.0
590 i
1.7
10.4
6.1
3.1
550
14.8
6.9
520
'
520
2.5
1.3
10.8
5.6
16.6
7.1
7.4
1.7
0.9
530
12.8
580 !
19.6
9.6
1.2
0.5
420
14.3
7.9
550
18.1
8.6
11.9
6.8
21.2
2.0
1.0
500
570
11.3
1.3
0.7
540
12.0
7.3
610
16.6
7.8
12.2
7.2
1.1
640
7.1
580 !
15.9
0.7
10.1
10.2
540
7.9
780
18.6
1.3
0.7
17.8
7.1
460
9.4
1.3
0.6
4.9
690 |
18.2
1.0
500
9.9
7.7
780
9.6
0.5
16.2
8.4
9.7
0.9
0.4
440
7.9
940 j
0.4
500
11.2
10.3
920
14.4
5.0
0.8
1.0
0.5
500
9.9
8.5
860 ■
14.0
6.3
9.2
15.2
9.1
1.2
0.7
580
9.9
1080
1.1
0.6
10.1
10.4
1030 ;
550
15.0
8.1
14.9
0.7
0.4
570
9.7
8.0
820 1
10.8
12.9
10.2
0.5.
0.3
570
11.8
1160 |
9.9
0.7
0.4
570
1370
10.0
9.5
13.0
6.1
10.3
0.6
0.3
500
9.8
12.8
1310 |
6.0
0.5
0.3
9.4
600
13.5
1440
9.1
6.7
0.4
750
9.5
10.8
1140 ;
9.3
5.5
0.3
0.4
0.3
750
9.3
13.7
1473
8.0
5.0
Agriculture. Centre for Monitoring Indian Economy
_
. 393
Yield
(Kg/ha)
870
840
860
810
720
660
470
430
490
480
530
470
450
550
530
530
600
350
450
600
540
720
730
610
580
740
591
625
September 1999
3!) 1
>: St.ht.evvise Det a ils: 1970-71
Area
(’000 ha)
3.6
5.5
5.5
4.2
3.6
5.9
9.5
3.7
2.7
3.1
3.4
3.0
2.4
2.5
3.2
2.8
2.4
1.8
. 2.4
3.6
3.3
1.9
1.8
1.4
1.7
1.3
1.7
1.2
1970-71
1971-72
1972-73
1973-74
1974-75
1975-76
1976-77
1977-78
1978-79
1979-80
1980-81
1981-82
1982-83
1983-84
1984-85
1985-86
1986-87
1987-88
1988-89
1989-90
1990-91
1991-92
1992-93
1993-94
1994-95
1995-96
1996-97
1997-98
450400350300250-
Rajasthan
Production
(’000 tns)
2.7
3.8
3.3
3.2
2.9
3.9
6.4
3.0
1 2.8
! 2.7
| 2.5
2.4
2.2
2.6
3.1
2.8
2.6
2.3
2.3
4.4
4.9
2.2
2.4
2.4
2.7
2.1
2.4
1.9
Rajas! han
Index 19X0.81 = 100
200150 IDO50-
80-81
86-87
Prod
92-93
VoP
Rajasthan
1.2
' '< Share in (’nopped Area
1.0
0.8
0.6
0.4
0.2
0.0
0.0
1970-73
0.0
1996-98
97-98
Tamil Nadu
Yield
Area Production
(Kg/ha) (’000 ha)
(’000 tns)
750
15.0
23.0
690
11.0
16.0
600
14.0
21.0
760
13.0
19.0
810
6.0
6.0
13.0
660
19.0
670
19.0
27.0
810
11.0
17.0
1040
13.0
19.0
870
13.0
19.0
740
15.0
22.0
800
15.0
23.0
920
8.0
9.0
1040
12.0
17.0
970
12.0
26.0
1000
13.0
18.0
1080
9.0
11.0
1280
9.0
13.0
960
5.8
■7.3
9.2
1220
7.3
10.4
1480
16.0
1160
7.3
11.1
1330
8.4
12.2
9.2
1710
13.5
7.2
1590
10.7
1620
8.6
13.0
1410
11.8
17.6
5.4
1583
7.9
1997-98 J
Uttar Pradesh
Yield
Area Production
Yield
(Kg/ha) (’000 ha)
(’000 tns) (Kg/ha)
1530
10.9
9.7
890
1450
11.2
9.8
880
1500
11.1
10.8 :
970
1460
10.0
8.9
890
’.
1000
7.7
5.8 \
753
1460
11.7
9.4
800
»
1420
10.8
10.7,
990 i
1550
8.9
10.2
1150
1460
9.3'
10.4
' 1120;.
1460
10.5
13.8
1310
®
1470
15.4
20.2
1310
12.2
1530
15.4
1260
1130
11.2
15.3
1370
‘
1380
1
1420
12.8
17.7
19.4
2170
28.1 .
1450
1380
14.4
21.5
1490
1220
13.6
20.4
1500
;
1440
12.8
38.3
2990
1260
14.0
48.0 .
3430 ’.
1260
15.8
70.7
4470
■ iooo; ’
1540
15.5
78.8
4780'
1520
14.7
70.3
5150
1
1452
14.5
76.7
1470
94.1
16.6
■ 5670
r
1490
16.7
• 90.7
: ’ 5430
.
'4660
J
1510
13.1
61.1
1492
17.1
105.5
6170
152.4
1463
22.3
6834
Tobacco: Stalewise Beta its:
1970-71
1971-72
1972-73
1973-74
1974-75
1975-76
1976-77
1977-78
1978-79
1979-80
1980-81
1981-82
1982-83
1983-84
1984-85
1985-86
1986-87
1987-88
1988-89
1989-90
1990-91
1991-92
1992-93
1993-94
1994-95
1995-96
1996-97
1997-98
.
•
1997 9H
Area
(’000 ha)
10.0
12.0
13.0
14.0
12.0
12.0
15.0
15.0
13.0.
13.0
19.0
14.0
16.0
15.0
16.0
15.0
14.0
11.0
16.0
12.8
12.7
14.0
11.7
12.0
12.6
13.3
11.8
10.7
Prod
— VoP
1970-73
1996-98
griculture, Centre for Monitoring Indian Economy
Production
(’000 tns)
8.0
9.0
10.0
11.0
9.0
11.0
15.0
15.0
13.0
12.0
17.0
13.0
16.0
15.0
17.0
15.0
15.0
13.0
. 19.9
13.8
12.8
13.7
9.3
9.5
10.0
10.4
9.1
6.1
India
Yield
Area 1Production
(Kg/ha) (’000 ha)
('000 tns)
800
447.0
362.0
750
458.0
419.0
770
445.0
372.0
790
462.0
462.0
750
381.0
363.0
368i0
920
350.0
1000
432.0
419.0
504.0
'
1000
494.0
1000
409.0
454.0
920
425.0
439.0
890
452.0
481.0
930
444.0
520.0
1000
503.0
582.0
1000
440.0
493.0
1060
437.0
4136.0
1000
397.0
441.0
1070
389.0
4(52.0
1180
318.0
367.0
, 1240
377.0
493.0
413.0
552.0
1080
1010
411.0
556.0
584.4
980
427.0
795
418.5
596.5
384.8
562.9
790
790
381.7
566.7
780
394.6
535.2
770
428.0
617.9
646.0
570
463.5
— Prod
Yield
(Kg/ha)
810
920
840
1000
950
950
970
980
1110
1030
1060
1170
1160
1120
1110
1110
1190
1150
1310
1340
1350
1370
1390
1460
1480
1360
1444
1394
• VoP
September 1999
Tobacco: Major Districts: J 988-8!) - 1995-96
Major Districts by Area
Kheda(GUJ)
Prakasani(AP)
Vadodara(GUJ)
Belgaum(KAR)
West Godavari(AP)
Mysore(KAR)
Kurnool(AP)
Khammam(AP)
Nellore(AP)
East Godavari(AP)
Koc.li Bihar(WB)
Vaishali(BlH)
Farrukhabad(UP)
Guntur(AP)
Sainastipur(BIH)
Krishna(AP)
Mahesana(GUJ)
Kolhapur(MAH)
Banas Kantha(GUJ)
Moradabad(UP)
Hassan (EAR)
1988-89
60400
38500
23200
30076
27500
11029
20500
13200
7800
11000
13270
6745
4172
7400
4776
7600
2700
4400
800
8
1557
1989-90
77200
41500
24100
30518
26600
13438
30000
10800
7500
11600
9105
7607
5413
5500
4688
9100
7200
4200
1000
406
3854
1990-91
79700
46100
21000
23627
27000
14317
23400
12000
7800
11100
8957
7332
6079
6900
5193
9700
5200
5300
1300
999
2946
1991-92
56700
62800
22100
25378
28200
14206
24700
14900
11100
19500
10379
7536
6122
9000
4987
11000
2800
4600
800
839
3975
1992-93
77100
56900
21800
27300
14600
14100
12300
14200
8600
8246
5044
7000
5656
9400
2700
5000
1200
450
1993-94
47600
24914
12500
5000
8200
7700
9210
8115
6650
6100
2596
1900
j®
.
(Hectares)
1995-96
81660 j
46100
49500
28071 !
26241
26241
1994-95
.
24300 -j
23299 '
11200 ;
10400
23500
24380
11800
8900
8200
10500
.|
|
*
9700 j
9300
.
9087
6882
5200
5300
' 5312
4600
J
|
5193.
4800
4711
4700
4435
4410
|
4148
4605
Major Districts by Production
Kheda(GUJ)
West Godavari(AP)
Prakasam(AP)
Vadodara(GUJ)
Belgauni(KAR)
East Godavari(AP)
Khaininam(AP)
Farrukliabad(UP)
Mysore(KAR)
MoiadabaiRUP)
Kurnool(AP)
Etah(UP)
Krishna(AP)
Kolhapur(MAH)
Guntur(AP)
Mahesana(GUJ)
Banas Kantha(GUJ)
Koch Bihar(WB)
Periyar(TN)
Vishakhapatnani(AP)
Nellore(AP)
1988-89
99800
45800
36300
40000
30572
14600
20100
15321
6160
1989-90
129200
45200
45500
30700
25078
13500
j 12600
32329
6651
1990-91
141300
39200
39500
28800
19438
17100
16300
29106
7263
1991-92
109400
40500
56200
30200
24760
34100
28900
28606
12268
1992-93
127600
43800
57300
28500
25900
20500
26578
1993-94
1994-95
13100
42600
36300
44000
28331
10700
6200
18870
23633
17300
17000
(Tonnes)
1995-96
15657
22
994
3009
2669
1741
17900
15515
11600
4000
8400
4500
1400
15568
4352
3600
4200
32200
11256
15200
5200
6500
14700
2000
9877
5708
3200
6300
26600
28627
12600
5800
7500
16300
2300
8851
6651
5900
7100
27100
28258
17500
4500
10100
8100
1400
10356
5849
7400
9800
15600
33305
15800
7700
8900
9700
1900
6436
6241
8900
13100
.
J
143779
38600' .
37700};
32851'
24705 ;■
>
4
3
1
22900 ’
20700j
<
18216..
11780
12100
10260
2500
9100
6100
6812
6320
2900
9200
8000
5100
10500
■
9300..
' *83oo j
7585
7140.'
,1
-.'SS
5300
7600
5900
5400
pH'
COVER STORY
TOBACCO/CIGARETTES
Braving all odds
On the face of economics, morality and altruism might as well take a back seat. Which
is why, it makes eminent sense to promote the tobacco industry, however obnoxious it
may sound. High time somebody looked into the irrational tax structures that have
created a situation where 85% of the industry goes untaxed. Because missing out on
that kind of revenues would be criminal. Now, who is to bell the cat?
By GUNJAN DHELIA
Chidambaram had a two step cure
for all the evils that ail the Indian
economy.
Step 1: Do away with all barriers that
impede growth. Till the day pink dailies
and investors scream their heads off tomtomming a 10% rate of growth.
Step 2: Maintain those levels for the
next seven to ten years.
The bottomline — poverty line disap
pearing and improved living standards
apart, altruism and morality will be a lot
more affordable. Because in the final
reckoning, what matters is sheer eco
nomics and nothing else — however
crude and obnoxious it may sound.
Which is why, it makes no sense for an
economy like India's to even think of
imposing a ban on tobacco and tobacco
related products.
Consider the following:
The industry provides direct and
indirect employment to over 10 million
people. These include tobacco and areca
nut growers, processors,
.transporters, etc. The 10
million apart, the indus
try provides self-employ
ment opportunities to
over 20 million people
such as paanwallas, ven
dors, hawkers and dis
tributors.
Tobacco
con
tributed to 4% of agricul
tural exports in 19 9 7-9 8.
,
The government
raked in Rs.55.16 billion
from the industry in the
year 1997-98.
□Export potential is in
excess of Rs. 10 billion —
a figure on the verge of
being toppled. Experts
P
reckon the real potential would be ful
filled when the industry nets at least $3
billion in exports.
Recent studies indicate that value
addition generated by the industry with
the inclusion of the multiplier effect
amounts to as much as Rs. 5 60 billion.
How the industry works
People love to hate it. Assuming eco
nomics be damned for a moment, most
people have reason. Because tobacco'
causes more amputations than acci
dents. Smoking (and chewing tobacco)
causes cancer, gangrene, impotency,
facial wrinkles, heart and lung diseases,
oral submucous fibrosis and a lot more.
Like claiming a couple of million lives
each year.
Which is why every finance minister
has managed to impose higher excise
duties with a smile (and a couplet thrown
in for good measure).,
Fortunately or unfortunately, these
smiles and couplets which have piled up
over the years have created a skewed
excise duty structure.This in turn created
a couple of distortions.
Like the fact that for every cigarette
stick sold, ten bidis are consumed. Ironi
cally. the tarcontentin Wdisismuch higherthan incigarettes.That. however, isjust
the tip of the iceberg.
For farmers it makes more sense to
grow low quality tobacco because
demand is higher. This, in spite of the fact
that returns per hectare on cigarette
tobacco exceeds that of other crops (see
table Farmers earnings on page 19).
This has had a cascading negative
effect on the kind of revenues that can
accrue from the industry. Like it was men
tioned at the outset, the forex potential is
something like $3 billion. But that may
remain just a pipe-dream because the
quality of tobacco grown in India does
not lend itself to exports. And invariably,
it is value-added products which have a
greater potential to rake in the revenues.
India’s, current tobacco exports, 75% of
which go in the form of unmanufactured
tobacco, do not inspire.
There are more losses in
terms of revenues; For ■
instance, as a consequence of
higher taxes, consumption of
cigarettes have more or less
contracted. This has resulted
in shrinking tax bases as taxes
are highly concentrated in
this segment.
In fact, a Tobacco News esti
mate claims that by expand
ing the consumption of
cigarettes, excise collections
can be upped to at least
Rs.200 billion from the exist
ing levels.
Cut back to reality. Not to
be outdone, states have
imposed their own luxury
taxes on the industry. Taxa-
Expfess Investment Week' • August 31 - September 6,1998
COVER STORY
I EXCISE DUTIES IN THE ASIA-1
PACIFIC REGION
Which effectively means “barring cig
This gave bidi smokers access to these
arettes, tobacco is relatively untaxed,”
lower-end cigarettes. It brought micros in
says Tobacco News. Interestingly, in India
direct competition with bidis. Within a
85%
of
.tobacco
users
are
virtually
out
year,
sales of this segment grew tenfold.
Excise as a %
Rates
side the tax net.
Volumes trebled to 18 billion sticks in
of retail price
Countries
(%)
Therefore, a case exists for a more
96,
1995taking the annual sales value
rational approach when it comes to the
(at retail prices) to over Rs.3500 million.
Less than 20% Gaum
. 5
industry. By targetting only the most visi
However, the 1996-97 Budget reversed
Macao
7
ble, in this case cigarettes,' the govern - thecoilcessionsdoledoutbythe 1994-95
Cambodia
13
ment may be doing itself more harm than
Budget. ;
'- The case rests. '.
■
'” / ’ \
its people any good.
.
" ; ■
Laos
.19 ■
The kind of difference a mild amount
20%-40%
Malaysia
28
The industry in India
of rationalisation can bring in was
29
*
Burma
' demonstrated recently.
In India, the approximately Rs. 80 bil
. Vietnam
The 1994-95 Budget had slashed
34
lion industry is segregated into two disduties on micros/minis from 12 paise to 6 . tinct lobbies. The cigarette lobby (18% of
South Korea
38
paise a stick. Thus, cigarette dealers were
the market) and the non-cigarette lobby
40%-50%
Taiwan
41
(seechartBreak-upof tobacco consump
Indonesia
46
tion on page 20).
The former has a more organised
Philippines
48
TC currently holds over 70% . structure while the latter is unorganised. .
Singapore
49
Of late though, what has all along been
of the market share. Though
Pakistan
49
unorganised is getting more organised.
Probably because their stakes are much
China/HK
50
over the last couple of years
higher. And it would do them good to stay
50%-60%
India
56
it has diversified into hotels,
together when their interests are under
(+state taxes
threat.
paper,
etc.,
its
core
= additional 6)
As for the cigarette lobby, it resembles
a monopoly more than anything else.
competency remains
This is because ITC currently holds over
India has the highest excise duty
cigarettes
and
contributes
in
' 70% of the market share. Though over
in the Asia-Pacific region
the last couple of years it has diversified
excess of 75% of its total
into hotels, paper, etc., its core competen
tion levels quite often differ from state to
cy remains cigarettes and contributes in
revenues
state, leading to a price differential. This,
excess of 75% of its total revenues.
in turn, encourages inter-state smug
Then there is Godfrey Philips India
gling. Even a 5% difference in tax rates
(GPI). The second largest player, it has a
able to reduce prices in this inert sector
translates into Rs.400,000-500,000 per
market share of justaround 16%.
from 25 paise to 15 paise per stick as
truck load (or Rs.600 per master carton).
The next in line, VST, is effectively an
against 10 paise for a bidi.
Incentive enough to smuggle.
extension of ITC. As for Golden Tobacco
Company (GTC), it has been referred to
BIFR.
That leaves ITC the undisputed !
Will It, won’t it?
monarch. Analysts have been quick tb
point out the dangers inherent to such a
tion of cigarettes has decreased in a few
n the wake of the opposition that is
situation. There are uncharitable market i
nations .despite advertising. For
being faced by tobacco products all
sources who single out money power (and
instance, inIndia itself cigarettesharein
over the world, one is forced to wonder
the support of its multinational parent) i
total tobacco consumption dropped
whether a ban on tobacco products
from 23% in 1971-72 to 16% in 1993can really help curb their consump
94.The major drop to the extentof 13%
tion. A few countries in the world have
tried this routebiitnotallof themhave
took place in the period 1984-85 and
Typeoftobacco
Returns/hectare
*'
95.'
1994succeeded.
According to a report of the Federal
In fact, experts argue that bans can
Flue Cured Virginia(FCV)
13600
Trade Commission in the'Unitcd States,
actually increase consumption. A com
BidiTobacco '
‘ 6000 11
cigarette sales dropped by 8.9% despite
plete ban may prompt the players In the
Mustard
■
5588
industry to compete on thepricing front
an increase in advertising/promotions
This will lead to increased consumption
spend to an extent of 15.4%. to US
Sunflower
4160 ., i
especially in a country like India where
$6030 millions between 1992-93.
Note: Figures in Rs.
’
Given such statistics one is really
sales of most tobacco products are
Source: Industry
extremely price-sensitive.
bound to wonder how far advertising
Returns/hectare from FCy vari
helps curb consumption.
♦
Another fact that provides credibili
ety are more than twice the
ty to the argument is the way consump
returns from Bidi tobacco)
I
Express Investment Week • August 31 - September 6,1998
19
COVER STORY
as the biggest reason for Its overpowering
Winch is why, there is a strong lobby
presence.
whose voices can increasingly be heard.
Money power was used to create nich
That more companies should be encour
es by brand positioning and pricing, not to
aged in the sector. But that will, given cur
rpention advertising. And money power
rent realities, remain a dream.
was used to take out part of the competi
It will, however, change if foreign
tion, namely VST. ,
brands do manage to gain a toehold in the
Of course, the government also helped ■ Indian market. Philip Morris, the Marl
— old-timers swear that the greed for
boro manufacturer, wants to set up a
excise collections was the biggest reason
100% subsidiary in India to manufacture
which drove GTC to BIFR. Whatever be
and market its products.
the merits of that argument, realities
Vora, however, is convinced that
today are that not many are enthused by
Philip Morris will not be too much of a
the thought of setting up shop in the
industry and facing ITC's near-monop- •
■ O;
oly.
Orands are being created
There is another school of thought.
The kind of school which analysts like.
in the gutkha and pan masala
Rajesh Vora of Prabhudas Liladhar, a
stock-broking firm subscribe to. That ITC
categories. The extent of
is where it is for the simple reason that ‘
Darwin's law applies—the fittest survive.
their penetration can be
And in the corporate jungle, the rest go to
vouched for by any humble
BIFR or are taken over.
