Universal says new PMI leaf supply deal will help address US farm labor issues
The Universal Corp subsidiary, Universal Leaf North America (ULNA), is set to increase its direct purchases of US flue-cured and Burley tobaccos as part of a new leaf supply agreement with Philip Morris International.
In making the announcement, Universal Corp’s chairman, president and CEO, George C. Freeman III, said PMI’s decision to adopt a new leaf buying model for its US operations (see PMI announces new U.S. tobacco purchasing model story, November 5) provided for a transition from a direct farmer contracting model to purchasing processed grades of tobaccos through two global leaf suppliers in the US. The transition was expected to provide important supply chain efficiencies and was said to be indicative of PMI’s and Universal’s strong commitment to grower communities, and of PMI’s intent to remain a major purchaser of US-grown leaf tobacco.
The change is due to be effective for the 2015 crop and will include the assignment of certain grower contracts and the use of receiving station operations.
“We are very excited about this opportunity to meet the evolving needs of one of our longstanding global business partners, while broadening our leaf purchasing and grower support activities in the United States,” said Freeman.
“As the global leader in the supply of leaf tobacco, we are well positioned to continue our support of Good Agricultural Practices, and are committed to the expansion of the Agricultural Labor Practices code (ALP) across our full US grower base. ALP is designed to further our corporate goals and the goals of our customers of progressively addressing and eliminating concerns found in agriculture with child and other labor issues, and achieving safe and fair working conditions on all farms from which we source tobacco.”
Meanwhile, Clayton G. Frazier, president of ULNA, said that the expansion of direct contracting by Universal would provide procurement synergies and economies of scale and would promote efficient leaf utilization of packed grades of US tobaccos supplied to PMI and ULNA’s other customers.
“In addition, we look forward to expanding our relationships and services to further strengthen our grower communities,” said Frazier.
“These positive developments, in conjunction with our recently announced entry into the sweet potato juicing and dehydration business, Carolina Innovative Food Ingredients, Inc., illustrate the continued strong commitment of Universal to tobacco growers in the United States. The production of sweet potatoes provides many tobacco farmers with an important and economically viable crop grown in rotation with tobacco.”