ITC, however, seems hardly bothered.
paanwalla on any street
It is gung ho about the future. Recently,
the government allowed it to triple exist- .
corner
, ing capacities (see ITC; A lot of fire under
the smoke on page 2 6).
At the same time, Godfrey Philips is
getting increasingly serious about its tea
bother for ITC because it will take the
business, into which it had ventured a
company timetomatchlTCsdistribution
couple of years ago. Which only means. network. ■
ITC’s hold on the industry is getting .
Therefore, he says, even if they go the
stronger.
1 full hog, it will be some time before the
For the consumer, therefore, there
company manages to create a dent in
appear? to be no choice in the future.
ITC's share.
Grey <areas
. All problems apart! the Indian ciga- ;. In the grey market. And two, the taste.
: rette Industry has to contend with the'
But. companies have got smarter
grey market. It accounts for one per cent
after bitter experiences in the past and .
; ofthetotalRs.87blUionIridlanclgarette
are now attacking the problem with
; market and 20% of the kirigslze cigarenewed vigour. Like undercutting the.
. rette segment, estimated at Rs 11.3 bil
grey market. And taking care to ensure
lion.
■' .
that the original flavour is maintained.
WhllethissegmehtcompetesdirectB&H is priced at Rs. 5 0 for a pack of
• < ly with existing brands, it also affects the
20s whereas its price in the grey market
• launch of new brands. For instance.
is Rs.5 5. ITC has even gone to the extent .
... planstolaunchJohnPlayerGoldLeafand
of sourcing the raw materials like paper, .
’ Lucky Strike were shelved' because of ‘ tobacco, filters and even the packaging
■■ their unpopularity
the grey markets.
. .
,in
_______________
from the same worldwide supplier to
On the contrary. State Express 555 ■ eight other manufacturing bases in the .
; and Benson & Hedges (B&H), which
World.
.....I.!. .•
i.have enjoyed tremendous popularity In
Simultaneously, It intends to run an ■»
•-■the grey market have now been . ad campaign, which highlights the haz■
l
_
j
.
ar(
js of sm0]jjng
months-old ciga
■^launched officially by ITC. In the past.
• such launches remained unsuccessful
rettes smugglers are bringing in, when
" for two reasons.
mu brands
mouus are
aic being
uemg- manufactured.
manuiacturea '
the
e One. prices in the'grey market were TocallybylTC.andarethus.freshandat
much cheaper than what was available ' most, two weeks old.
•»
20k
'
Manfd.
Exports
2%
Bidis
43%
Unmanfd.
Exports
19%
Cigarettes
15%
Chewing
Tobacco
21%
Source. Industry
—7*
Non-cigarette products account for
83% of total tobacco production
As for companies like Rothmans Pall
Mall (International), it has gained the
support of some 38 MPs in parliament.
Their bone of contention being that the
more competition was neccessary on ;
Indian soil to counter the "lack of competition"and consequent unremunerative
prices for tobacco growers.
Here again, analysts like Vora don’t
agree. They contend that ITC offers the
best possible prices to tobacco growers.
And that a. near-monopoly has not
skewed the dynamics of the market.
Meanwhile, the unorganised sector is
growing in leaps and bounds. Their for
tunes are on the rise. And whatever
claims they make about their revenues
being affected on account of micros
sounds specious for apparent reasons.
, Bidis are going strong. Brands are being
created in the gut kha arid pan masala cate?
gories. The extent of their penetration
can be vouched for by any humble paanwalla on any street corner.
The time is just right to bring in these
companies into the tax net. At least for the
economy in the long run. Another obvi
ous benefit is that taxation, wherever
policies are implemented vigorously,
helps a lot in corporatising the sector.
Which again bodes well for the economy
on three grounds—growth is structured,
transparency is greater and (in this indus
try’s case) export possiblities and benefits
will compound.
.
■. .
Ultimately, Chidambaram does make
sense. A10% rate of growth is what the
country needs. And anything that goes in
taking this country towards that rate of
growth (albeit just a few decimals) is good
enough. '
♦
Express Investment Week* August 31 -September 6,1998
CORPORATE REVIEWjTOBACCO/CIGARETTES
Turbulent times ahead
In sharp contrast to the developed economies, cigarettes constitute .
only 20 % of the tobacco consumption in the country.
'
ntherecentissueoPTheEconomist" dated July’ across all segments. While Godfrey Phillips India
and VST Industries went for an increase of 1511-17. 1998tin an article titled, ‘TheTobacco
wars’it is stated: “Like a smoker about to quit ,16% in prices across all segments, TTC increased
who has lit up again (and can't stop complaining
the price of its products by around 10% in 199 7- .
CHETAN PARIKH
about it), America's great tobacco war has quiet
98
' '
.
<'
,
■ Duringthecurrentyear,following theincrease
ly resumed. With a grand tobacco settlement now
The author is a director
a burnt-out fag-end in Washington, the struggle
of 6-11% in excise duty across the segments, vol
with Jeetay Invest
ume
sales
of
the
industry
are
likely
to
continue
to
has returned to the courts and the first big class
ments Pvt. Ltd.
action lawsuit by smokers has come to trial. Amid
stagnate. The margins of VSTand Godfrey Phillips
thefamiliartalkof “landmarkdecisions", the legal
(which have presence largely in the lower and mid- .
: ground seems to be shifting. ■
die market segments) are likely to be under pres
Big Tobacco says that it will fight all these foes.
sure'. ■ V1’-'*- ’!•'
The tobacco industry primarily 'comprises
Indeed, it was the confidence that it could win a
bidis, chewing tobacco and the cigarettes segment.
better deal for itself in the courts that persuaded
the industry to lobby against the proposed settle
Bidis and chewing tobacco are its major compo
ment in Washington. In June 199 7, the tobacco
nents accounting for the larger part of the tobac
co consumption in the country. In sharp contrast
firms had agreed to pay $368 billion over 25 years
inadeal withsome 40state attorneys-generalthat
to the developed economies, cigarettes constitute .
would not only have settled all state lawsuits, but
only 20%of the tobacco consumptionin thecoun-.
alsoprohibitedbothclass-actionsuits andpunitive
try. . ..
■
-s
damages. The final offer from the Congress omit
Excise payments by companies is the single
ted such protection; and it raised the bill to $516
largest expenditure accounting for about 53% of ■
billion. The legal settlements the industry put for
the gross turnover with raw materials accounting
ward during the negotiations in Washington were,
for another 23%. Investments in fixed assetsarc
ithints, offeredonlyforpoliticalreasonsandcanbe . generally major in nature which is why deprecia
withdrawn now the settlement has collapsed. Yet
tion and interest costs are not high cost compo
in the meantime the evidence against the cbmpa- ‘ nents.
■/
. 'X •;
j . nies has been building."
■ . ■
TTC is the market leader, particularly strong in
The cigarette industry in the developed counthe higher end of the market. It has atotal 67%
triesismature; andincertaincountries.ithaseven market share in volume terms. It has an even high-'
witnessed negative growth due to increased 'er market share of 74% in the relatively price, ■
health consciousness. In India, of course, things
insensitive higher end of the market.
Theyear 1997-98 has seen the launch of sev-'
are somewhat different with the industry's vol
umes depending on the government's excise duty
eral premium international brands in the Indian,
market. They include Benson &. Hedges. State’..
policy. ,
Here are some interesting figures. The Indian
Express, 555(fromBATIndustnes through ITC)
cigarette industry achieved an estimated turnover
andMnriboro(fromPhilipMorristhrough its Indi-'
of 103.3 billion units in 1997-98. The growth of
an partner Godfrey Phillips India).
around 1.3% (in volume terms) was significantly
Let us now examine the risks faced by the indus-1
lower than that of 7.7 % and 13.2% achieved in
try. In the Philip Morris Companies Inc 1997 (
97
1996and 1995-96, respectively. This slow
Annual Report, it is stated: “Some foreign conn- j
down in sales was a result of the sharp increase in
tries have also takensteps torestrictorprohibitcigexcise duties that were effected in the 1997-98 . arette advertising and promotion, to require
budget. The 1994-96 period of high annual
ingredient disclosure, to impose maximum con- growth was largely due to a reduction in excise
stituent levels, to increase taxes on cigarettes, to |
duties on non-filter cigarettes (below 60mm) from
control prices, to restrict imports, to banor severe-'
ly restrict smoking in workplaces and public'
Rs.120 per 1,000 sticks to Rs.60 per 1,000 sticks.
The resulting price reduction led to an increase in
places, and otherwise to discourage cigarette
demand.
.
smoking. It is not possible to predict what, if any, 1
The excise duty increases effected in 1996-97
other foreign governmental legislation or regula-1
and 1997-98 reined in the growth. Moreover, the
tions will be adopted relating to the manufactur-j
excise duty increases were in the lower and middle
ing, advertising, sale or use of cigarettes or to the ,
market segments which are characterised by
tobacco industry generally.”
♦ [
extreme price-sensitivity and low margins. The
duty hike in 1997-98 resulted in a price hike
I
Express Investment Week • August 31 - September 6,19 9 8
2DS
INVESTMENT PERSPECTIVE '
CIGARETTE INDUSTRY
Few players, fewer choices
The Indian cigarette industry has been characterised by an exorbitant duty structure;
it has consistently faced escalating excise duties over the years.
By PROBITY RESEARCH & SERVICES P. LTD
he Indian cigarette industry reeling
under the burden of an exhorbitant
duty structure has been witnessing
stagnant growth rates. The sector is domi
nated by four players who account for 9 9 %
of the industry volumes. 1TC, the leading
playerin thesectorwitha65%marketshare
has also witnessed stagnant growth in QI
FY98-99. Godfrey Phillips. VST (also a BAT
affiliate) and GTC are the other significant
players in the sector.
The Indian cigarette industry has been
characterised by an exorbitant duty struc
ture; cigarette being a non-populist and
, politically insensitive item, the industry has
Consistently faced escalating excise duties
over the years. The trend is expected to con
tinue as cigarettes will always remain a
politically unfavourable Industry.
T
are generally able to pass on duty escala
tions to the consumers. A marginal increase
in price results in disproportionate growth
in the bottom line.
Cigarette/tobacco companies in devel
oped countries like the US face a high risk, as
in these countries cost of legal suits andcompensation payable for damage to health
caused by tobacco is very high. In India, the
currentlegal frameworkdoesnotexpose the
cigarette manufacturers to that kind of risk.
Demand growth, driven by population
growth will remain low over the long term.
In terms of relative risk, bidis pose a higher
health hazard. The share of cigarette con
sumption In total tobacco consumption Is
expected to gradually increase with
Increasing awareness and higher dispos-
BTC's Scissors is the brand
Low volume growth
Thehigh level of duties has led to low vol
ume growth in the Industry. Globally, about
95% of tobacco is consumed in the form of
cigarette. In India, only 20% of tobacco Is
consumed incigarette form.TheexcIseduty
structure is skewed in favour of bidis (alter
nate form of tobacco consumption), which
is' a small scale industry. This has encour
aged consumption of bidi at the cost of ciga
rette consumption.
On the positive side, levy of excise duty
oh the basis of specific rates benefits the
leading players. With a relatively inelastic
demand, players with strong brand equities
gr Company
Volume
Value
% share
% share
65
74
i
ITC .
,
VST____ .
13
8
i
GRj_______
12
12
i
GTC______
9
5
'
Others_________ 1
1
i Total
—
100
100
leader in
volumes and Wills Gold Hake
family has
emerged as the single largest
consumerproducts
trade mark in India
able incomes. Players endeavour to add val
ue by improved packaging and marketing.
Due to strong brand loyalties and require
ment of a vast distribution network, estab
lished players are considerably protected
from new competition. Earnings are highly
defensive as demand is insensitive to eco
nomic conditions and equities of brands
give pricing power to the established play
ers.
products trade mark in India. It has entered
into licensing agreements with two sub
sidiaries of BAT for manufacture and sale in
India of their international brands - State
Express 555 and Benson & Hedges. Itsdistribution network comprising one'milflion
retail outlets is the widestin thesector. ITC's
operations are integrated, encompassing
tobacco procurement, processing, and also
captive manufactureof alargepartof pack
aging material. The massive modernisation
programme undertaken to upgrade its facil
ities to international standards will greatly
enhance ITC’s competitive position in the
global markets. The company also proposes
to treble capacity of its cigarette manufac
turing unit at Calcutta from 4.8 billion
pieces to 12.2 5 billion pieces. ITC is also one
. of„the leading exporters of leaCtobacco,
mainly to Latin America, South East Asia,
Western Europe and the CIS countries.
Tobacco/cigarettes is now the mainstay of
its business. Its agro and hotel divisions
have been hived off. Other interests include
speciality paper and trading. In paper busi
ness also, ITC is well placed with a dominant
market share in cigarette & carbonizing
papers.Thecompanyhasalso ventured into
sports goods and leather articles.. Certain
states like Delhi have imposed a ban on
’ advertisement of cigarettes. Advertisement
'and promotions of these products have a
spill over benefit for ITC's cigarette brands.
In FY98, while sales grew by 16% YoY, prof
its leaped upwards by 52% YoY with curtail
ment of loss making international trading
businesses. In QI FY99, ITC’s sales regis
tered a 15% YoY growth. However net prof
it growth at 18% YoY. was much lower than
expectations, despite major contribution
ITC
CMP Rs.606
ITC, strongly placed in the cigarette sec
tor with a 65% volume share, has an array
of brands that enjoy strong consumer fran
chise. ITC’s Scissors is the brand leader in
volumes and Wills Gold Flake family has
emerged as the single largest consumer
Express Investment Week • August 31 - September 6.1998
MONTHLY CIGARETTE
PRODUCTION IN 1998
January
6,424
February
5,550
March
6,418
April
6,636
May
6,640
Note: Figures in million pieces
INVESTMENT PERSPECTIVE
esesesee
Budget 98-99
*
(Rs.)
Budget 97-98
*
(Rs.)
Increase % YoY
Non filter
<60mm
90
100
11
60-70mm
350
370
' 6
Filter
<70mm
500
550
10
70-75mm
820
900
10
.
75-85mm
>85mm
1,100
1,200
9
1,350
. 1,470
____ 9
*
Note:
For 1,000 cigarettes
from other income. Although ITC has a
strong brand equity and its tremendous
pricing power enables it to pass on all duty
escalations to the consumers, stagnant vol
ume growth has negatively affected its mar
gins. Although the company’s operations
are cash rich, factors like, (i)stagnant
industry growth, (ii) substantial invest
ments planned in hotel and paper business
es, (iii) decision on pending excise cases and
(iv) settlement under the Samadhan
scheme, will have significant impact on
ITC's future cash flows. Valuation at a P/Eof
28x on FY98 earnings seems slightly
expensive. Buy at declines.
VST Industries (VST)
commodities acount for a small part of the
turnover. The company has also set up a
100% EOU, VST Natural Products, for pro
cessing natural vegetables and oleoresins
and exporting them to Canada, US and Hol
Ms a marketing
strategy, group insurance
has met with limited
success. Now companies
are planning to give their
agents higher commissions
CMP Rs. 104
VST was incorporated in 19 30 in Hyder
abad. Engaged primarily in the business of
manufacturing andmarketing cigarettes, it
has an excellent brand franchise, support of
its affiliate ITC and the foreign shareholder
BAT. VST commissioned its first primary
manufacturing facility fortobacco process
ingin 1990. It has since, continuously mod
ernised and upgraded its primary &
secondary tobacco process ingandcigarette
manufacturing facilities to meet interna
tional standards. Its- factory is located at
Azamabad in Hyderabad. Upgradation and
modernisation have lead to significant
improvement in productivity. Exports of
tobacco leafs/cigarettes and agricultural
to increase revenue from
competedinthelowerendof themarketand
also targeted up-gradation of bidi smokers.
Post robust volume growth in FY95 and
FY96. increase in excise duty rates on mini
and micro segments of the market in the
next three budgets led to a slowdown in the
demand growth in thesegment. Besides, the
increase in state levies and luxury tax have
also affected the company's profitability.
Moreover, owing to non-integration of
operations it is highly dependent on FTC for
procurement of tobacco. VST’s financial
performance has been inconsistent. In
FY98, its sales grew by 13.6%YoY.However, net profit declined by 14%YoY. The micro
segment has witnessed the highest percent
age increase in excise rates, and this has
affected the company’s profitability as it has
been unable to pass on the cost escalations.
In QI FY99, sales have grown by 18% YoY
with a new launch Charms Blues Kings dri
ving volume growth. The company record
ed a profit of Rs. 15 million against a loss of
Rs.60 million in the corresponding quarter
of FY98. Its proposed Rs. 750 million rights
issue has been postponed several times with
the FIPB failing to approve the proposal to
offer the unsubscribed portion to two BAT
subsidiaries.The approval would have led tq ’
an increase in BAT's stake in the company
from 32% to 50% The company has now
withdrawn the proposal and is instead seek
ing the government’s approval for a $4 mil
lion Euro Commercial Borrowing plan!
Given the company's erratic performance,
valuation at a P/E ratio of 25x on FY98
earnings appears expensive.
,
Godfrey Phillips India (GPI)
accident insurance
■
CMP Rs.303
land. VST’s three major umbrella brands
Charminar. Charms and GoldPrernium, have
several brand extensions. The company has
a reasonably well entrenched distribution
network. VST’s brands are particularly
strong in low and medium categories. It has
been unable to build up volumes in the pre
mium king size cigarette segment. In 1994,
when the excise .duty on non-filter ciga
rettes upto 60 mm length was reduced. VST
responded by introducing new brands like
Vijay Deluxe and Charminar Standard which
GPI was incorporated in India in 193(j
as a subsidiary of Godfrey Phillips UK,
When Phillip Morris acquired Godfrey
Phillips UK it automatically took over the
36.2% stake of the British parent in GPI.
The other Indian partner K K Modi has
around 31.4% stake. GPI is the third larges^
cigarette manufacturer in India. Its ciga/
rette manufacturing plants, located at And-'
heri andThane, have a total manufactures
capacity of 15,000 million cigarettes pffl
annum.
•>“
(Continued on page 41}
• ~]
______________ ■___________________Sales
OPM
PAT
Equity
EPS
Mkt Price
ITC._______________________________68,342
13.8
5,262
2,454
21.4
606
VST
__________ :____________ 6,453
2.0
65
154
4.2
104
____ 24^-
GPI_______________________________ 10,145
6.4
386
104
37.1
303
(9.5)
6
' _____ 82
. iu
*
GTC
______________________________ 5,102
2.8
(227)
Note: * GTC figures are for a period of eighteen months ended March 31,1998; Market price as qn 21/08/98
160
'
_____P/E
____ 28.3'
vT
•
Express Investment Week • August 31 - September 6,1998
_ _
&
TECHNICAL ANALYSIS
TOBACCO/CIGARETTES
Bullish signals
ITC and Godfrey Philips are the stocks to be watched.
he cigarette sector index has been in
an ascending channel and since the
index has made a major bottom in
1996. the index been making higher major
bottoms which is a bullish sign. Currently,
the 30 WMA is moving sideways and the
cigarette sector has been oscillating about
this long term moving average.
As the sector has been exhibiting higher
major tops and bottoms, the long term rela
tive strength line for the sector is bullish and
continues to exhibit strength. Hence, when
themarketbottomsout.investorsmustlook
out for long positions in strong stocks.
The daily momentum indicator for the
index has been languishing but the weekly
momentum indicator for the stock is over
extended and is moving closer to its trigger
line.
Thus, when the intermediate momen
tum indicator for the index moves up then
the major trend of the index will also turn
up.
This will happen if one or
two of the stocks start moving
up and goes into a fresh inter
mediate uptrend. Also, the
weekly momentum indicator
hasalso been exhibiting higher
intermediate tops and bottoms
which indicates that the sector
will also follow suit. This is a
bullish sign.
A detailed look at the stocks
in this sector will give us more
insight.
There are only four stocks
listed in this sector which have
GTC
T
The author is a Mumbai-based technical
analyst
been trading regularly at the BSE and hence
I will discuss only these four stocks.
1^1 ;l W
GTC topped out in 19 94 and since then
has been exhibiting descending intermedi
ate tops and bottoms.
The relative strength line continues to
stay below its zero line and though this line
has been recently moving up, it is still weak.
There are no immediate signs of the
stock bottoming out and investors must
currently stay away from the stock. The
money flow index for the stock is also bearish.The weekly momentum indicator for
the stock has been exhibiting a positive
divergence suggesting that the stock is cur
rently falling more due to inertia. The mon
ey flow index for the stock continues to stay
below its zero lihe and there are still no indi
cations that the money is flowing into the
stock.
Godfrey Philips
I >1
Express Investment Week • August 31 - September 6,1998
Godfrey Philips bottomed out
in mid. 1996 and since then has
been exhibiting ascending inter
mediate tops and bottoms. It is
one of the very few stocks cur
rently which have been moving
contrary to the indices and thus
the relative strength for the stock
is very bullish.
Hold on to long positions and
more long positions in the stock
can be added when it pulls back
towards its 30 WMA. The money
flow index has also been rising
and this is also a bullish sign. It
suggest, that the money contin-
TECHNICAL ANALYSIS
PERFORMANCE COMPARISON INDICATOR FOR 24-08-98
________________ Price gain (in percentage) over last
Security
Closing price (Rs.)*
20 Days
50 Days ’
100 Days
150 Days
200 Days
GTC
6.25
(-(24.690
(-130.55
(-116.66
(-) 23.78
(-150.98
40.93
27.57
Godfrey Philips
303.00
0.00
7.48
15.64
ITC
605.50
(->5.24
(-16.52
(-115.07
1.76
3.28
VST Ind
104.00
(-11.88
4.00
30.00
(-114.40
(-18.97
BSE INDEX
2922.61
(-17.84
(-112.69
(-124.90
(-11721
(-125.71
Note:* Closing figures as on August 24,1998.
ues to flow into the stock.
Oodfrey Philips and ITC are
VST
VST has currently moved up sharply
after attaining an intermediate bottom of
ITC is tn a major downtrend but is one of
better stocks as compared to 66.50. This also resulted in the relative
the few pivotals which is still exhibiting a
strength line for the stock moving above its
VST and the trading volumes
bullish relative strength indicating that the
zero line which is a bullish indication.
fall in the stock has been at a lower pace as
The weekly momentum indicator is also
of
these
stocks
is
better
than
compared to the indices.
above its trigger and zero line which indi
. Thus, though the stock has exhibited
cates that the bulls are now in charge of the
VST. The company is in a
descending intermediate tops and bottoms,
stock.
confirmed major uptrend and
the investors must hold on to the long posi
The current intermediate decline can be
tions as the relative strength line for the
used by investors to pick up long positions in. j
long
positions
are
less
risky,
stock continues to stay above its zero line.
this stock.
■
Currently, the intermediate trend of the
Godfrey Philips and ITC are better stocks l
while VST will have to exhibit
stock has turned up and the stock will have
as compared to this stock and the trading
higher intermediate bottoms
to move past 726 in this intermediate
volumes of these stocks is better than VST '
uptrend if the major trend of the stock has
Also. Godfrey Philips is in a confirmed
to confirm a major uptrend
to turn up again.
major uptrend and long positions are less n
Also, a higher intermediate bottom in
risky while VST will have to exhibit higher
the next intermediate decline will indicate
intermediate bottoms to confirm a major ,
that the major trend of the stock has
uptrend.
turned up. As the relative strength of
Investors must always
TECHNICAL
PARAMETERS
the stock is up, traders must also
look out for the best sector .
trade the stock on the long side. Buy
30WMA Major Trend InterTrend Minor Trend
Particulars
and within the best sector ',
the stocks first and sell it later.
they should then look out for
Down.
Down
GTC Industries
8.08
Down
Further, as the stock is exhibiting
the strongest of stocks.
*
|(
•
Up
Up
Godfrey Philips
281.63
Up
a bullish relative strength, it will con
tinue to outperform the other piv
Down
I.T.C._________
655.67
Up
Down
otals and the indices.
Down
V.S.T.Industries
•'Down
Down
96.53
ITC
Express Investment Week • August 31 - September 6.1998
CORPORATE PROFILE
ITC
A lot of fire under the smoke
A multinational giant, blue chip and index mover, this speculator’s delight has
many skeletons in its cupboard.
ByDHRUVRATHI
"Big is beautiful” is the mantra in today’s
environment of stagnant demand and
declining margins. These are the times
when scrips of huge companies are highly
sought after on the bourses. One such scrip
is ITC, the Indian arm of the multinational
tobacco giant British American Tobacco
Company (BAT).
On the face of it. the company has many
attractive features in its annual report. But
as the saying goes, “beauty is only skin
deep”. Once the skin is peeled off, several
sores are revealed. ITC has been in the cen
tre of controversies time and again, be it for
the biggest excise evasion case in corporate
history or for FERA violations. However,
thishasnotdeterredits fans on the bourses
and in spite of all these controversies, the
scrip continues to command a high price of
Rs.605 per share.
Consider the excise case (see box The
(in)famous excise exercise on page 28). The
Excise board has come down heavily on the
company for under-invoicing sales and
attempting to defraud the authorities of a
sum of Rs.6.82 billion. In such circum
stances, some questions which leap to the
mind of an analyst are — why are the
income flows, on which the excise liabilities
have been slapped, not reflected in the rev
enues ? Have they been recorded at all? Some
1995-96
1996-97
1997-98
Sales
51,153.50
58,627.70
69,273.70
Excise duty
25,796.30
Netsales
29,503.30
37,593.10
25,357.20
29,124.40
31,680.60
Other income
725.10
975.60
932,10
Operating profit
5,838.70
7,697.70
9,583.40
839.00
1,200.90
810.10
Interest
630.30
858.50
__________
1,911.50
2,397.50
■ 2,652.80
PAT_________________
2,610.80
3,469.00
5,262.00.
Depreciation
Tax
Other anomalies
TTC's balance sheets show that it
Lcontinues to expand the capacity
of its cigarette division. At the same
time, the capacity is highly under
utilised. In 1995-96, its capacity
stood at 73.76 billion units of ciga
rettes which went up to 78.30 billion
during 1996-97. Production in
those years stood at only 42.25 bil
lion and 46.09 billion, respectively.
Thus, capacity utilisation during
this period was only around 58%.
Against this, companies like Godfrey
Philips have shown workings at lev
els of up to 13 6% for the sameperiod.
The company also outsources
output on Job work basis, which is
understandable given its wide prod
uct range. Then surely, there is no
call to increase capacities at such a
time. But ITC is doing just that.
Recently,.its planto treble capacities
got official clearance. Incidentally,
the government had earlier denied
licenses to other players. The rest is
best left unsaid.
♦
26;.,
puzzling questions.
Meanwhile, the excise case could also
involve a consequent sales tax liability. II
ITC loses the case, it is most likely go before
the Supreme Court, where the legal proce
dure will again take its own time. And if it
loses even there, thenit will be liable to pay a
simple interest at the rate of 13% on the
penalty awarded from 19 9 6 onwards to the
Judgement date. Not much of an opportuni
Equity
Net Worth
477.40
2,454.10
2,454.10
2,454,10
10,501.40
12,890.50
16,937.70
0PM %_________
GPM(%)________ 1
23.03
26.43
30.25
19.72
22.31
NPM %______________
10.30
11.91
27.69
16.60
605.00
Market Price
EPS (Rs.)_____________
10.64
14.14
21.44
Book value (Rs.)
42.79
• 52.52
69.02
Interest cover
6.96
6.41
11.83
Exports (FOB)
5,155.00
5,032.00
NA
Total Debts
2,397.50
2,151.90
NA
Total Assets
6,840.80
9,519.50
NA
Investment
3,172.30
3,020.60
- NA
Dividend (Rs.)
2.50
4.00
NA
Debt:Equity
0.68
0.53
NA
________
24.86
26.91
NA
ROCE%______________
30.76
36.92
NA
Adj.ROCE%___________
30.93
36.89
NA
P/E
R0NW%
____________
28.21
Note: All figures in Rs.milion, unless mentioned otherwise.;‘•price as on (as on 24-8-98)
Source: Annual reports
Express Investment Week • August 31 - September 6,1998
.
CORPORATE PROFILE
ty cost, considering the company's return
on capital . ITC can definitely utilise the
money more gainfully in the meantime.
There are other possibilities for easing out,
in the shape of the “Samadhan” scheme
and such others. The market also hints at an
undercurrent of benevolence on the part of
the powers-that-be. After £li, they do not
want another GTC on their hands. It may be
recalled that excise enforcements had
resulted in that company going sick and the
government losing a revenue source.
Maybe ITC could get away after all.
Different strokes
The problem does not end there. The
Enforcement Directorate (ED) had charged
ITC with FERA violation worth $180 mil
lion. The company was accused of underinvoicing its tobacco leaf exports. The ED
had acted on the information provided by
the US-based Chitalias. These non-resident
Indians (NRIs) were paid commissions of
5% on the difference between the underinvoicing and the true value of exports.
The reason behind all this? In 19 89. ITC
had opened a restaurant named “ITC
Bukhara” in NewYork along with some NRI
investors. These investors were promised
handsome returns, but the venture ended
up making losses. ITC decided to compen
sate these losses. which it is said to have done
through EST Fibres, a company owned by
the Chitalias. In 1991, the company also
deposited $4 million in a Swiss bank
accountof Lokman Establishment, another
Chitalia-owned company. ITC Global had
worked as a conduit for these transactions.
The Chitalias were also compensated by
way of other deals like over-invoiced Import
MMMMMMMiEn335
Brand
Price/stick
Excise Duty
(Pack)
(loose)
FY98
2.80
3.00
1.10
2.15
2.25
1.10
1.85
2.00
1.10
Wills Filter________________
1.40
1.50
0.82
Gold Flake Filter/Premium
1.10
1.25
0.50
India Kings
Classic Filter Kings
Gold Flake Filter Kings
'
Bristol Filter
1.00
0.50
0.65
0.75
. 0.35
Note: Figures in rupees
Source: Prime Broking
100
159.9
Elan Enterprises
100
48.8
Vindicated?
Sage Investments
100
267.3
Greenacre Holdings
100
2.4
The company recently did win its case of
$ 13.5 million agains t the Chitalias in the US
court, but only because the Chitalias
refused to submit documents to the judicia
ry. Market sources are openly hinting at an
out-of-court settlement. One possible rea
son for hiding the information could be that
the revelation of the confidential document
by the Chitalias to the US Court might have
damaged ITC’s interests in the $ 180 million
case pending with the ED.
Meanwhile, this verdict may weaken the
ED’s case which has been prepared mainly
on the evidence furnished by the Chitalias.
Interestingly, the ED chief, Bezbaruahas.
% Share Cap
Summit Investments
100
573.6
Pinnacle Investments
ITC Infotech (USA) Inc.
100
WO
355.7
3tT
ITC Hotels___________ 71.24
302
Srinivasa Resorts
68
179.9
Fortune Park Hotels
99.99
4.5
ITC Global Holdings
100
255.8
Fortune Tobacco .Cyprus NA
Fortune Tobacco USA
NA
0.50
•
0.90
ScissorsPlain
All India Tobacco Co.
shareRs Million
1.00
0.93
Scissors Filter
of waste.
. ThesedealswerecorifirmedbyMr.G.K.P.
Reddi. head of ITC’s international division,
in a confession to the ED. Reddi had also con
firmed that he had acted on instruction
from the then chairman. K.L.Chugh who
was later arrested and imprisoned in the
course of these investigations.
The Chitalias account was never
squared up—the auditors too raised incon
venient queries. A special audit of leaf
tobacco exports, done by SBBillimorla & Co,
concluded that ITC routed around $18.92
million worth of leaf tobacco to BAT
through its subsidiaries ITC Global and ITC
World Trading Corporation.
In addition. BAT also procured leaf
tobacco from ITC through the Germany
based Debis, a trading arm of Mercedes
Benz. This, despite the fact that BAT had
been importing tobacco directly from ITC
for several decades. The ED during its raids
on ITC in 1996 had found prima facie evi
dence of goof-ups in the transaction
between the international leaf tobacco divi
sion of ITC and the latter’s leaf tobacco buy
ers.
LIST OF SUBSIDIARIES
;1
HI
Price/stick
who was in charge of the ITC case, has been
transferred to another department.
Sources opine that the recent replace-'
ment of FERA with FEMA may benefit the
company. However, in the event of losing
this case, ITC will suffer heavily. The penal ty
will be much harsher — upto four to five
times the disputed amount.
Still In the shadows
All this has been well-publicised. How-'ever, there are some dark shades in the bal-
Express Investment Week «August 31 -September 6,1998
Mathe-magic
TTC's annual report for 1996-97
Jlshows the average unit sales price
of cigarettes at 72 paise. which
includes average excise duty of 43.3
paise. It indicates that the company
manages all cost price of raw mater
ial and filter, packaging, advertise
ment,
distribution
expenses,
operating expenses and profits in the
remaining 28.7 paise per stick. In
fact, the company manufactures
only about 20% production in micro
and around 22% production in plain
segment which are sold little below
the average price. But remaining
production falls in the segment of fil
ter cigarettes in regular filters, longs
and king-size filters. In fact the com
pany enjoys monopoly in the longs
segment. These are much more
expensive than the average ones
which are sold between Rs. 1.15 to!
Rs.3.00 per stick (see table
Even after accounting for dealers’:
margins and other mark-ups, how'
the average price of 72 paise was
arrived at boggles the mind.
*
27)S
CORPORATE PROFILE
The (in)famous excise exercise
TC is facing one of the biggest excise evasion cases in corporate
history. The excise department has slapped an excise duty of
Rs.8.04billionon thecompany. Th is was towards exciseon addi
tional amount collected over and above the printed price. The
above charge is related to sales in the period from March 1.1983
to February 28.1987.
Thecompanyischargedwithhavingindulgedinunfairpractice of colluding with retailers and charging additional amount
above the printed price, while paying excise only on the printed
price. The commissioner of Central Excise. Delhi also confirmed
the huge sum comprising differential excise duty of Rs.6.82 bil
lion. penalty of Rs.665 million, personal penalties of Rs.31.5
million and Rs. 1.18 billion slapped on seven contract manufac
turers.
The company is. of course, contesting the case. An amount
of Rs.3.5 billion has already been paid following an order passed
under Customs Excise and Gold Control Act (CEGAT). It has also
furnished a bond for the remaining amount. Several other cases
of excise duty evasions worth Rs.2.86 billion concerning activi
I
ance sheet which have so far evaded the
Unexplained
IW sent a questionnaire to the
company, but no response was
received.Some of the important
queries are listed below.
Q 1. The excise authorities have
claimed Rs 8 billion towards
increased price charged from retail
ers during March 1.1983 to Febru- ,
ary28,198 7. How could ITCcommit
such
lapses
if
your
costing.budget,planning
and
accounts were being properly tnaintained?if amounts in excess of the
printed price were charged, why was
it not reflected in the incremental
margins or profits during these
years?
Q.2.Could you give details of the
losses incurred by your three invest
ment subsidiaries on account of the
merger of ITC Classic Finance and
ICICI?
Q. 3 .Could you give the reason for •
expanding capacity despite a low
capacity utilisation?
Q.4.Could you give the details of
themarine products which are being
sold at as a high rate as Rs. 3 71 per
kg? Why is the information about
stocks and purchases not *given?
E
ties prior to 198 3. are also pending before the court.
Such wrangles have various implications. For one. it appears
that the company’s system for excise calculation could do with
some upgradation. Faulty calculations on a regular scale do not
speak well fortheco-ordination among thevariousdepartments
— budgeting, finance, accounts and costing. This, for a compa
ny which claims to have "an integrated accounting system
which unifies financial and costing records."
There is another unpleasant implication of the affair. Includ
ing the incremental amount, duties account for an average of I
6 9 % of ITC's gross income during 19 8 5 -8 7. As against that, the I
period 1993-1997sawdutiesdecline to 60%. Assuming that the
rate remains constant (in times of increasing tax on cigarettes).
at 69%. ITC is facing a possible additional liability of Rs.l 1.80
billion. This, combined with the Rs.8.04 billion liability, could
wipe out the net worth of the company. Of course, whether the
Excise department will manage to garner this amount is anoth
er matter. Market speculators appear confident that ITC will
manage to find a way out.
♦
spotlight.
■ ITC has more than 16 subsidiaries
and many other group companies (see
table List of subsidiaries on page 27). The
company’s large investments into these
companies, accounting for 98% of its total
investment, Is a cause for worry. The pre
sent scenario has seen many such sub
sidiaries sink and blast holes in the balance
sheets of their parents in the process.
■ ITC Classic Finance (ICF) is a classic
example and a case-study on how a sub
sidiary’s demise can deal a body blow to its
parent. ICF ran into serious financial prob
lems and incurred huge losses of Rs.2.82
billion in 1996-97. The following six
months saw a further loss of Rs. 740 mil
lion. The reasons — the high cost of capi
tal, mismatch in tenure of assets and
liabilities, rise of non-performing assets
with large defaults by corporate clients and
lack of appropriate business' strategies.
ITC held a 49% stake in ICF which was
ultimately merged with ICICI. ICF could
not get a good bargain in the share swap
ratio, whichwasworkedoiitatl5:l.Atthe
time of the deal, the ICF and ICICI shares
were quoted at Rs.13.80 and Rs.74.60.
respectively. The swap deal effectively
meant that 15 shares worth Rs. 207 of ICF
were exchanged for one Rs 74.60 share of
ICICI. ITC's justification? "Beggars cannot
be choosers”.
■ As per reports, the company had also
invested aboutRs.4.75billioninto two oth
er subsidiaries. Summit Investment and
Pinnacle. In Summit, ITC’s investment
increased from Rs.573.60 million (as of
March 1997) to Rs.1.11 billion the follow
ing year. In Pinnacle, the jump was from
Rs.355.8 million to Rs.4.57 billion. These
two, incidentally, also had large stakes in
ICF.
■ Other group companies. ITC Global
and ITC Agro-tech, have also incurredhuge
losses. While ITC Global is mired in judicial
tangles, ITC Agro-tech has been sold to
CAG-Tech(Mauritius).
The parent frowns
Apart from these webs and tangles.
there are also internal battles. The compa
ny's largest single shareholder (31%). its
multinational parent BAT has been
involved in boardroom battles over the ITC
chairmanship for a long time.
BAT also did not approve of ITC's 1995
decision to foray into the power sector once
the latter was decontrolled by the Indian
government. The MNC insisted on the
removal of the then chairman K.L. Chugh.
This led to a prolonged boardroom battle
and a truce was arrived at only when Chugh
stepped down, months before his tenure
ended.
Holding its own
All these problems have been discounted
by the market. After being temporarily out
of favour, ITC is back with a vengeance. But
the heavy incidence of speculation, the
intra-day volatility and the extremely high
P/E of 28 all call for an investment warning
—“Highly priced shares may be injurious to
your wealth.”
Express Investment Week •August 31 - September 6.1998
'
♦
pH'-T-.
[STRATEGY CIGARETTES
What are cigarette companies doing about falling volumes?
1999 (see box). The reasons
vary. "It is essentially a
price-led phenomenon,”
says an unfazed Anup
Singh, executive director,
1TC, "and there is still space
for further market penetra
tion,” be continues. In
deed, pricing did have a
major role to play in the dip
in volumes, especially in
the micros segment, which
is the closest to bidis in
price. A 10% hike in excise
duty on micros (Rs 110 per
1,000 sticks) in the last Bud
get affected its competi
tiveness vis-a-vis bidis.
That apart, states like
West Bengal and Kerala
also imposed a 40% local
on cigarette
prices, leading to
brands like ITC’s
popular Scissors
losing
market
PALLAVI BHATT^CHARJEE
IIAT do you do
when you have a
problem prod
uct? Cigarettes
are health haz
ards, the government uses
the industry as an excise
milch cow, and there is
tremendous competition
from an unorganised sec
tor that does not pay excise
duty and produces a sub
stitute mass product, the
bidi, which you can’t com
pete with on price. If you
belong to the industry,
what strategic tools would
you employ to counter a
sales slide?
The Its 7,262-crore cig
arette industry saw
a volume slide
of 8.8% in the
quarter ended
Tjiggest worry:
volumes in the
second-largest
selling segment
for all cigarette
companies — the
minis — plum
meted by a whop
ping 22.4% for the same period. And a
dip in volumes could mean a slide in
profits later.
According to the latest National
Council of Applied Economic Research
(NCAER) report (1996), the cigarette in
dustry grew by a mere 5% a year — not a
healthy figure.
The problem cried for a four-step ap
proach. One, analyse what was wrong in
the volumes-Jed micro segment and
counter the threat from bldis.
Two, work on a product mix that
could minimise the high-frequency,
heavyweight excise blow.
gislics, using backward integration into
raw material and packaging to prune
production costs.
And four, ensure better brand build
ing by taking lough decisions on which
Anup Singh of 1TC says there Is scope
for further market penetration
the most important brands were.
Why is it happening?
HE three cigarette majors—ITC, God
frey Phillips India (GPI) and VST In
T
billion stick, organised cigarette market.
They also have a significant slake in the
minis market which accounts for 19%
(Rs 1,380 crore) of the organised sector
which is competing against Wr/is. On the
went up. Overall sales in May 1998 zoo
med with pre-Budgel stockpiling — the
Union Budget was announced in lune
seem more marked. In actual terms,
however, the sale of minis has fallen
from 1,357 million sticks in April-June
1998 to 1,051 million sticks in April-June
■t ocroiit-ii isas
country, especially
in the western re
gion, after its stick
price was hiked
from Re 1 to Rs 1.25.
On the other
hand, GP1 and VST
have kept prices at Re
1, preferring market
Some industry men believe that the
health scare is one of the reasons for the
fall in volumes, but statistics prove othcigarette majors with their backs to the
wall. Yet, in India, health concerns are
still limited to a small section of the pop-
distinction of having one of the highest
smoking adoption rates among vulnera
ble 20 year olds. The problem obviously
factor." The premium tag attached to
cigarettes makes consumers in any seg
ment aspire for the b igh-end brand. This
CIGARETTES STRATEGY
The micros segment—non-filter
cigarettes less than 60mm long —
was introduced during the late 1980s
to take on bidis. Cigarettes are cate
gorised according to length for excise
reasons. The lowest rate is paid on
cigarettes less than 60mm long and
the highest on king-sized ones be
tween 75mm and 85mm. In between
fall regular plains and filters at 60mm
to 69mm and the longs between
70mm and 74mm.
g^The segment, however, did not
W^e off until former finance minister
Manmohan Singh cut excise duty
from Rs 100 per 1,000 sticks in 1992 to
Rs 60. This enabled cigarette produc
ers to price minis at Rs 1.50 perpack,
luring smokers who upgraded to
minis from bidis.
Yet, this didn’t last long as consumers
felt the new brands launched in the seg
ment — ITC’s Hero, GPl's Commando or
VST’s Vijay—were not the best brands
from their stables as they were not the
better-known ones. To rectify matters,
ITC, GP1 and VST launched mini ver
sions of their popular brands like ITC’s
Scissors and GPl’s Four Square.
But as a former cigarette industry
hand points out, about 40% of bidi
smokers are also cigarette smokers and
look upon them as a status symbol, to
make a social statement among peers.
“The dual smoker feels that if he is to
.smoke cigarettes at public places, it
’should be a reasonably upmarket
brand," he says. Again, a plain cigarette
may be priced, say, at Rs 6 a pack, when
a mini would cost Rs 2. While the price
difference was one-third, the size differ
ence was 10mm. Thus, more plain
CIGARETTE CLEARANCE
COMPOSITION OF INDUSTRY
STAGNATION AND DECLINE
6%: KING SIZE (75 mtn-85 mm)
(Growth from 1993-94 to 1998-99)
i.7%:L0NGS(70mm-74mm)
®p4KSoed
Ty
47%: REGULAR FILTER
I (60 mm-69 mm)
.... 18%: PLAIN WITHOUT
FILTER (60 mm-69 mm)
<./
19%: MINIS WITHOUT
J, ,i
?0®S^£roppo,,
FILTER (>60 mm)
L-............ 3%: UNORGANISED SECTOR
MM tFo°l9% "
Figures cover only lhe organised sector
smokers moved to minis than compa
nies would have liked.
Also, where a smoker In socio-eco
nomic category D would spend Rs 1.25/
stick per brand, he now starts with Rs
2.50/stick per brand. The compromise is
that fewer cigarettes are purchased, for
'showing off. The loser, volumes in the
regular segment. This is why the value
equation hasn't changed much for firms,
while volumes keep getting hit.
This behaviour pattern coupled with
the latest excise duty hike has stymied
minis' growth. They account for 19% of
the total market, whereas tire lion's share
belongs to regular filters with 47%.
Plains account for 18%, longs 9% and
king-size for the remaining 6.1%.
What are the cigarette companies doing?
HE cigarette companies have decided
to focus on brands in the filter seg
ment. TYue, this segment has grown only
by 2% in the last five years, from 45% to
47%. But in the same period, the share of
plains fell from 36% to 18%, indicating
that fillers Is where (he action will be.
"We are focusing on our two key brands
— Charminar and Charms — and dri
ving our business through filter vari
ants," corroborates a VST spokesperson.
Yet, market leader ITC is best posi
tioned even in a tough market. Its form
ula for success: backward integration
into tobacco growing and packaging,
and the adoption of a portfolio and cate
gory strategy. It is present in each of the
five categories. In fact, ITC is the only
player to have a presence in longs, Wills,
by virtue of which other manufacturers
call it the 'Wills' category. It also has at
least two successful brands in each cate
gory, thereby creating a portfolio.
So, ifScissors filter becomes more ex
pensive, the consumer may switch to
T
BUSINESSWORLD
4 OCTOBER 1999
Scissors Plain. The company is also up
grading its packaging — Bristol was re
cently relaunched with a Rip top.
On the distribution front, ITC is leav
ing no stone unturned to expand its
reach into the countryside. While earlier
it used to sell cigarettes wholesale to
towns with a population of 10,000, it has
begun targeting towns with 5,000 peo
ple. Not that ITC brands were unavail
able here. But now the company is
adopting a more aggressive stance.
And if market sources are to be be
lieved, ITC plans to be available at the re
tail level in towns with a population of
10,000, whereas earlier the cut-off was
25,000. And th is should work in the com
pany’s favour as, according to NCAER
statistics, the penetration rate of ciga
rettes is only 250 per 1,000 consumers.
Of course, manufacturers are hoping
that there will be a sustained period of
revival, where bidi smokers upgrade
themselves as purchasing power grows.
ITC has even hiked capacity in anticipa
tion of this. Since cigarettes constitute
only 19% of all tobacco consumption,
bidis 54% and tobacco products 27%, if
even one-third upgrade to cigarettes,
companies are in for a possible windfall.
Despite the gloom, there is a silver
lining. The markets aren't too perturbed.
Says Jal Irani, assistant director, Jardine
Fleming India: "The market will look at
the value metrics, not the volumes. Cur
rently, the value share is still healthy. So
the markets are not unduly bothered.
For firms with strong brands, like ITC,
there will be little to worry about,” he
says. Adds another market observer: “It
will be another 20-25 years before they
are really affected and by then lhe smart
companies would have moved to other
businesses.” Maybe that's the best way
to handle a problem product.
■
pH
6
2 2 MAY IWi
THE
y'^OJ^OMSC. TIMES
Grey market puffs
out launch ...ofKUS3
foreign cigarettes
higher end also.
The experiment with 50 per
cent duty slash on the 59 mm mi
THE thriving grey market in for cro filter-less segment resulted in
eign cigarette brands is jeopardis a nine-fold rise in tax collection
ing the official launch plans of a for the government over a period
number of multinationals like of just two years between 1993-94
BAT, Phillip Morris, Rothmans to 1995-96.
and RJ Reynolds.
Industry sources suggested,
Most of these companies are ei “This movement up the revenue
ther waiting in the wings or have ladder can be accelerated if the
just entered the market with such differential rates of duty on the
powerful brands as Benson & higher slabs are moderated mak
Hedges, 555, Dunhill and Marl ing it possible for consumers to
boro. But they are unlikely to go move up the value scale.”
the whole hog unless the grey
The duty structure on tobacco is
market is curbed. While the com highly skewed against the organ
panies themselves don’t stand to ised sector. The Rs 7,500-crore cig
lose much in that their brands get arette industry contributes Rs
sold in India in any case, the ex 4,762 crore to the national exche
chequer is losing crores in unpaid quer. This is 90. per cent of all tax
excise duty.
es collected by the government
According to industry estimates from the tobacco sector.
the government is losing some Rs
However, cigarette manufac
120 crore per annum on account turers account only 20 per cent of
of smuggling of foreign brands the national tobacco consumption.
into the country.
The rest is consumed by the unor
Holding the high tax regime on ganised sector like bidis, chewing
cigarettes responsible for the pre tobacco and gutkas.
sent scenario where high-end Indi
Bidis which account for 53 per
an brands are more expensive cent of tobacco consumption in In
than smuggled foreign brands, dia contribute only 4.8 per cent of
sources in the industry said the the excise collection. The govern
experiment with slashing taxes on ment’s justification for this in
the 59 mm non-filter cigarettes equality is that the bidi industry is
category should be followed up a major employer and bidis cater
with similar reductions in the to the larger mass of poor Indians.
Sudipto Roy
CALCUTTA 21 MAY
PH-
2 9 MM 1W8
Undaunted, tobacco
companies unleash
r
SKftp. M'«c
hard sell campaigns
1
i
By Rupa China!
The Times of India News Service
MUMBAI: As yet another ‘World
No Tobacco Day’ is observed on
May 31, India is seeing tobacco
companies operating as if there is
no tomorrow.
While the central health ministry
has taken a positive step forward in
recommending a ban on tobacco
products like ghutka, the finance
and agriculture ministries have
effectively blocked the way. Even
as a recent nation-wide poll con
firms how strongly ordinary citi
zens feel about supporting a ban
on tobacco, the government refuses'
to read the writing on the wall.
Meanwhile, an unprecedented
advertising blitzkreig is seeing high
profile tobacco companies linking
their brands to images of affluence,
healthy lifestyle and smoking and
glorification of Western culture
and values. Money power has lured
sports, music and Bollywood
heroes into promoting tobacco
brands.
According to Viji Venkatesh,
director, Cancer Patient’s Aid Soci
ety, awareness campaigns conduct
ed in twelve Mumbai colleges high
light tobacco advertisements’
forceful impact on youths.
“Such advertisements arc catch
ing the attention of youths. It plays
upon their desire to get out of the
‘vernacular culture’ and appear
Western. Smoking is associated
with people who live the good life,
are wealthy, have pretty girl
friends, look happy and do unbe
lievable feats. This is a phase when
young people arc innocent, irrever
ent and irresponsible. By the tune
they want to take responsibility
and wish to kick the habit, they are
addicted,” says Ms Venkatesh.
In the past year, cigarette compa
nies have clearly defined and con
solidated their advertising territory
in sports such as cricket, tennis and
polo. “Older, mature persons are
not interested in the projected
^smoking habits of sports persons.
The use of‘role modeii"!^ promot
ing brands is clearly aimid at influencing young, adolescenirjtriinds,”
says Prakash Gupta, sfejor
research scientist at the Tata Institute of Fundamental Research In
Mumbai. In instituting ‘Bravery
Awards’, one cigarette company
has found an ingenious method of.
achieving social sanctity and brand
popularity, through a year long
advertising blitz on television.
Meanwhile, there is a brazen dis
regard for the law in the absence of
an enforcing, authority. A hoarding
at Mumbai’s Marine Drive for
instance, blazons a cigarette brand
name, while the statutory warning
in white lettering merges into a
pastel background, and cannot be
read even when viewed from up
close.
Asian editions of leading U.S..
based news magazines have alto
gether dropped this statutory
warning. “When such flouting of
the law would not be allowed in
their own countries, how is our
government tolerating this? Is
there no value for the life of this
country’s youth and their health?”,
asks a livid Ms Venkatesh. While
the Supreme Court came out with
an important judgment on banning
use of tobacco in toothpaste, no
effort at enforcement has been
pursued, critics point out.
Sushma Swaraj, the minister for
information and broadcasting has
protested tobacco advertising on
satellite television, but the threat
has not moved towards action.
Meanwhile, a determined group
of professionals, led by those work
ing in the field of cancer, are gal
vanising patients to publicly share
their experience, raising funds to
run counter-advertising campaigns
and conduct education and health
check-up campaigns. Their imme
diate target is to force an advertis
ing ban on tobacco, with a long
term goal aiming at obliteration of
the tobacco industry and diversifi
cation of crop land and employ
ment to horticulture.
3315
BUSINESS INDIA
♦
pis
May 4-17, 1998
Going up in smoke 7^
The manufacturers of cheap cigarettes lobby for less
discriminatory tax policies
\ <g,<g
he golden goose of the Indian tax
department is dying. The cigarette
industry, which had so far been
subjected to ritual annual hikes in
excise duties, has now reported its
sales going down under the pressure of
taxes. This might be encouraging
news for ecology enthusiasts and the
anti-smoking lobby. But the cigarette
industry's swan-song is no frivolous
matter for those involved, including
tobacco farmers. The industry has
been trying to make the tax depart
ment understand its plight. However,
going by the results, these pleas appear
to have virtually fallen on deaf ears.
Because of the warped tax structure
on cigarettes, smokers are shifting
over to costlier and longer fags from
smaller and cheaper ones. If you are a
smoker, you might just as well do your
bit of calculation for tax avoidance. As
things stand, you will avoid paying
more tax if y.ou go in for the higher
priced fags than those costing less. In
T
fact, the cigarette taxation structure,
as it has evolved over the last few years,
defy all canons of taxation.
Government & Politics
The general tenet of taxation is that
higher income attracts higher tax or
that a costly item should attract higher
tax than a cheaper one. However, this
logic does not apply to cigarettes. By a
curious turn, the cheaper brands of
cigarettes have tended to attract
higher rates of taxation than the cost
lier brands. Of course, rates apart, the
Excise and price relationship
1
Segments Brands
,co.
Filter
Kings
i ITC:
Classic.
;
Excise Post | % Inc , Price Pre ! Price as on i %lnc
March' 97
*
Mar
97 '1st Apr1 98
(10s Pack i (10s Pack
(Rs./m)
(Rs./m)
■
Price)
; Price)
(Per 100 Pkts (Per 100 Pkts:
Of 10s Cig.) Of 10s Cig) .
Excise Pre
March' 97
1070
..
1100. .J
2.8 J
1100
i 2.8
Gold Flake ' ITC
1070
Longs _ ! Wilis
i ITC
800
-820
: 2.5 i
Filters
i Gold Flake : itc
500
• 1 16.3 .
_ 430
Capstan / ! ITC;!
500
16.3 ■
430
i ITC'
500 ' , 16.3 '
430__j
Bristol.
Berkeley . ITC
430 _ i
500 _ 1
500
Four Square GPLi... _430_ '
16.3
Special
Four Square CPI IP 1.4301 17, ....’.5001 J[W
Premium
500
1’163 '
Charms
i VST;; “ 430 ’ ’ ~
; rrc!'
Plains
Scissors
315" '----- 350 7 11.1
Charminar vst:’
315" ‘ I;
350
11.1 ■
1 ITC
Micros
■ 75 7
90
11 20.0
Scissors
Charminar VST
"75
90
i
:20 0 i
21.0
i: 16.7
17.5
19.0
13.0
14.9
10.0 1 72.0
8.0
55
8.0 _
£o_
9.8
_jo.pl r~ Tijo
j1 10.0
14.6
'; 20.0
23.0
; 18.8
21.9
ZEpZ171 9.4
IJ7.5
18.0
i
L 19-o
TZ."’£o~
6.7
6.0
7.0
' 16.7
6.0 1 _6-5. ; 8.3
2.3
2.5
25~
11.1
' 2.3 “
BUSINESS
INDIA
.
Govcrinent & Politics
May 4-17, 1998
absolute level of tax on cigarettes have
imposed a burden on the industry
which is now having an adverse
impact. Cigarette sales are showing
signs of buckling under the weight of
taxes. Industry sources revealed first
quarter sales growth were virtually
negative this year, against 7-9 per cent
growth during the corresponding
period last year.
As if to take a perverse delight in
making things difficult for smokers of
cheaper varieties, the last budget
raised excise on cheaper brands by a
comparatively much higher margin
than those on the costlier packs. It
raised the duty on plain small ciga
rettes by 20 per cent and those on
small filter cigarettes were raised by a
little over 16 per cent. By contrast, the
duty on kingsize and longer size ciga
rettes were hiked by 2.5 to 2.8 per cent
only. As a result, smokers are being
forced to move from small filter
and plain cigarettes to the costlier
varieties. In view of the inverse tax
regime, the entire cigarette industry is
now readjusting itself. Cigarette
manufacturers who earlier catered to
the tastes for cheaper cigarettes, are
now moving over to produce more
costly long and filter cigarettes.
Indeed, if any industry has faced
higher and higher imposts year after
year, it is the cigarette industry. The
only golden exception was during
Manmohan Singh's tenure in the
North Block, when in one of those
more
comfortable
years
he
announced a respite for smokers.
However, given the state of govern
ment finance and ever increasing
demands for more revenues to pay,
say, salaries of government employ-'
ees, the industry fears another round
of tax hikes. Anticipating this, some
sections of the industry now argue
that if there are any hikes, let these be
confined to the costlier varieties only.
In the process, the industry sources
feel that at least some balance could be
restored in the comparative incidence
of tax on cigarettes of varying prices.
For the tax-man, however, as a
member of the central board of excise
and customs explained, the reverse
structure is an "eminently sensible"
way of raising revenues. The top end
of the cigarette market — kingsize
filters — account for only 5 per cent of
the total sales of the industry. "Hence,
if you have to mobilise more funds
from the smokers, you have got to tax
the broad-base rather than impose
stiff rates at the top-end of the pyra
mid," he explained. Chidambaram
thought this to be logical and as a
result he accentuated a trend which
was already there. But, maybe he took
it to ridiculous lengths, which left the
industry reeling under the "skewed
burden". So the industry appeal goes:
will the authorities do something to
correct the imbalance?
♦ ANJAN ROY
|L
- £rhu
g
WU-UA.-Wg
g^ClG.XHKl 1 ES
- •???,
7-
Company-wise Trends in Production: 1992--93 to 1997-98
| JTC‘
5 Godfrey Phillips India
VST Industries
GTC Industries
■ ■ R D B Industries
■ International Tobacco Co.
:■ Raghunath Tobacco Co.
; Sava Bharat Enterprises
; ’ Laxmi Ventures (India)
Total for the sample 9 cos.
Tbtal production
Units
Mln.nos
Mln.nos
Mln.nos
Mln.nos
Mln.nos
Mln.nos
Mln. nos
Mln.nos
Mln.nos
Mln.nos
Mln.nos
1992-93
33278.0
13096.0
14171.0
2219.0
1993-94
34550.0
11769.0
12710.0
2374.0
1994-95
37653.0
12646.0'
13469.0
2942.0'
4056.0
4476.0
830.4
3901.0 '
693.5
693.5
2783.0
69355.5
73362.0
4700.0
76164.5
76164.5 I
67513.5
67513.5
1995-96
42251.0
12332.0
15143.0
5562.7
830.4
4055.0
23.2 '
7.5
4700.0
84881.5
84881.5
1996-97
46094.0
12896.0
13545.0
5562.7
547.1
4959.0
14.1
7.5
1997-98
83625.4
83625.4
92134.7
92134.7
51445.0
13260.0
14113.0
7303.3
334.3
5677.0
2.0
Company-wise Trends in Sales: 1992-93 to 1997--98
Be& ITC
(S Godfrey Phillips India
C VST Industries
; ■_ GTC Industries
' RD B Industries
istemational Tobacco Co.
b Raghunath Tobacco Co.
Sava Bharat Enterprises
Lumi'Ventures (India)
t? Total for the above companies
Total sales
1992-93
2752.90
656.30
585.70
128.18
1993-94
2981.45
630.53
557.67
147.17
1994-95 1
3335.72
698.92
597.10 i
183.39
14.78 ■
0.16
1995-96
4105.98
726.95
595.73
250.21
14.78
0.76
10.07
1.62
4328.51
4328.51
0.33
2.79
4833.19
4833.19
0.75
2.79
5697.95
5697.95
8.52
10.07
4141.67
4141.67
1996-97
4927.07
803.71
536.88
250.21
16.26
0.77
0.17
0.75
6535.82
6535.82
••- .... .
It
Source. - C.MIE -/rW5/(<ysec-Xoit t
Market Size & Shares. Centre /orMnntlorini’ Indian Econnniy
PrUHi>Sf
CMlfc ,&0M<W .
Review
(Rs.crore)
1997-98
5777.88
925.58
619.17
322.28
13.51
3.23
0.04
7661.69
7661.69
I
Bee
Trends in Market Shares: 1992-93 to 1997-98
(Per cent)
United Breweries
Mohan Breweries & Distilleries
Skol Breweries
Balaji Hotels &: Enterprises
Mysore Breweries
Mohan Meakin
Hindustan Breweries & Bottling
Mount Shivalik Breweries
Sica Breweries
Som Distilleries & Breweries
Total for the above companies
Total for the sample 35 cos.
Import
Herfindahl Index of Concentration
1992-93
11.45
17.63
5.98
1993-94
33.02
12.23
4.99
1994-95
30.42
11.06
5.83
1995-96
25.38
13.46
6.25
4.57
8.43
5.05
5.88
1.97
4.48
6.89
5.03
5.51
1.53
60.96
99.96
0.04
0.081
73.68
99.90
0.10
0.149
5.15
5.83
4.44
4.99
2.26
0.23
70.22
99.88
0.12
0.130
5.68
5.86
4.70
4.24
2.44
1.78
69.78
99.79
0.21
0.109
1996-97
25.25
12.30
6.90
4.71
5.43
5.88
3.99
4.04
3.50
2.34
74.34
99.90
0.10
0.104
1993-94
311786.2
2277.5
3.9
210.1
0.6
585.3
585.9
582.0
1994-95
324152.8
3820.6
6.9
231.0
0.8
635.3
636.0
629.1
1995-96
370046.0
4738.0
9.4
376.0
1.5
692.7
694.2
684.7
1996-97
425486.0
6372.1
12.0
183.3
0.8
725.3
726.0
714.0
1997-98
34.42
9.65
7.93
7.83
5.41
4.78
4.31
3.32
2.88
2.77
83.37
99.74
0.26
0.153
Key Statistics
Production
Export Quantity
Export Value
Import Quantity
Import Value
Sales Value
Market Size (Value)
Domestic"Consumption (Value)
Units
’000 litres
’000 litres
Rs.crore
’000 litres
Rs.crore
Rs.crore
Rs.crore
Rs.crore
1992-93
278215.5
1462.8
2.1
78.8
0.2
504.5
504.7
502.6
1997-98
433075.0,
3575.1
8.0
585.5
2.3
879.7
882.0
874.0
United Breweries sales increase since 1993-94 is due to merger of various subsidiary and group companies during 1992-93. Associate
Breweries Ltd. (manufacturer of London Pilsoner, London Diet, London Draught, etc.) with reported sales of around Rs.50 era
during 1997-98 is missing from the'above. Bombay Breweries (which was later amalgamated with Herbertsons Ltd.) commission,
its first beer making plant at Taloja ^Maharashtra) during 1995-96. This Taloja plant was subsequently acquired by United Brewerie
Sales value for most of the companies include traded items or third party processing. Sales value include purchased items alsoI
case of few companies.
will speak on the topic
'HIV/AIDS AND THE SURGEON'
On 6th October ' 99, at 3pm
At
The Lecture Hall, Bowring Hospital.
All are welcome
Samraksha
AFK is a group of organisations & individuals
Madhyam
&
&
BMST
1 U-
JL
KNP+
Sn<
Dr Jayashri Ramakrishna. NIMHANS
Dr Prabha Chandra. NIMHANS
Dr Satish Chandra. NIMHANS
Dr V Ravi. NIMHANS
Dr KS .Satish Wockhardt
VIEWPOINT.!
Bimbos and
Ballot Boxes
It’s time parties did a rethink on their choice of candidates
"T TOU WOULD IMAGINE. WOULDN’T YOU. THAT | now agreeing to contest on a Congress ticket. Is this right?
V glamorous parties in Delhi and Mumbai would be the Think about it. Here is a man who until not so long ago was
JL last place you v.ould find prospective members of the I in charge of ensuring free and fair elections. Could he have
Lok Sabha. Well it you did you would be ■. ■ ng it is . . ‘ direthisiftherewasalwaysasoftcornerinhisheartforthe
exactly these watering holes ofth idlcri ii
ti he socially ; engross? Besides what can he contribute now that he was
ambitious that you are lik'.iy to .>■) a-r.
. -i
ible to do in the 40 years he spent as a bureaucrat?
these days. I jest not. So i; volou-. and f;-r< i ■ has Indian
When political parties are questioned about why they
politics become that the most cr.-my-lmnd-d wonian you 1 mid out tickets to inappropriate candidates, they usually
meet in a Delhi drawingroom could well end tin a
>,iy well-known people find it easier to win. Great. So do
the main candidates in your co>:s; frucncy.
i dacoits, killers, bootleggers and thieves. Why should we
Is this what our political leaders mean when they de- j object to Phoolan Devi being givenaticketifshecan win her
mandthat 33 per cent of seats in Parliament be reserved for i seat? Why should slum lords and sundry gangsters from
women? Hopefully not. What it does seem to be though is | Mumbai not be sitting in the Lok Sabha since they too can
part of a trend that began when Rajiv Gandhi successfully usually win? It is time for our political leaders to start facing
used filmstars to defeat important politicians in the 1984 I the fact that the only reason why they need to resort to the
wrong kind of candidates is because at the
election and realised the people of our country
■organisational level, there has been a frighten
are, alas, stupid enough to fall for any old trick.
ing collapse in most of our parties.
Since then socialites and bimbos—espe
If this had not happened, then parties
cially of the slightly over-the-hill variety, for
would have had within their ranks people who
whom domestic and maternal duties have less
had earned the love and respect of a particu
ened—flock to party offices at election time
lar constituency through their work. These
and often return with tickets to run. Personally
candidates would become automatic choices
I know at least 10 women of the aged bimbo
for the Lok Sabha at election time. It is only in
ageing socialite genre who. with alarming sud
the absence of this kind of real politician that
denness, start spouting political views at
our political parties need to parachute in peo
dinner parties instead of gossip. This is usually
ple with recognisable faces, in the desperate
the first sign that political horizons beckon.
hope that charisma will help them win. Fine
The second sign comes when instead of
for the political parties—but what about us?
lunching with the ladies they begin to be seen
at street corners demonstrating enthusiastically for some
The Lok Sabha’s main purpose is to make the country's
obscure cause or the other. Or making a huge noise about laws and to helpformulate policies thatwillhelpourbattered
their interest in, for instance, the fight against aids. Come land move towards a better next century than the one gone
elections and they are off and away either contesting or by. Instead what we have seen is a series of Lok Sabhas that
campaigning for someone else.
usually make headlines only for their noise and chaos.
These are our new politicians and it really is time for us
The result is in many areas of national enterprise we
to start asking our political parties what they are trying to are guided by laws that are over 100 years old. Can we even
achieve by inflicting former beauty queens and semi begin to think ofchanging this without MPs who are not
literate socialites on our already battered political system. serious politicians? This column has pointed out in the
Things are bad enough already, what with actresses with past that we need a special parliamentary session on liti
no known political opinion being handed tickets. If the Con gation ifwe are to unclog a Judiciary so utterly clogged that
gress started things off the bjp was quick to follow, adding its it will take 324 years before the cases currently in Indian
own peculiar religious touch to the matter. So instead ofjust courts are dealt with.
any old actress they gave us Sita (from that tv Ramayana) as
This past week, when the Congress and the Bjp-led
an MP from Gujarat. She looked really pretty andSita-ish as National Democratic Alliance released their manifestos.
she sat demurely in the Lok Sabha. But if she made any po most newspapers wailed that all they were offering were
litical contribution it went unrecorded.
the usual platitudes, promises and populism. Can we even
There are those who say that in a free country nobody begin to expect better till we get a better class ofpoliticians?
should be disbarred from participating in the electoral And in expecting better we must remember that the rot
process. But what we need to think about is whether this ap begins with the choice of candidates at election time. So
proach has no t led to farce instead offreedom. So we have our Please, no mOrf. bimbos, bandits or blustering bureaucrats.
former chiefelection commissioner, the mighty T.N. Seshan. Their place in society is outside the Lok Sabha. O
STRIDES TOWARDS COMPETITIVENESS
globalising environment can only
be realised through an accelerated
reform process that makes
the Indian economy globally
competitive and thereby attract
;mi nensur; s te in vestment
Speech by
Shri Y.C. Deveshwar,
Chairman, LT.C. Limited
at the Eighty-Eighth
Annual General Meeting
of the Company
on 30th July, 1999
It gives me great pleasure to welcome
you for the fourth successive year after
being elected as Chairman of your
Company. These last four years have been
challenging ones both for the Indian
economy and for the Indian industry. India
has witnessed five governments during this
short period. The country is getting ready
for yet another general election. The
substantial erosion in the value of the
currencies in Russia, South East Asia and
Latin America intensified price competition
for Indian exports on the one hand, and
made imports into India attractive on the
other, thereby adversely impacting the
financial performance of many Indian
enterprises. Investment sentiment has been
at a low ebb. The growth rate of the Indian
economy came down from 7.8% in 199697 to 5.8% last year. This rate of growth is
woefully inadequate. According to an
estimate of the Confederation of Indian
Industry, even if the Indian economy were
to grow at 7% per annum consistently over
thirty years, the resultant per capita income
would barely match the levels obtaining in
Thailand today. It is therefore evident
that India must target a much
higher rate of growth. Such an
ambitious growth agenda in a fast
There is th • <Tore a ervii • • , ;
•nsensusonai ror.omic unit
it -I'
unanimou idcplion 01
het seems
cf
(iment and •: ere are caj■!v
.
■
•
■
i,
•
onotnic rec
CCGciOirilC
. ilienee that is
trated during
: urcertain pc .: ical phase .is indicative
of thuipotential ol a mi.ch ij.rer rate of
.‘Mwthonce poliip. f stability is restored
and a second generation of reforms
takes concrete shape. The globalising
market and '.he prospects of
a higher growth rate whilst
presenting opportunities, pose
formidable challenges.
As I had stated in earlier years,
competitiveness continues to be a
compelling agenda for the Indian
industry. The task of transitioning
businesses from a relatively protected
environment to the rigours of a globalised
market requires upgradation of capabilities
to international standards. This implies a
major change in mindset, backed by
substantial investments in modernisation,
scaling up and skills upgradation.
Such strategic investments would
naturally entail gestation drags that
would severely test managements for their
staying power and commitment to their
businesses. Business portfolios will
therefore need to be rationalised
and restructured for focused
attention so that the deployment
of scarce resources is confined to
those areas that best match
organisational capability with
market opportunity. Those who fail
to overcome these challenges would
succumb to the severity of competitive
pressures, while those who succeed would
be handsomely rewarded. It is therefore
imperative to shed preoccupation
with the mere maximisation of
tactical financial results, and
instead focus on building strategic
capabilities. A wholesome balance
will have to be struck between the
short, medium and long terms.
In line with such reasoning, and with
the objective of fashioning a sustainable
growth path, I am pleased to state that
considerable progress has been made by
your Company over the last few years.
PROGRESSIN
RESTRUCTURING
Investment Subsidiaries
Further to the status indicated in the
Rep t md Accounts, the statutory
approvals for the merger of
you,- Company’s investment
sub.-irijaries have since been
received and consequently,
SammU and Sage investments
start.! merged with liusseil Credit
with effect from is? February 1999.
Russell Credit's Balance Sheet size now
stands ;.t Rs. 671 crores.
Investments in Edible Oils
Shareholders are already aware that
ITC had exited completely from the
management of this business by transfer
of control of ITC Agro-Tech to ConAgra.
Your Company's investment subsidiary
Russell Credit, holds a minority interest of
17% in ITC Agro-Tech currently valued in
its books at Rs. 53 crores. The market value
of this investment as at 22nd July 1999
was around Rs. 71 crores. Further, the
Mantralayam facility which was licensed
to ITC Agro-Tech and the Mantralayam
land are held in your Company’s books
at Rs. 104 crores. On the basis of the
agreements among ConAgra, ITC
Agro-Tech and your Company, ITC
would be in a position to disengage
from these investments only after
October 2000 and redeem these
assets on the basis of their market
values obtaining then. Concurrently,
the use of the ITC prefix in the name of
ITC Agro-Tech would stand withdrawn.
Investments in Financial
Services
Following the merger of ITC Classic
with ICICI, your Company was to cause
the disposal of ITC Classic’s investments
in the home finance and stock broking
businesses. The home finance company
has since been sold for a consideration of
Rs. 10 crores and an agreement is in place
to liquidate ITC Classic's interest in the
stock broking business, pending requisite
regulatory approvals. Further, negotiations
with the Zurich Financial Services group
are at an advanced stage for the ITC group’s
exit from the asset management business
of ITC Threadneedle.
As a result of the disengagement
from the erstwhile ITC Classic group of
companies, your Company’s investment
subsidiary Russell Credit now holds
ADVERTISEMENT
shares of ICICI valued in its books at
Rs. 5.7 crores. The market value of this
investment as at 22nd July 1999 was about
Rs. 10.5 crores. In addition, there is an
exposure of Rs. 350 crores in the form of
preference shares of ICICI, redeemable at
par in the year 2018.
Additionally, in the course of
such restructuring, your Company and
its subsidiaries have had to deploy
around Rs. 360 crores in Real Estate
projects Although the real estate
market is currently depressed, it
is expected that your Company
would be in a position to redeem
these investments over time at a
reasonable surplus. Towards tlus t-n.1.
your Company is engaged in creadna
an organisation air. assembling d e
requisite manager..--.: -kills io ch".?'
development plans for t.,!•? .: .-:n.
execution. Opportunit:.:-: for pa-w.--.; s
with reputed intemalic al il-.: an ,i*so
being explored to mio-ei-e .-.lu'., .-. .'.cm
these assets.
Investments in Paperboards
As a result of the infusion of
capital approved by you last year,
ITC Bhadrachalam Paperboards
Limited has now become a
subsidiary of your Company
facilitating closer management
attention in line with the strategy
of focus.
Investments in Speciality
Papers
In respect of speciality papers,
efforts towards striking a partnership
with a suitable international player to
reposition this business on a growth path
are continuing. This is likely to take
time on account of the depressed
sentiment in the international markets
resulting from the deep recession
witnessed in the global paper and pulp
industry. In the meantime, vigorous
efforts at improving quality and
cost standards are continuing
to make this business more
attractive for potential partners.
The aggregate tie up of funds
in what may be termed as non
performing assets as a result of
restructuring towards disengagement
from non core activities, and on account
of the excise pre-deposit of Rs. 350 crores,
amounts to around Rs. 1,260
crores. The associated drag arising
therefrom needs to be kept in mind
while viewing the financial results
of your Company, particularly in
the year under review.
REVIEW OF OPERATING
AND FINANCIAL RESUUS
The last year was yet another year of
satisfying performance for your Company
despite difficult trading conditions. In spite
of business sentiment continuing to be
depressed in the face of weak domestic
demand, extremely competitive export
markets and lacklustre industrial growth,
your Company continued to post creditable
results. While turnover grew by
11% to Rs. 7,579 crores, trading
profits, at Rs. 1,092 crores,
increased by an. even more
impressive 25% > cross the one
th>',’<sand crore mark for the first
i ■
. tbsorbing tire .dditional interest
: .-'n dear!'
net profits at Rs.
■'
.
.... 1 u 'owthof 18.5%
.-sure that these
■
i the context of
.
p substantial
.....
a preceding
ye :
of satisfaction
for v’isirehoiders.
The last few pages of the Report and
Accounts provide at a glance, the progress
that your Company has made in operating
and financial results. The reserves have
more than tripled since 1995
at Rs. 1,988 crores. This enabled
tire debt equity ratio to be contained
at a healthy 0.56:1 despite the
substantial increase in the size of
the Balance Sheet from Rs. 1,640
crores in 1995 to Rs. 3,486 crores
in 1999. This has been made possible by
significant improvements in operating cash
flows. The capital markets have handsomely
acknowledged the performance of your
Company, with the growth in market
capitalisation of your Company having
significantly outperformed that of the
BSE Sensex.
Your Board is committed
to the creation of long term
shareholder value. Each of your
Company’s businesses is in a different
phase of development requiring distinctive
focus and investment for the successful
transition from a position of dominance in
the regulated market of yesteryear, to a
position of leadership in the highly
competitive markets of tomorrow. It will
therefore periodically review the
portfolio of businesses for
sustainable competitiveness and
take necessary strategic initiatives,
including striking strategic
alliances and partnerships, and
even exiting from a business if the
competitiveness objective is not
attained with sustainability in a
reasonable time span.
The strengthening Balance
Sheet of your Company will
provide the much needed staying
power in building leadership
positions in the capital intensive hotels
and paperboards businesses, as also in
supporting investments in modernising the
tobacco, cigarette and packaging businesses.
STRATEGIC PROGRESS
IN CORE BUSINESSES
Cigarettes and Leaf Tobacco
Your Company has invested
nearly Rs. 500 crores during the last
three years towards upgradation and
modernisation of its manufacturing and
product development facilities. The new
plant outside Bangalore, when completed
at an estimated outlay of Rs. 450 crores,
would provide state-of-the-art facilities for
the next millennium. The first module, at
an investment of nearly Rs. 100 crores, has
now been completed and commercial
production is scheduled to commence
shortly. Similarly, the modernisation project
ht the Saharanpur plant has been completed
at a cost of approximately Rs. 80 crores.
As a result of these investments,
the internationally preferred high
value “Hinged Lid” form of
packaging, which constituted 2.4%
in 1995-96 now constitutes 22% of
your Company’s production.
Concurrently, filter cigarettes now
constitute 69% as opposed to 60%
in 1995-96, thereby providing your
Company the benefits of the high
value addition. Such investment in
brands will continue, with outlay of over
Rs. 700 crores envisaged over the next
5 years. Continuous improvement
in quality and cost standards
has further strengthened your
Company’s market standing.
The export of leaf tobaccos suffered
a setback during the year under review as
a result of a glut in the international tobacco
markets. The adverse impact on the farmer
was exacerbated by overproduction by the
farmer above the limits mandated by the
Tobacco Board. Your Company purchased
quantities beyond its immediate
requirements as a measure of assistance to
the farming community, who are viewed
by your Company as long term partners in
business. The adversity on the tobacco
export front is likely to continue in the
foreseeable future. In order to enhance the
competitiveness of Indian tobaccos your
Company continues to enlarge and upgrade
its development and extension services to
the fanners. Initiatives are also on the anvil
with regard to development of Oriental
type of tobaccos, the cultivation of which
is highly employment intensive and which
has a growing demand in the international
markets. Concurrently, to support
export efforts, modernisation plans
to upgrade green leaf tobacco
processing facilities at an outlay
of nearly Rs. 350 crores are in hand
for implementation over the next
five years.
Hotels and Tourism
Your Company commenced the hotels
business way back in 1975. For reasons of
competing demands from newer businesses
such as financial services and edible oils.
fresh investments did not take place at the
desired rate in the 80s and the early 90s.
As a result. Welcomgroup could not c.v.-:< -J
its presence to several high potent'
locations, which would have consider ■ strengthened the chain. In an endeavo
offer a more complete and attractive c! »i.
product to upmarket international ■ '
domestic business travellers, an expanse
plan involving investments of over
Rs. 1.500 crores in the next five years is
under implementation. The Rs. 450 crore
five star deluxe hotel project at Mumbai is
progressing satisfactorily and is slated for
opening in October 2000. The civil works
for the 100 bay expansion at Maurya
Sheraton in Delhi is nearing completion
and is planned for opening in March next
year. Preparations to commence
construction of a second hotel in Mumbai
on your Company's land at Parel and a five
star deluxe project at Calcutta are at an
advanced stage. These projects are likely
to be completed by the years 2001-02 and
2002-03 respectively. I am also happy to
advise you of the induction of a second
hotel into the Welcomgroup chain in
Delhi, which is at an advanced stage of
construction. On completion of the
expansion plans, nearly 1,500
deluxe rooms will have been added
to the Welcomgroup chain over
the next five years.
These investments, apart from
providing an attractive growth
opportunity to your Company,
would stimulate large direct
and indirect employment
besides supporting substantial
foreign exchange earnings from
international travellers. Your
Company views these investments
as a significant contribution to the
development of infrastructure for
trade and commerce in the
country. Although this capital intensive
business carries gestation drags in the short
term, the long term potential for earnings
and real estate appreciation is attractive. In
the globalised world of tomorrow, India can
acquire a position of leadership in the
employment intensive Services businesses.
It is expected that after your Company
acquires a critical size and scale of
operations in the Indian market it can
successfully venture overseas and acquire
a global dimension.
Packaging and Paperboard
Significant progress is being registered
in the packaging business of your Company.
You would recall my statement last year,
that any in-house buyer supplier relationship
within the ITC group is governed by a
policy framework that provides freedom
to the buyer to access the most appropriate
inputs from the market. The in-house
supplier has to earn the custom through
superior quality and cost. You will be
happy to learn that the packaging
requiremer.ls of the cigarettes
business, th
were earlier being
sourced from, overseas in put suit
Tinternatic,■■. , ■
''■;■■■■ v. rds,
have now
veried io your
■Company’s
s-uess,
ith considerable gains in
efficiency anti substantial savings
in costs and foreign exchange
outgo. This achicx ement has also provided
the packaging business the impetus to
grow exports of value added packaging
to overseas tobacco companies. While
pursuing organic growth,
opportunities for acquisitions are
also being explored.
You are already aware that ITC
Bhadrachalam Paperboards Limited, now
a subsidiary of your Company, has been
engaged in the stabilisation of the recently
capitalised 120,000 tonne capacity plant
involving an outlay of nearly Rs. 675 crores.
Unfortunately this new investment had
coincided with a deep supply demand
adversity, both in the domestic and
global markets, intensifying price
competition, thereby leading to severe
erosion in margins. Focused product
development efforts together with
early signs of revival of the paper
and pulp industry give the hope
that the turnaround of this
business can begin to take place
in the not too distant future.
Attainment of international
competitiveness by Indian
enterprises would largely depend
upon the interplay of two mutually
supportive ingredients. The first
one relates to the vitality of the
enterprise in reshaping its business
portfolio to align more closely with its
unique capabilities, inculcating dynamism
in leadership, investing in technology and
human skills to nurture core capabilities,
and evolving appropriate governance
processes to enhance the wealth generating
capacity of the enterprise. The second
relates to the vitality of the
economy as a supplier of globally
competitive inputs and resources.
In this context, the social and physical
infrastructure in our country needs urgent
and quantum upgradation. Equally, the
institutional and policy framework needs
to be progressively reformed to create a
climate in which efficient entrepreneurial
activity is rewarded and resources made
more productive.
Industry and government
therefore need to work in close
partnership to fashion a policy
framework appropriate to each
industry. I would like to place before
you an area related to the tobacco industry
that requires urgent attention.
REFORM OF THE
REGULATORY
FRAMEWORK FOR
THE TOBACCO INDUSTRY
Expansion of the tax base
It needs to be highlighted that
cigarettes constitute a mere 20%
of tobacco consumption in India
by weight, and that fewer than
15% of the 200 million tobacco
users consume cigarettes. Yet these
15% contribute nearly 90% of the
revenues to the Exchequer from
the tobacco sector. This form of
consumption, apart from constituting
practically the entire tax base of the tobacco
sector, also supports export of cigarette
tobaccos which contribute nearly
Rs. 1,000 crores in foreign exchange
earnings annually. Although tobacco
consumers in India aspire to
upgrade consumption to the
cigarette format in line with
international trends, the punitive
taxation regime both at the Central
and State levels has made it
unaffordable to the majority of
tobacco consumers, thereby
keeping the tax base narrow and
much below its natural potential.
This has also resulted in the sub
optimisation of rural incomes and foreign
exchange earnings from this sector.
An initiative towards expanding the
tax base was taken in 1994 by reducing the
excise duty on the micro segment from
Rs. 120 to Rs. 60 per 1000. Resultantly, the
tax base was expanded, with the micro
segment growing from a level of600 million
cigarettes per annum to nearly 23 billion
cigarettes in 1997-98. Over time the micro
segment has coine to be taxed at much
higher rates, both at Central and State levels,
which has now brought about a major
ADVERTISEMENT
decline in this segment. The year under
review witnessed an erosion of about 13%
in this segment. Although this segment
carries lower margins and has thus not
materially impacted the financial results
of your Company, the adverse impact on
the growth prospects of the tax base
is undesirable.
The government needs to
moderate the approach to this
potentially high growth segment
in line with the stability provided
to the other segments in the last
Budget. It is to be noted that
the elasticity of revenues to the
Exchequer would be visible over
time and would require a patient
adherence to the policy of
moderation in taxes.
The menace of contraband
cigarettes
High rates of uc'.s'.ica, parc.-ei:- iy a:
the upper end. have si•.?. ;<e.i ~ f‘sunshiny
trade in smuggled
conservative estimates indicate that
smuggling in cig;:;
cans'ng
an unaccounted
al'foreign
exchange upward of its. 500 crores
and the related loss of revenue to
the Exchequer that would otherwise
accrue on equivalent domestic manufacture.
This contraband trade is estimated to be
growing at an alarmingly high rate
upwards of 20% per annum.
The menace of contraband cigarettes
is well recognised the world over. Since
tax is avoided in the exporting
country and evaded in the
consuming country, given the high
tax regime, smuggling of cigarettes
has become lucrative and appears
to be highly organised. The policy
framework related to the tobacco industry
needs to take into account the growing
menace of smuggled cigarettes and the
resultant tax export which is detrimental
to the Indian economy.
There are a number of avenues that
can facilitate the flow of contraband
cigarettes into India. The legal framework
related to the import of duty free cigarettes
needs to be reviewed as these legal
channels provide the opportunity to be
used as a cover for supply to the
contraband channel. The legal channels
that carry such risk of misuse are: the duty
free import under the Baggage Rules, duty
free shops at international airports, the
duty free imports by agents on behalf of
embassies and naval ships, and duty free
import of cigarettes for re-export. There
are hardly any retail shops in the
metropolitan cities of Mumbai. Calcutta,
Chennai and Delhi where contraband
cigarettes are not openly displayed and
sold in large numbers.
The recent announcement awards
liberalisation of trade among oAARC
countries has exacerbated this menace and
provided another channel of enlr7 of
contraband into the Indian market The
promotion of international brands
in India coupled with the absence
of a harmonised tax regime among
the SAARC countries, constitutes
a very real threat of accelerated
growth in contraband flow and
economy. Over time it can become a
major player of international dimensions
and create growing value for its
shareholders. The ITC Group currently
represents a pool of high calibre human
resource comprising 2,400 managers,
13,700 employees and an asset base of
Rs. 4,700 crores. Although your
Company ranks high in terms of
market capitalisation among
Indian companies, and its size of
operations in India is significant,
it is still a tiny enterprise when
viewed in the international context.
consumption.
As an illustration, the excise duties in
Nepal on king size cigarettes are one third
of that >h'..jining in India. The import of
intcrnatioii;:: bi.u/’s of cigarettes is also
permitted i.t Nepal at attractively low rates
of c i mini- .! ity. International cigarettes
v
a: rings can be found
in d,e Indian in-: !:c'. in a. owing numbers.
Thu; opportnnit .,. ha . been created for
;;!< J
i luting a growing
ta...
.i -..id
erious threat to
and the tax base of
t:i • Exchequer from the tobacco sector.
: would make a strong plea
that the ramifications of this
serious issue are examined by the
various arms of the government
in conjunction with the tobacco
industry in India with the
objective of refurbishing the policy
framework. It is evident that a
combination of moderation in
taxes, harmonisation of the tax
regime among SAARC countries,
plugging of the loopholes related
to tax free imports and the
strengthening of the enforcement
machinery would go a long way in
minimising the injury caused by
such illegal trade in cigarettes.
The challenge of attaining
international dimensions is at once
humbling, inspiring and exciting.
In the ultimate analysis, the cutting edge
in the realisation of such an aspiration
would be provided by the dynamism of its
human resource. The secret of
creating a winning corporation lies
in the appreciation of the potential
value of this human capital and in
the ability of the distributed
leadership within the company to
nurture and mobilise such talent.
I would like to acknowledge the
contribution made by your Company's
employees at all levels and seek your
cooperation, as always, in support of their
endeavour.
Before I continue with the agenda for
today's business, I would like to, with your
permission, pay a sincere tribute to the
valour of the armed forces of our country
who fought so bravely to preserve the
territorial integrity of our secular nation.
I would now request you to join me in
observing a brief silence in the memory of
those who made the ultimate sacrifice for
this cause.
On an experimental basis, your
Company would be willing to contribute
to the cost of strengthening the enforcement
measures. This experiment can begin in
the metropolitan cities of the country,
whereby the seized contraband cigarettes
are destroyed thus creating disincentives
for the retail trade. The industry forums,
with your Company's support, are in the
process of making comprehensive and
detailed recommendations to the
government in this regard and on other
measures related to the tobacco industry.
A
CONCLUSION
This complete text of Chairman
Y. C. Deveshwar’s speech
has beei) published in the interest of all
shareholders. Please write to Corporate
Public Relations Dept., I.T.C. Limited,
Virginia House, 37, Chowringhee,
Calcutta 700 071 for a booklet of the speech.
Your Company is a leading Indian
enterprise. It has the wherewithal
to significantly enhance its
contribution to the Indian
I.T.C. Limited
r. ..
■ ‘
......
>—1 BUSINESS ♦ MARUTI UDYOG LIMITED
SHIFTING GEAR
With new models, upgraded technology and competitive pricing, the
automobile giant has woken up to the competition. But is it too late?
BySHEEALI REKHI
OMPETITION HAS FINALLY
caught up with India’s largest
car maker. Maruti Udyog Lim
ited (mui.). The Rs 8.118-crorc
company which produced
3.33.199 vehicles last year is now
embarkingon a new drive. Il will launch
more models, chase technology, cat lab
and go after buyers with fresh zee
with the ever intensifying compel iti.'o i<;
the car market.
Later this week, the company • iil
launch the Zen Classic version. Over !l.c
next year the company, which lies ...
launched any model since the Esteem in
1994. will add three new car.- to it
existing seven-model fleet. On the anvil
are the Wagon R. Baleno and a New Alto
(tentative names) that will help broaden
mui.'s presence in the Indian car market.
Jagdish Khattar. who took over as man
aging director ofthe company on August
17. is confident that mul “will retai
leadership in the car market".
That's easier said than done.
Between April-June 1998 and AprilJune 1999. MUL'ssharein passenger
cars slipped from 84 per cent to 69
per cent, even though its sales.
including exports, grew by 14 per
cent during the period. Clearly, its
competitors have grown faster.
C
For instance, Hyundai's small car
Santro, which was launched only in
October 1998. sold 12.684 cars dur
ing April-June 1999. Telco, which in
troduced Indica in December 1998,
has put 7,617 cars on the road in the
same period. Even Daewoo, which got
off to a slow st art because its small car
Matiz was priced much higher than ex
pected, had a long list of buyers. The
increased conw-lhion was one of the
reasons why;
> net profit slid from
Rs 652 crore in 1997-98 to Rs 522
'Tore last year. Hyundai is aiming to
ell 55,000 cars this year while Telco
has set 60,000 cars as its target. If
the two manufacturers achieve their
numbers, their sales would be equal
to almost half the total number of
Maruti 800s and Zens sold last year.
Khattar is trying to change that by
focusingon customer care, puttingcosts
under a magnifying glass and examining
ways to increase market reach. Right
now, he is busy despatching survey
teams to 35 highways to check out the
feasibility of setting up a Maruti service
station every 25 km. That's not all. Ear
lier, new colours were introduced every
five to six months. Now Khattar
promises fresh hues every two or threcd
months. “Buyers have become impa
tient,’’ he says, “we'll have
to give them what they
want.”
But Khattar knows
only too well that in
competitive markets.
the biggest challenge is
Khattar's main task is to retain MUL’s
leadership in the car market
SANJOY GHOSH
THE OVERHAUL
■ Launch new models to
be present in different
segments of the market.
■ Reduce production costs
by achieving a 85-90 per
cent indigenisation for new
models within 12 months.
■ Revamp marketing by
increasing the dealer
network from 150 to 300
and focusing on bulk
institutional sales.
■ Bring down number of vendors and introduce
competitive bidding by suppliers.
5>?5
1 0 MAR 19%
or
The case afjaiwst ®
cigarette advertising
ru '
Amita Deshmukh
THE Cancer Patients Aid
v
Association (CPAA) is planning to
combat "lifestyle advertising" by
cigarette companies which has
been attracting youngsters towards
smoking.
A total management project is in
the pipeline which would deal with
the disease, awareness, early
diagnosis, economic, social and
psychological aspects of the
patient.
"
“It is important for voluntary
organisations to be financially
viable. And the fact remains that
major cigarette companies are
profit-making ventures and we
want them to support this project,"
asserts Y K Sapru, founder
chairman, CPAA.
Thanks to the strong anti
smoking lobby in the US which has
seen stagnant sales, Asia and
Eastern Europe are fast becoming
)re new markets of the cigarette
companies. Since the restrictions
on advertising tobacco products
are non-existent, US multinationals
have shown good growth in other
continents.
Lack of legislation on
consumption of tobacco has seen
violation of rules by some
companies in India too. “While the
hoardings have become larger and
larger and are placed at strategic
I
■
;
i
What is the US legislation
all about
THE US tobacco Industry has agreed to pay $368.5 billion to more
than 40 American states In the next 25 years for public health caus
es, antl-smoklng campaigns and compensation for victims of.smokIng-related diseases. But the legislation needs to be passed by the
.Congress and signed by President Bill Clinton.
■ If the plan Is approved, cigarette vending machines will be
■: banned and all tobacco products will be kept behind the coun- ters In the stores. There will be no cigarette hoarding and signs
In stadiums etc.
■'. The weirnlhg on cigarette packages will be bigger, on the front;
arid more specific, like “WARNING: Smoking can kill you.”
■ The tobacco Industry will pay to enforce federal rules and for
antl-smoklng advertisements. People who want to quit smok
ing could also get money for help.
■ Tobacco companies would not face future lawsuits from large
. groups, but Individuals could recover money for damages.
■
The Food and Drug Administration (FDA), a federal agency In
. theUSregulatlngthequalltyoffoodanddrugs.Includlngtobac: co, will regulate nicotine as a drug. Under the agreement, the
administration could ban nicotine from cigarettes as early as
In the year 2009.
locations across the city, the size
of the accompanying statutory
warning usually retains Its original
size of 3mm. Many youngsters and
even kids are sometimes made
part of the marketing campaigns,"
points out Vijl Venkatesh, director,
Diagnostic services, CPAA.
Despite three million cancer
patients and around six lakh that
are added to this number every
year, India's health budget
continues to
to be
be 0.5
0.5 per
per cent
cent of
c the
continues
GNP. Around 20 lakh youngsters
join the smoking community every
year without knowing that the habit
results in dependency on nicotine
— a condition not different from
addiction to heroine or cocaine.
According to the projections of
the World Health Organisation,
India is among the three countries
on the verge of a cancer epidemic.
So far the CPAA has given total
management support to 15,000
cancer patients and have rehabil
itated 700 families in the past
seven years. “In India, 70 per cent
of cancer is caused by social and
hygiene factors — usage of
tobacco, early marriages and
multiple pregnancies. All of which
is can be avoided. If cancer is
diagnosed early, than the cure rate
Is 70 per cent," explains
Venkatesh.
The organisation’s biggest asset
Is the Cancer Insurance Policy
which has over 6,000 policy
holders. “The policy is a result of
our association with the New India
Assurance and is approved by the
Centre. People have to just pay
Rs 6,400 once and CPAA takes
care of all the premiums. If the
policy holder gets cancer, we
provide him compensation upto Rs
two lakh per year till the disease is (
cured," states Venkatesh.
-------
MAR ,NU
g 9
Curbed in West, cigarette firms set sights on Asian market^
By Rupa Chinai
The Times of India News Service
MUMBAI: Driven by the slogan
‘We want Asia’, yet another brand
of international cigarettes has
joined the pack of companies in the
assault to hook India’s vast con
sumer market to the cancer stick.
The last few weeks in Mumbai
have seen children from middle
class families, dressed in a particu
lar cigarette company’s landmark
gold and black colours, dispensing
free cigarette packets yet again at
street comers at Churchgate and
Breach Candy. They are paid Rs
500 for 21 days’ enlistment.
Facing stringent curbs on adver
tising and promotion, as also pun
ishment fines if youth smoking
prevalence fails to decline in West
ern countries, cigarette companies
are turning their attention to Asian
markets where virtually no con
trols exist.
In India, the quest for ‘gold’ has
reached new heights of assault in
the past months, with every imagin
able surface and exterior aiming at
luring impressionable youth into
this deadly addiction, protests the
Cancer Patients AID Association,
which is based in Mumbai.
More than 600,000 people in
India die every year, and what is
worse, die prematurely, due to
tobacco addiction, says Viji
Venkatesh, director of diagnostic
services of the Association. Every
year, two million youngsters are
enticed by the blitzkreig of tobacco
promotion through advertising,
sponsorship and promotion which
creates an environment that
encourages new smokers to try
tobacco and, at the same time,
weaken user’s resolve to try and
quit. Presently, 20 million young
adults in India are already addicted
to tobacco in one form or the
other, she adds.
How is society and government
to respond intelligently to this for
midable health challenge? Are
there any international experiences
India can draw upon? The recently
published Harvard Report on Can
cer Prevention (November 1997),
supported by the Harvard School
of Public Health, Boston, U.S., pre
sents an array of experiences,
backed by studies to show that
some strategies do work.
A key insight into this report is
that if prevention is to be success
ful, a comprehensive array of com
ponents are required through gov
ernment and community action,
which creates an environment for
health consciousness and an aware
ness of the risk factors.
“Repeatedly, it has been seen
that interventions that focus on
only one component of the strategy
fail or achieve only minimal shifts
towards lower cancer risk. For
major, reductions in the burden of
cancer to be achieved, we need
broad-scale interventions that will
shift the behaviour of the whole
population. Rather than focus sole
ly on individuals defined as being
at 'high risk’, a shift in behaviour by
the whole population can achieve the equivalent of 30 minutes of
greater reductions in cancer,” the brisk walking per day would result
report observes.
in a 15 per cent reduction in the
While an earlier Cancer Report incidence of colon cancer, it says.
of 1996 reviews the causes of
human cancer, identifying smoking,
In addressing sedentary lifestyle.
diet, sedentary lifestyle, occupa public and environment policies
tional factors, viruses and alcohol can powerfully encourage physical
as potential sources of cancer risk,
activity. Examples include the con
the 1997 report summarises
research on prevention pro struction of sidewalks, bikeways
grammes, public education cam and safe recreational spaces The
paigns, and social policy measures report highlights the special vulner
for preventing cancer.
ability of low-income groups, their
A reading of these reports point lack of access to health-giving
to public health -messages that products and physical space. It also
would encourage changes in our speaks of institutional settings that
daily lifestyle. For instance, lack of
activity is a defined cause of colon could encourage exercise through
cancer. Having the total population well-lit and safe staircases, for
'
increase their weekly
*
activity by instance.
Ph-
pH " T—
17^.
.
Tobacco companies m sports:
WOTE to saek iegs§ ra^eriy
From Our Special Correspondent
BANGALORE, Jan. 19.
The National Organisation for Tobacco Eradi
cation (NOTH), composing among others, can
cer specialists, has decided to seek legal remedy
over the increasing manner In which sports
tournaments were being funded by tobacco
companies.
Dr. B. S. Srlnath, Secretary. NO TE tludtu) and
Director of the Bangalore institute of Oncology
told The Hindu here on Thutsday that tile re
gional chapters of the NOTH In Madhya Pradesh
and Goa apart from the Karnataka Chapter
would huvc no choice but to approach the (\iui t
to prevent >1 tobacco company'frorn sponsoring
the World Cup Cricket. It should however not be
construed ihut cancer speclubsts were against
the World Cup Cricket as tvits being made out in
curiam quarters, he said.
were expected to watch the tournament and at
least half of them would ultimately end up to
bacco consumers. Dr. Srinath said. Il is pointed
out that according to studies on tobacco con
sumption conducted by NOTE, It was easy to
attract a person to tobacco but extremely dllficuti to wean hint away from it. While tobacco
consumption in the West was declining fast. It
was the. reverse tn the developing countries, par
ticular!;. L idia, where tobacco consumption was
galloping In recent years.
As pec a study, the turnover of the cigarette
companies in the past year had shot up to Rs ,
1 H.QOO crores, indicating a ft) per cent Increase
over the turnqvyr of 1991.
Tlie NOTE has expressed its unhappiness over
the vacillating policies of the Union Government
vis-a-vis tobacco. "In so far as the role of the
Government hi regulating the cancer inducing
The NOTE'S opposition stems from the fact • substances is concerned, there has been no tuthat most cricket fans In the country were in the ..pional polity or a consistent ethical stand, and
younger age groups un i the <;ljt.arc>lp advertise^ this hits largely beep responsible for increase in
ments Io lie put up by the torappny were bound the incidence of cancer and other diseases. It. has
to draw the. intention of the younger gpnpr'ation. been well established that 50 per cent of the
As per an estimation, nearly 30 crore people cancer cases were Induced by tobacco".
WORLD NO TOBACCO DAY
REDUCING THE GLAMORISATION OF TOBACCO IN MOVIES, ON
TELEVISION AND IN MUSIC VIDEOS
Four Steps The Entertainment Industry Can Take to Reduce the Glamorisation of Tobacco
When tobacco is glamorised in movies, on TV and in music videos, it sends a powerful message to young
people that tobacco use is both appropriate and desirable.
Following are four steps the entertainment industry can take to discourage teenage tobacco use:
1.
Avoid glamorising tobacco. Refrain from portraying tobacco use as something that is exciting, cool
or sexy and linking tobacco with adventure, fun and celebration.
f 2. Creatively substitute other props. Consider means other than tobacco-type cliches for portraying
rebellion, celebration and relaxation.
3.
Portray the reality of tobacco use. People become sick and die from using tobacco. Most smokers
would like to quit but have a difficult time because of the highly addictive nature of nicotine.
Environmental tobacco smoke impacts the health of non-smokers. The majority of people in the
world do not smoke and prefer to live in a smoke-free environment.
4.
Work toward reducing overall tobacco use. Avoid creating an image that smoking is a normal,
daily activity. Refrain from having characters use tobacco in inappropriate situations such as around
children, in medical care facilities and in non-smoking areas.
Three Other Actions That Will Make a Difference
Watch what you are watching. Inoculate yourself against the pro-tobacco messages you receive from
entertainment productions. Recognise that movies and TV are for entertainment and that they rarely
f reflect reality. Tobacco use is not exciting or glamorous. Many stars have died from tobacco-related
diseases.
Encourage others to watch what they are watching. As a young person, talk with your friends about
tobacco use in the movies and on TV. As a family, watch movies or TV and discuss the difference
between the portrayal and reality of tobacco use. As a teacher or youth group leader, consider teaching a
unit on critical viewing skills.
Work to raise public awareness. Host local youth-based media events around the time of the Oscars or
your local award ceremonies. Contact your local movie and TV critics and ask that they write articles on
the issue. Copy and distribute this packet at health fairs, World No Tobacco Day, and other events that
promote health and/or tobacco education. Be creative!
Why Is Tobacco Included in Movies and on TV?
There are several reasons why tobacco finds its way into movies and TV programmes.
It is a convenient prop. If you want to establish that a teen is rebellious put a cigarette in his or her hand.
It may depict reality.
It can reflect the personal attitudes and use of tobacco by writers, directors, actors and actresses.
It may result from direct or indirect influence by the tobacco industry.
It may be used as a marketing tool to reach specific audiences.
Do a Study
Many studies have been conducted to test the manner and frequency of tobacco usage in the movies and
on popular television programs. An example of one such study comes out of California in the United
States. It was conducted by Thumbs Up! Thumbs Down!, a project of the American Lung Association of
Sacramento-Emigrant Trails. The study looked at all movies with a domestic box office income of more
than $5 million in the time frame from May 1994 through April 1995. It reviewed television shows over
a six-week period in the spring of 1996. These are movies and programs that are screened all the world,
not just the US, and have enormous appeal to teenagers everywhere. Following are the key findings:
Hollywood gets a Thumbs Up! and a Thumbs Down! in the amount of tobacco use.
Approximately 50% of the 133 movies reviewed had zero to 10 incidents of tobacco. The other half
ranged from a moderate 11-20 incidents to a smoke-filled 100 plus incidents. Television fared
better with only 15% of the 238 episodes watched containing tobacco. Overall, movies averaged 10
incidents per hour and television two.
Use varies considerably by studio and network. Studios with low tobacco use included Walt
Disney Pictures, Twentieth Century Fox and Hollywood Pictures. On the high side were Miramax,
Castle Rock and Warner Brothers. On television, ABC had the lowest incidence while Fox was F
highest.
Leading actors are more likely to light up in the movies.
In the movies and television
programmes which included tobacco use, one or more leading actors and actresses lit up 82% of the
time in movies and 57% of the time on TV.
Cigarettes and cigars are the tobacco of choice. In the movies where tobacco was used 86%
displayed cigarette use, 52% cigar use, 12% pipe use and 7% smokeless tobacco. On television
episodes with tobacco use, 67% displayed cigarette use, 42% cigar use and 3% pipe use. There was
no smokeless tobacco use displayed.
So What If Your Favourite Actor Lights Up on Screen?
The entertainment industry has a pervasive influence on our society. While movies and television may
reflect our life styles, they also help define them. The power of the entertainment industry in influencing
young people suggests that it also has a responsibility to monitor and reduce the potentially negative
impact of its messages on this audience. One area where it can play a particularly important role is in
helping to discourage tobacco use.
Basic Tobacco Facts
Tobacco kills 4 million people a year around the world. According to the World Health Organization, it
is the single most preventable cause of death and disease in the world. In addition to the tremendous
suffering it creates, tobacco use costs the United States alone close to $100 billion annually in health
care and days missed from work. Do you know what the costs are in your own country? It is a price we
all help pay, whether we smoke or not.
Adults Don’t Make the Decision to Start Smoking: Young People Do
Each day between 82,000 to 100,000 teenagers light their first cigarette. Tobacco use starts in early
adolescence. Almost all first-time use occurs before graduation from high school. People who start
smoking at an early age are more likely to develop severe levels of nicotine addiction and are more likely
to die early of a tobacco-related disease than people who start later.
Why do young people start? A teenager is much more likely to light up if his or her parents, brothers or
sisters smoke. Peer pressure is also a powerful influence. The most common offer of a first cigarette is
from a friend. Certainly, the massive advertising campaign carried out by the tobacco industry plays a
part. Billions go toward making the Marlboro Man and his counterparts attractive to children. Whether it
is popularity, beauty, adventure, wealth or uniqueness, the tobacco industry and its legion of public
relations firms have a multitude of ways suggesting it can be had for the price of a puff. Kids with low
levels of self-esteem and a sense of alienation are especially vulnerable to the industry’s relentless
campaign.
The Role of the Entertainment Industry
What role does the entertainment industry play in this process? When tobacco is glamorised in movies,
on TV and in music videos, it provides a powerful message that tobacco use is an appropriate and even
desirable activity. Whether the glamorisation is intentional or not, it reinforces the multi-billion dollar
advertising campaign carried out by the tobacco industry. In some ways, it may be even more effective.
No warning label is required when actors and actresses light up. What the young person sees is someone
he or she looks up to, living a life that he or she would like to live, and doing it while using tobacco.
There are three major ways tobacco use is glamorised:
It's fun. Cool, attractive and successful people light up and they use tobacco while they are doing
exciting things.
It represents rebellion. Lighting up becomes a symbol for challenging a repressive system,
whether that system is your parents or the government.
It's a way of relieving stress. As tension mounts, people light up.
Watch What You Are Watching
How do your country’s movies and television programmes fare? It would make for an interesting pioject.
Why don’t you find out?
Whether you are sending a message to Hollywood or your local entertainment industry, discussing
tobacco use with your family, or working on a class or group project, the following questions and
methods utilised by the Thumbs Up! Thumbs Down! project should help in your efforts.
How much tobacco use is shown? The easiest way to determine the extent of tobacco use is to count
incidents. While there are various ways of counting, the method used by Thumbs Up! Thumbs Down! is
to consider each time tobacco is shown on the screen as an incident. For example, two people smoking at
the same time on screen are considered two incidents. When a hand holding a cigarette moves off screen
and then back on and when a camera refocuses on a person smoking are also considered separate
incidents. More than 30 incidents in a movie and over 10 incidents on a television programme reflect
relatively high use.
What type of tobacco is being used? The type of tobacco being used in movies and on TV can
encourage or discourage certain trends in tobacco use. For example, the prominent use of cigars in
recent movies and TV shows in the US has likely played an important role in the increasing incidence of
cigar use in the US.
Who is using tobacco? Major characters who are played by popular actors and actresses carry out much
of the tobacco use in movies and on TV. Many of these characters, actors and actresses serve as role
models to young people. When these role models light up, it sends a powerful message that smoking is
OK.
How is tobacco use being portrayed? The way tobacco use is portrayed is an important factor in
encouraging or discouraging tobacco use. When the entertainment industry shows tobacco use as fun,
suggests it’s a way of rebelling and establishing independence, or shows it as a means of relaxing and
dealing with stress, it sends a message that using tobacco is a highly desirable activity. When the
entertainment industry suggests that tobacco use is unhealthy or addictive, portrays a character
strenuously objecting to breathing second-hand smoke, or shows some of the more unattractive aspects *
of tobacco use such as smelly clothes and stained teeth, it sends the message that one should avoid
tobacco use.
Advocacy Activity for Teens
\ outh advocacy efforts are an important way to reduce the influence and amount of positive tobacco
portrayal in movies and on television. Here are some suggestions:
1. Teens can write to the actors and actors to express their concern over how tobacco use is portrayed on
screen. Simple form or hand-written statements or letters to actor/actress, production company, or anyone
actively involved in decision making, will let them know that the amount of tobacco use does not go
unnoticed and is undesirable. The youth may also send letters of recognition to those who convey an anti
tobacco message to encourage and congratulate their efforts.
2.
Produce a slide with an anti-tobacco message that could be shown prior to movie trailers or previews.
Contact your local theatre to find out if they will show it.
3.
Send a petition to a particular actor, director, or producer signed by youth. This petition can express
^heir concern regarding how tobacco is being portrayed.
4.
Do a pre and post test at a movie theatre. Survey moviegoers about their impression of tobacco and cite
some facts. After the movie, survey the same audience to see if their impression/reaction changed.
5.
Get permission from a movie theatre and hand out a movie evaluation form for the audience to fill out.
For example, the release of the Hollywood movie “The Insider” may be a good opportunity to do this.
6.
Have youth create a list of movies that contain smoking scenes.
7.
Encourage teens to write letter/article in school newspaper. Include a list of celebrities who have died
from smoking related diseases. (See List of Celebrities Killed by Tobacco)
These are just a few of the ways to encourage critical thinking while deglamorizing tobacco use. The goal is
to encourage the movie and television industry to stop portraying tobacco as being a desirable activity.
1
CELEBRITIES KILLED BY TOBACCO
The following is a list of prominent international celebrities who have died from smoking, their age, and the
cause of death. Please help us put together a similar list for your own country or region (Courtesy of the
Entertainment Industry Council's Tobacco in the Media Project and "Cigarette Hall of Fame,” a report by the
Roswell Park Memorial Institute).
Nat "King" Cole
Mary Wells
Steve McQueen
Rod Serling
Eddie Kendricks
Michael Landon
Lee Remick
Betty Grable
Edward R. Murrow
^Humphrey Bogart
James Franciscus
Dick Powell
Gary Cooper
Chet Huntley
Dick York
Sammy Davis, Jr.
Walt Disney
Yul Brynner
Tallulah Bankhead
Sarah Vaughan
Colleen Dewhurst
Harry Reasoner
Alan J. Lerner
Desi Arnaz
Nancy Walker
Buster Keaton
^Seville Brand
l\rt Blakey
Ed Sullivan
Duke Ellington
John Wayne
Lucille Ball
Denver Pyle
Lillian Hellman
Robert Mitchum
Arthur Godfrey
John Hust
Bette Davis
45
49
50
51
52
54
55
57
57
57
57
59
60
62
63
64
65
65
65
66
67
68
68
69
69
70
71
71
72
72
72
77
77
79
79
81
81
81
Lung Cancer
Throat Cancer
Lung Cancer (also worked with asbestos in shipyards)
Heart Disease (4 packs a day)
Lung Cancer
Pancreatic Cancer (4 packs a day)
Lung & Kidney Cancer
Lung Cancer
Lung Cancer
Throat and Oesophagus Cancer
Emphysema
Throat Cancer
Lung Cancer
Lung Cancer
Emphysema
Throat Cancer
Lung Cancer
Lung Cancer
Emphysema
Lung Cancer
Lung Cancer
Lung Cancer
Lung Cancer
Lung Cancer
Lung Cancer
Emphysema
Emphysema
Lung Cancer
Lung Cancer
Lung Cancer
Had Lung Cancer and survived bypass surgery,
Heart Disease (aortic aneurysm)
Lung Cancer
Emphysema
Emphysema
Lung Cancer
Emphysema
Stroke
Many of these stars also appeared in ads promoting cigarettes.
Many of the victims were sick for more than ten years before dying.
Freely adapted from "Thumbs up! Thumbs Down! Advocacy Information Kit”.
American Lung Association of Sacramento-Emigrant Trails.
tew
Tobacco Free Initiative
World Health Organization
Avenue Appia 20
1211 Geneva 27
Switzerland
Tel: +41 22 791 21 08
Fax: +41 22 791 48 32
E-mail: tfi@who.int
Website: http://www.who.int/toh
p H ' 2- -
Meeting on tobacco, health and development: 12th September 2002
iue. 3 Sep 2002 11:18:34 +0100
Roger Drew <drew.r@healthlink.org.uk>
"Admin@Befrienders.Ora 'E-mail’" <adn1.in@befrienders.oro>.
"AJ Oliver (E-mail)" <A..J.0!iver@lse.ac.uk>, "Alan Beattie (E-mail)" <a.bea(lie@ucsm.ac.uE>,
"Alastair Burtt (E-mail)” <aburtt@iydercheshire.co.uk>,
"Alex Rosdol (E-mail)" <a.k.rosdol@lsc.ac.uk>,
"Amalos@Bond.Org.L)k (E-mail)" <amalos@bond.org.uk>,
Andrew Chetley <chetley.a@healthlink.org.uk>,
"Andrew Pendleton (E-mail)" <apendleton@christian-aid.org >,
"Anna Thomas (E-mail)" <anthomas@chrisiian-aid.org>,
"Anthony Costello (E-mail)" <a.costello@ich.ucl.ac.uk>,
"Balwant Singh (E-mail)" <bsingh@,ifli.org.uk>.
"Barbara Judge (E-mail)" <Barbara.Judge@lshtm.ac.uk >,
"Bridget Sieap (E-mail)" <bridgets@panoslondon.org.uk>,
”C Mears (E-mail^” <cnicars^rcdcross.oror.iik^>
"Carlos Grijalva (E-mail)" <C.Grijalva@ich.ucl.ac.uk>,
"Chiara Carcianiga (E-mail)" <Chiara_Carcianiga@lepra.org.uk >,
"Christiane Fischer (E-mail)" <bukopharma@compuscrvc.com>,
Clare Haskins <haskins.c@healthlink.org.uk>,
"Clive (E-mail)'1 <c.nettleton@healthunlimited.org>,
"Costanza de Toma (E-mail)" <cdetoma@bond.org.uk>,
"Craig Burgess (E-mail)" <craig@merlin.org.uk>,
"David Woodward (E-mail)" <woodwardd@who.ch>, "Di (E-mail)" <dross@ifh.org.uk>,
"Dorothy Flatman (E-mail)" <d.flatman@wcf-uk.org>.
"Doug_Soutar@Lepra.Qrg.Uk (E-mail)" <doug_soutar@lepra.org.uk >,
"Elena Medi (E-mail)" <e.medi@tiscalinet.it>, "Emma Back (E-mail)" <e-back@dfld.gov.uk>,
"Iona Heath (E-mail)" <pe3 l@dial.pipex.com>,
"Jane Banez Ockelford (E-mail)" <janebanez@aol.com>,
"Jane Betts (E-mail)" <jane.betts@worldvision.org.uk>,
"Jancc Rambocus (E-mail)" <jancc.rambocus@stopcs.org.uk>,
"Janine Fearon (E-mail)" <janine@fearon28.freeserve.co.uk>,
"Jean Jones (E-mail)" <jeani@tlmew.prg.uk>. "Jeff Collin (E-mail)" <Jeff.Collin@lsh.tm.ac.uk>,
"Jenny Brown (E-mail)" <JBrown@christian-aid.org>,
"Jerry Clewett (E-mail)" <j.clewe(t@healthunlimited.org>,
"Jo Best (E-mail)" <JBeistt@redcross.org.uk >, "Judith Cook (E-mail)" <nick.alex@virgin.net>,
"Kelley Lee (E-mail)" <k.lee@carc4frec.net>,
"Laura Ferguson (E-mail)" <L.Ferguson@AMREF.org>,
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"Lidia Simbitseva (E-mail)" <simb@comset.net>,
"Lucien Bigeaull (E-mail)" <lucien.bigeault@freesbee.fr >,
"Malayah Harper (E-mail)" <m-harper@dfid.gov.uk>,
"Manjitk@Echohcalth.Org.Uk (E-mail)" <manjitk@cchohcalth.org.uk>,
"Margaret Reeves (E-mail)" <margreeves@yahoo.co.uk>,
Melaina Bames <bames.m@health!ink.org.uk>,
"Melany Zipperer (E-mail)" <zippererm@who.ch>,
"Mick Matthews (E-mail)” <ukaidscon@gn.apc.org>,
° TM /sic
"Mike Rowson (E-mail)" <mikerowson@medact.org>,
"Modonohue@Cafod.Org.Uk (E-mail)" <modonohue@cafod.org.uk>,
"Mona@Map-uk.org (E-mail)" <Mona@Map-uk.org>,
"Mwajuma Masaiganah (E-mail)" <masaigana@africacnline.co.tz>,
"Nick Pahl (E-mail)" <n.pahl@helpthehbspices.org.uk>,
"Nick Priggis (E-mail)" <nick.priggis@worldvision.org.uk >,
"Onkar Mittal (E-mail)" <o-mittal@dfid.gov.uk>,
5%^- |o
fa
leetmg on tobacco. health a id devetopB ent ' 2ft Set tanber 2002
,"Pam Zinkin (E-mail)" <pamzinkin@gn.apc.org>.
"Paul- (E-mail)" <paul@ somhealy. demon, co. uk>,
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"Regina Keith (E-mail)" <r.keith@scfuk.org.uk>,
"Richard Lansdown (E-mail)" <r.lansdown@ich.ucl.ac.uk>.
Roseman.' Gilbert <rosemaiy.giibert@befrienders.org >,
"Rosemary Rodgers (E-mail)" <rrodgers@rcgp.org.uk>,
"Ruairi Brugha (E-mail)" <Ruairi.Brugha@lshlm.ac.ttk>,
"Sandhya Sastry (E-mail)" <sandhya.sastry@stopes.org.uk>.
"Sandra Kabir (E-mail)" <skabir@rhac.org>. "Scott Hardie (E-mail)" <S-Hardic@dfid.gov.uk>,
"Sheila Davie (E-mail)" <resultsuk@gn.apc.org>, "Susan (E-mail)" <scrane@ifh.org.uk >,
"Susan Fallon (E-mail)" <sfallon@projecthopeuk.org>,
"Tim Cullin (E-mail)" <Tim.Culiinan@merlin.org.uk>
=ase find attached a paper by Jeff Collin of I.SHTM which will be the basis of an introductory talk he will give at the
ixt meeting of the Health and Development Forum on 12.9.02. If you are planning to attend, could I ask you to
contact Anna Malos at BOND. I ter e-mail address is mailto:amalos@bond.org.uk
•
Roaer Drew
Executive Director
Healthlink Worldwide
Cityside
40 Adler Street
London
E1 1EE
Direct Tel. 020 7539 1577 (Mon-Thu)
Fax: 020 7539 1560
E-mail: drew.r@healthlink.org.uk
;althlink Worldwide - communicating through partnership
«dev NGOs intro.doc»
;
Name: dev NGOs intro.doc
; h?) dev NGOs intro.docType: Winword File (application/msword);
^Encoding: base64
9/4/02 10:59 AM
TOBACCO, HEALTH AMO DEVELOPMENT: AN INTRODIJCTION
•Jeff Collin
Centre on Global Change and Health, London School of Hygiene & Tropical Medicine
The World Health Organisation (WHO) is in the process of negotiating its first
international public health treaty, a proposed Framework Convention on Tobacco
Control (FCTC). A major stimulus to this initiative has been recognition of the
escalating burden arising from tobacco consumption and production in low- and
middle-income countries, with serious and diverse social, economic and
environmental impacts in addition to enormous implications for global health. With
one or two exceptions, however, the development community has generally been
slow to respond both to the challenges posed by the tobacco industry and to the
opportunities presented by the FCTC process. This short paper highlights the
importance and value of engaging with tobacco control for NGOs working with
development issues, and provides links to easily accessible sources of further
information, it serves as an introduction to key issues that will be developed during
discussions at the forthcoming meeting of the Health and Development Forum to be
held at the London School of Hygiene and Tropical Medicine on September 12th 2002
at 1.30pm.
Tobacco, Health and Equity
it is estimated that some 4 million deaths per year can currently be attributed to
tobacco, or about 1 in 10 of all adult deaths, Such figures are set to rise dramatically
such that by 2030 the annual death total will stand at around 10 million or 1 in 6 adult
deaths. Consequently, around 500 million people alive today will eventually be killed
by tobacco.
This burden is becoming increasingly inequitable in its distribution. Smoking related
deaths were once largely confined to men in high-income countries, but the marked
shift in smoking patterns to middle and low-income countries is being accompanied
by rapidly rising trends in death and disease.
®
o
•
Around half of all deaths from tobacco occur in the developing world, but this will
rise to 70% by 2030.
In China smoking accounts for around 1 in 3 of all adult male deaths, or around
100 million of the 300 million Chinese males now aged 0-29.
Tobacco will kill around 80 million Indian males currently aged 0-34
Selling tobacco products to women has been described as the single largest product
marketing opportunity in the world. While the epidemic may be in gradual decline
among men, it will not reach its peak among women until well into the 21st century,
and it is predicted that the current world total of around 187 million women smokers
wili reach 532 million by 2025. Such an increase, driven by economic and social
change and by increased targeting of women by major tobacco companies, is liable
to have enormous consequences for health, Incomes and families across developing
countries.
Sources:
WHO Tobacco Free Initiative (2001) Burden of Disease
http://www5.who.ini/t obacco.'paqe.cfm?sid=47
Gajalakshmi CK et al (2000) 'Global patterns of smoking and smoking-attributable mortality' in
Jna P and Chaioupka F (eds) Tobacco Control in Developing Countries available at:
http:/Aw.'w1.worldbank.prg/tpbacco/tcdc/009T0040.PpF
Sam&t J and Yoon S eds. (2001) Women and the Tobacco Epidemic: Challenges for the 21
Century (Geneva: World Health Organization)
http://tobacco.who. int/documents/WoMonograph01. pdf
The Economics of Tobacco Control:, Tobacco Production and Development
A fundamental obstacle to the development of comprehensive tobacco control
programs has been the misplaced belief in the value of tobacco production and
consumption to national economies. As a result of research led by the World Bank, it
is increasingly ciear that, for the vast majority of countries, increased taxation of
tobacco products would not cause long-term job losses. Tobacco control actually
presents policy makers with a virtuous circle, often combining substantial benefits for
public health through reduced consumption with an expansion in revenues via
increased taxation.
Notwithstanding the broadening evidence base that tobacco control makes good
economic sense, it is clear that some countries are significantly reliant on tobacco
production. Rea! dependence on the crop is, however, far less common than is often
suggested. Of the 141 countries that export tobacco only 18 derive more than 1% of
their total export earnings from it, .and tobacco account's.'for ..oyer 5% of export
earnmgs'ln drily 4'~ namely Kyrgyzstan, Macedonia, Zimbabwe and Malawi (af 8%,
T6%r~32%~and~58% respectively),
~ ———————
Importantly, however, improved tobacco control is not going to result in a sudden
collapse. Rather, the number of people using tobacco products is expected to
increase by over 500 million during the next quarter of a century. Tobacco control
efforts do not focus on reducing supply, and any decline in overall consumption that
could undermine employment in tobacco farming will occur over several generations.
Sources:
World Bank (1999) Curbing the Epidemic: Governments and the Economics of Tobacco
Control http://www1.worldbank, org/tobacco/reports.htm
Campaign for Tobacco Free Kids (2001) 'Golden Leaf, Barren Harvest' The Costs of Tobacco
Farming' http://tobaccofrekids.org/campaign/glob3l/FCTCreport1.pdf
Globalisation, Trade and the Tobacco Epidemic
Globally, the tobacco industry is increasingly dominated by a handful of major
companies. 75 percent of the world cigarette market is now controlled by just four
companies:' PhilipTviorr!s7”British American Tobacco (BAT), Japan Tobacco and the
China National Tobacco Corooratiori"Recent years have also seen the number"of
major companies~~involved in the purchasing, processing and shipment of raw
tobacco iaii ran eight io three. Trie period from 1934-97 witnessed a 12.5%
increase in .unmanufactured tobacco exports globally, following a decade' of
negligible growth. Cigarette exports were, relatively stable between 1975 and 1985,
began to steadily rise thereafter, and.grew.by.42% between 1993-96.
Both the consolidation and expansion of the tobacco industry hayebeen driven by
trade liberalization. The opening of cigarette markets in Asia has been particularly
■significant, as^shown by the impact of the so-called Section 301 agreements in
Japan, South Korea, Taiwan and Thailand. Access io these markets was gained
following threatened trade sanctions by the'US and, in the Thai case, adiudicatioryby
GATT. jt has been estimated that ‘he opening of ’hose markets increased per capita
cigarette consumption by an average of 10% by 1991.
.
“
It is particularly important to note the inequitable impacts of trade liberalisation on
tobacco consumption. Trade liberalisation has led to increased consumption of
tobacco overall but, while it has no substantive effect on higher-income countries, it
has had a large and significant impact on smoking in low-income countries and a
significant, if smaller, impact on middle-income countries.
Sources:
Taylor A et al (2000) ‘The impact of trade liberalization on tobacco consumption' in Jha P and
Chaloupka F
eds,
Tobacco Control
in
Developing
Countries,
available at:
http://www1.worldbank.org/tobacco/tcdc/343T0364.PDF
Hammond R (1998) 'Consolidation in the tobacco industry', Tobacco Control, 7: 426-428
(Winter), http://tc.bmiiournals.eom/cgi/context/full/7/4/426?
Transnational tobacco companies and development
The tobacco industry has undoubtedly contributed to the widespread failure to
perceive tobacco as a significant development issue, particuiariy in seeking to
undermine the credibility of WHO’s work to promote tobacco control. An examination
by 3 WHO Committes of Exports of industry documents msdo svsiisbls vis liticjstion
revealed the scale of efforts to portray such activities as a ‘First World’ agenda
carried out at the expense of developing countries. Documents have identified the
explicit use of the international Tobacco Growers Association as a front group for
industry lobbying, a clear concern to stop developing” countries becoming committed
to tobacco control, to restrict WHO’s funding and divide it from other UN agencies,
and the creation of an international consortium to mobilize officials from developing
countries to advance pro-tobacco positions.
Underlying such tactics has been a broad strategy of attempting to present the
concerns of small tobacco farmers in developing countries as fundamentally aligned
with ihose of the enormous transnational tobacco companies based in the United
States, the UK and Japan. The extent of divergence in interests is becoming
apparent, with increasing evidence of the poor economic returns, environmental
damage and health impacts associated with tobacco production:
»
*
*
•
In Brazil, a report by Christian Aid highlighted the role of BAT’s local
subsidiary Sousa Cruz in controlling the livelihoods of small-scale contract
farmers and raised serious concerns about the health impacts of pesticides
sold by the company.
In Uzbekistan, where BAT has made a substantia! investment, the British
Helsinki Human Rights Group identified exploitation of local farmers
amounting to de facto slave labour.
In Kenya, there is rising concern about the substantia! death toll from
pesticide use and the rapid rate of deforestation attributable to tobacco.
Cigarette companies are using progressively less tobacco per cigarette,
adopting techniques such as using expanded or reconstituted tobacco,
increasing profitability while reducing demand for raw tobacco.
Sources:
WHO Committee of Experts (2000) 'Tobacco Company Strategies to Undermine Tobacco
Control Activities at the World Health Organization’
http://fiiestore.vrho.int/~who/home/tobacco/Lobacco. pdf
Chnsrian Aio/DtSER (zuuz) i-iooKeo on Tobacco report on BAT subsidiary Sousa Cruz
http://vAvw._christian-aid. org. uWindepth/0201_bat'index_htrn
British Helsinki Human’Rights' Group (2002) Uzbekistan 2002: British American Tobacco
http;/Mww. bhhrg.org
Campaign for Tobacco Free Kids (2001) Factsheets: 'Tobacco and the Environment’,
'Tobacco industry Manipulation of Agricultural issues’ and 'Lowering Leaf Content, Boosting
r rofits’ http:i7tobaccofreeriids.org/campaign/global/
Towards the Framework Convention on Tobacco Control
The process of negotiating the FCTC was established by a unanimous resolution of
the World Health Assembly in 1999, initiating a two-step process of Workino Groups
to establish technical foundations followed by an intergovernmental Negotiating Body
(iNB). Semi-annual negotiating sessions of the INB have been held in Geneva since
November 2000. with the fifth round set for October 2002. The FCTC is expected to
take the form of a broad convention outlining iegai parameters, structures and
general obligations for all signatories, in combination with a number of protocols
detailing more specific commitments to which states can choose to accede on a
case-by-case basis. The objective is for a negotiated convention to be ready for
presentation to the WHA in May 2003.
The FCTC process has been characterised by an attempt io secure broad
participation both by member states and by civil society. One notable development
has been the negotiation of coordinated positions among regional groupings prior to
the INR meetings. The Johannesburg Declaration on the FCTC, for example, was
adopted by the 21 countries of WHO’s African Region in March 2001. This common
front was widely perceived as having added weight to their contributions to the first
INB session, emphasising a commitment to progressive control measures in
combination with calls for assistance in agricultural diversification.
The FCTC process has aimed to encourage the participation of actors traditionally
excluded from the state-centric politics of UN governance. Public Hearings held in
October 2000 provided an opportunity for interested groups to register their views
prior to the start of inter-governmental negotiations. Over 500 written submissions
were received, while 144 organisations provided testimony during the 2 day hearings,
encompassing TTCs, state tobacco companies and producer organisations as weii
as diverse public health agencies, womens' groups and academic institutions.
The role of NGOs in the process has centred on the development and activities of the
Framework Convention Alliance. This grouping of over 160 increasingly diverse
NGOs was created to improve communication between those groups already
engaged in the FCTC process and to address the need for a systematic outreach to
smaller NGOs in developing countries. It has developed a valuable series of briefing
papers and identified key issues in support of developing a strong Framework
Convention.
Sources'
WHO (2002) 'Framework Convention on Tobacco Control: An Introduction’ with links to all
documentation and draft Chair's text http://tobacco.who.int/en/fctc/index.html
Bates C (2001) Developing countries take the lead on WHO convention, Tobacco Control, 10
(3): 209 http://vAvw.ash.orq.uk/html/international/html/inb2review.html
Framework Convention Alliance (2002) Briefings on Trade, Advertising, Smuggling and
Packaging and Labelling, together with a list of 10 key issues for global tobacco control and
the FCTC. available at www.fctc.orq
and corporate res onsibility
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Tobacco industry and corporate responsibility...
An inherent contradiction
World Health Organization
Many businesses from a wide range of sectors
conduct projects and programmes that aim to
Increasingly consumers, employees and man
reduce social inequity—by creating or improving
agers expect companies, particularly large
health care or educational facilities, providing
multinationals, to go beyond their traditional
vocational and management training, enhancing
role of creating, producing, packaging and
the quality of leisure and cultural activities.
selling—for a profit. In the public's view, job
Specific sectors are recognizing their responsi
creation and tax paying no longer suffice as
bilities and orient their CSR efforts to areas
private sector’s sole contribution to society.
especially relevant to their business. For ex
The boom of socially responsible investment
ample, food and beverage multinationals have
(SRI) products attest to this trend as investors
specific responsibilities in terms of product
express their concerns and make their social
marketing, consumers' changing eating habits,
and ethical stands known to the companies they
and conditions under which agricultural com
invest in and patronize. Socially responsible
modities are produced and traded. Transport
investors include individuals, corporations,
companies must contend with the environmental
universities, hospitals, foundations, and insur
impact of their business as well as traffic con
ance companies, pension funds, non-profit
gestion, energy waste, safety and security and
organizations, churches and synagogues. Funds
access to trade and enterprise opportunities.
may exclude certain products or practices such
as alcohol, weapons, pollution, animal test
ing or gambling; or they may seek to actively
identify positive aspects of companies that
adopt sound policies for environmental protec
tion, fair employment practices, community
and labor relations, for example. The common
denominator among the vast majority of ethical
or socially responsible investment policies and
products is the exclusion of tobacco companies
in their portfolios.1
Well-planned and well-managed philanthropy,
from sponsoring music, film and art festivals
to creating education programs for the disad
vantaged to protecting the environment, in the
name of corporate social responsibility (CSR)
has become a necessary element in virtually
every large corporation's business plan.
people easily circumvent these restrictions. Tacti
cally, these programmes serve the purpose of
creating the appearance that tobacco companies
are proposing solutions for the problems they
create. In reality, they detract attention from
proven, effective solutions—including price and
tax increases—to which young people are par
ticularly sensitive. Tobacco companies vigorously
oppose price and tax increases.
One area where nearly every major tobacco
company invests publicity efforts to improve
their corporate image is the development and
promotion of ineffective youth smoking preven
tion programmes. While these programmes are
created to appear to dissuade or prevent young
people from smoking, in fact the effect is often
the contrary. By portraying smoking as an adult
activity, these programmes increase the appeal
of cigarettes for adolescents. Proposed measures
that involve proof of age for purchase at the
counter are ultimately ineffective, as young
consumers, communities and the environment?
How can they claim to promote transparent
business practices, calling for open dialogue
among stakeholders when public inquiries and
legal testimonies in courts in countries around the
That documentary evidence pointed to system
atic and global efforts by the tobacco industry to
undermine tobacco control policy and research
developments.
world attest to tobacco companies' actions and
strategies to conceal the deadly nature of their
products, derail work to protect public health and
destroy incriminating evidence?
As in many respects, tobacco companies are sim
ply not like other companies. Tobacco products
are legal. But they are also lethal. Tobacco is the
only consumer product available that kills one-
half of its regular users. As such, in terms of CSR
activities, they cannot simply figure among the
ranks .of other consumer goods companies.
Despite the tobacco industry's thinly-veiled at
tempts to gain corporate respectability and com
panies' claims to have changed their practices,
they continue to use a vast of array unethical and
irresponsible strategies to promote its products,
expand markets and increase profits.
In the summer of 1999, an internal report to Dr
Gro Harlem Brundtland, Director-General of the
The Committee found that the tobacco industry
regarded the World Health Organization as one
of their leading enemies, and that the industry
had a planned strategy to «contain, neutralize,
reorient® WHO's tobacco control initiatives.
Tobacco industry documents show that they
carried out their plan by staging events to divert
that there was evidence in formerly confiden
attention from the public health issues raised by
tobacco use; attempting to reduce budgets for
the scientific and policy activities carried out by
tial tobacco company documents that tobacco
companies had made "efforts to prevent imple
WHO; pitting other UN agencies against WHO;
seeking to convince developing countries that
mentation of healthy public policy and efforts
WHO's tobacco control program was a «First
World# agenda carried out at the expense of
World Health Organization (WHO), suggested
to reduce funding of tobacco control within UN
organizations.” Later that year, she announced
the developing world; distorting the results of
important scientific studies on tobacco; and
that understanding the role of the tobacco in
dustry in causing and perpetuating an epidemic
that kills some 5 million people annually, would
These findings were the catalyst for efforts in
be a key to developing tobacco control policy in
WHO Regional Offices and individual country
general, and specifically a Framework Convention
offices to carry out their own investigations
on Tobacco Control that can stop, if not reverse
on tobacco industry activities aimed specifi
the tide and appointed a Committee of Experts to
research tobacco company documents which had
cally at sabotaging public health work. They
also spurred the implementation of a system
become publicly available as a result of lawsuits
atic screening process of WHO employees and
against the tobacco industry in the United States.
consultants to determine whether or not there
discrediting WHO as an institution?17
health officials in the Middle East, including
the Arab Gulf Health Ministers' Conference,
the World Health Organization and national
tobacco control coalitions. The tobacco industry
documents show that the companies enlisted
prominent political figures in the Middle East to
provide information and lobby for them, includ
ing an Egyptian member of Parliament, a former
Assistant Secretary General of the Arab League
and even, at one point, the Secretary General
of the GCC Health Ministers who was also the
Kuwaiti Under-Secretary for Health.1"
A recent report released by the Pan American
Health Organization echoes these same findings.
Transnational tobacco companies planned and
executed comprehensive campaigns of decep
tion over the last decade in Latin America and
Ke EU-Gesundheitemiraster: RAUCHEN GEFAHRDET DIE GESUNDHEIT
TOBACCO SERIOUSLY DAMAGES HEALTH
exists any conflict of interests with the aims of
the organization. All employees and consultants
are required to declare any interests that may in
fluence their objectivity —including whether they
are or have been involved in the production,
manufacture, distribution or sale of tobacco or
any tobacco products or directly represented the
interests of any such entity.
WHO Headquarters was not the only target. In
WHO's Eastern Mediterranean Region, tobacco
industry activities to weaken public health policy
in the Middle East began in the late 1970s,
when multinational tobacco companies met
regularly to discuss pending regulations and to
plot joint strategy. The Middle East Working
Group (MEWG), which later became the Mid
dle East Tobacco Association (META), comprised
the Caribbean regarding the harmful effects of
second-hand smoke and the nature of tobacco
company marketing activities. By hiring scientists
throughout Latin America and the Caribbean to
misrepresent the science linking second-hand
smoke to serious diseases and by designing
«youth smoking prevention» campaigns and
programs primarily as public relations exercises
aimed at deterring meaningful regulation of
tobacco marketing, tobacco companies sought
to delay or avoid tobacco marketing restrictions
and restrictions on smoking. Industry documents
also show that tobacco companies had detailed
knowledge of smuggling networks and mar
kets and actively sought to increase their share
of the illegal market by structuring marketing
campaigns and distribution routes around them
and that they enjoyed access to key govern
ment officials and succeeded in weakening or
killing tobacco control legislation in a number of
countries.1"1
all of the major tobacco multinational operating
in the Middle East, and was formed in order to
"promote and defend" the interests of these
companies in the region-carefully monitoring
8
and seeking to undermine the work of public
All these investigations consistently point to the
discrepancy between the measures that tobacco
companies internally recognize to be the great
est threats to their sales, and those that they
champion in public. For example, companies
publicly deny the connection between smoking
dimensions, faster than expected—reaffirming
the urgent need for action on a global scale.
prevalence and tobacco advertising, but inter
nally acknowledge that advertising bans are a
Tobacco companies are asking for open dia
threat to tobacco sales, and a key priority for
logue. They assert that their efforts to under
thwarting regulatory action. Companies con
stantly insist that they do not market to young
mine global tobacco control policy are a product
of a past era and that now they seek to engage
people while internal documents clearly demon
in constructive dialogue with the WHO and
strate otherwise.
national governments. They appeal to "reticent
stakeholders" to judge them "not by the swirl
In a recent report examining recent statements
submitted by British American Tobacco, Philip
of words around [their] industry but by [their]
actions. "XIX
Morris, RJ. Reynolds, Brown & Williamson and
Lorillard in the civil suit brought by the US De
partment of Justice,’"" US Representative Henry
A. Waxman found that most companies contin
ue to question whether smoking causes disease
and do not admit that nicotine is addictive. All
companies denied that that second-hand smoke
causes disease in non-smokers—despite un
equivocal evidence from the US Surgeon Gen
eral and the World Health Organization (WHO).
Tobacco companies also denied that they control
nicotine levels in cigarettes, that they market to
children and that they destroyed documents to
avoid their use in lawsuits—despite their own
testimonies in courts of law to the contrary. The
tobacco industry systematically creates contro
versy about risk assessment and about the sci
entific evidence of the health hazards of tobacco
use and second-hand smoke.1"1"
Similar enquiries and investigations have been
done out or are in the process of being carried
Today WHO has defiantly acted for the benefit
of the public health, and the WHO Framework
Convention on Tobacco Control (WHO FCTC) is
a reality and is very close to entering into force.
There is only one way to reduce the death and
suffering caused by the tobacco epidemic, and
out in other countries, including Switzerland,
that is the implementation of effective tobacco
Finland, Israel, Syria, Iran, among others. The
control policies. The WHO FCTC sets the
tactics are expertly adapted to specific country
situations and executed solely in the interest of
standards for regulating tobacco in its different
tobacco company profits.
aspects. The Treaty sets the ground for tobacco
control with provisions on advertising and spon
sorship, tax and price increases, labelling, illicit
At the same time, the toll of tobacco-related
trade and second-hand smoke.
disease and death around the world is spiralling
to 4.9 million lives lost every year. This figure ex
Nearly 5 million deaths a year, 1.3 billion smok
ceeds all previous projections, reaching greater
ers in the world today and high rates of youth
smoking are in part the result of the failure of
governments to implement tobacco control
policies that are known to work. Governments'
inaction and public indifference, where it exists,
are largely a result of decades of tobacco com
panies’ untoward influence.
The business community, consumer groups and
the general public should join policymakers and
the public health community in being more
vigilant and critical about tobacco companies'
CSR activities. Because, despite the industry's
claims, there is little evidence of any fundamen
tal change in their objectives or their practices.
' Yach, Derek, Sissel Brinchmann, and Suzanne Bellet. "Healthy
Investments and investing in health » Journal of Business
Ethics, Dordrecht Oct 2001, Vol. 33, Issue 3, pp 191-198.
" Addiction to Tobacco: Defining Links between the Tobacco
Industry and Canadian Universities and Medical Schools. BMJ
2002;325:734 http://bmj.eom/cgi/content/full/325/7367/734/a
Ghanaian Chronicle (Accra), December 3, 2002,
http://allafrica.com/stories/200212040313.html
lv College tells tobacco company to take its money
elsewhere, BMJ 2002:325:794
http://bmj.eom/cgi/content/full/325/7368/794/c
" http://www.eastandard.net/eahome/story11112002013.htm
w The Malawi Standard. December 24, 2002
http://allafrica.com/stories/200212250001.html
■ http://www.souzacruz.com.br/frame_left.
asp?n=i mprensa&sn=_artigo36
Hooked on Tobacco, Christian Aid.
http://www.christian-aid.org.uk/lndepth/0201bat/bat1 .htm
“ The Daily Star (Bangladesh), 30 October 2002, http://www.
dailystarnews.com/200210/30/n2103006 . htm#BODY4
* The Daily Star (Bangladesh), 23 October 2002 http://www.
dallystarnews.eom/200210/23/n2102305.htm#BODY13
http://lndependent-bangladesh.com/news/dec/23/
23122002bs.htm#A6
m Tobacco Industry Strategies to Undermine Tobacco Control
Activities at the World Health Organization, August 2000.
http://www5.who.int/tobacco/page.cfm?tld=174
n Voice of Truth.
http://www5.who.int/tobacco/repository/tpc48/VoT1-en.pdf
ni Profits Over People, Tobacco Industry Activities to Market
Cigarettes and Undermine Public Health in Latin America and
the Caribbean
http://www5.who.lnt/tobacco/page.cfm?tld=178
"v" http://www.reform.house.gov/min/pdfs/pdf_inves/
pdf_tobacco_doj_rep.pdf. Tobacco Industry Statements in the
Department of Justice Lawsuit, Rep. Henry A. Waxman Minor
ity Staff Report, Special Investigations Division, Committee on
Government Reform, U.S. House of Representatives, Septem
ber 17, 2002.
xvl" Yach D. and 5. Bialous, Junking Science to Promote Tobacco,
American Journal of Public Health, November 2001, Vol 91, No.
11, 1745-1748.
tlx http://www.bat.com/oneweb/sites/uk_ 3mnfen.nsf/vwPagesWebLive/ C83FBD4911F1636280256BF4000331B8
?opendocument=, British American Tobacco Social Report
2001/2002
” The Daily News (Harare), 30 October 2002
http://allafrica.com/storles/200210300294.html
” Philip Morris Attempts to Distance itself From Marlboro
Man's Clobal rampage With name change to altria Corporate
Accountability Activists Say Massive PR Make-Over Won't
Fend Off Tough Regulation in Global Tobacco Treaty,
http://www.infact.org/012703pm.html
© World Health Organization, 2004
This document is not a formal publication of the World Health
Organization and all rights are reserved by the Organization.
The document may, however, be freely reviewed, abstracted,
reproduced and translated, in part or in whole, but not for sale
or for use in conjunction with commercial purposes. The views
expressed In this document are solely the responsibility of the
authors.
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