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Universal says new PMI leaf supply deal will help address US farm labor issues

| November 6, 2014

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.”

Modest price rise for Japan’s growers

| November 6, 2014

Japan’s Leaf Tobacco Deliberative Council today announced the area on which domestic leaf would be grown next year and the prices that would be paid to farmers.

In a note posted on its website, Japan Tobacco Inc. said the council had been in general agreement with a proposal put forward by JT earlier in the day and had determined that the domestic tobacco cultivation area should be set at 8,662 ha, down by 2.7 percent on that of 2014, (8,901 ha).

Flue-cured will be grown on 5,679 ha in 2015 (5,761 ha in 2014), Burley will be grown on 2,975 ha (3,116 ha) and local leaf varieties will be grown on eight ha (24 ha).

Meanwhile, grower prices will be set at ¥1,920.1 per kg, an increase of 0.71 percent on those of this year.

E-cigarette outlets plummet in Spain

| November 6, 2014

The number of shops selling electronic cigarettes in Spain has fallen by 90 percent during the past 12 months, according to a story in The Local quoting the country’s electronic cigarette industry association, ANCE.

A year ago there were about 3,000 shops selling electronic cigarettes in Spain but now there are about 300.

“There has been a very intense attack by pharmaceutical companies which has generated bad publicity in the media,” ANCE vice president, Alejandro Rodríguez, was said to have told Spain’s El Confidencial newspaper.

The Local said that the ANCE comments had followed a leak of e-mails from GlaxoSmithKline showing that the company had been lobbying for tougher regulation of electronic cigarettes.

According to the leaked emails, the company wants the products to be regulated as medicines; so that they would have to compete with products such as nicotine gum.

Spain does not have such regulations but it has banned the use of electronic cigarettes in public places such as hospitals and schools.

Rodríguez conceded that part of the problem was down to the fact that too many shops had opened in Spain in too short a period. Many of the staff had been inexperienced and didn’t know how to advise their clients, he said.

UAE to outlaw tobacco smoking in public

| November 6, 2014

A nationwide ban on tobacco smoking in enclosed public places in the United Arab Emirates (UAE) is due to come into force from early next year, according to a story in The National quoting a Ministry of Health announcement.

The ban will include public places such as universities, hospitals, public transport, theatres, cinemas, playgrounds and pitches.

At the same time, the ministry says it is stepping up efforts to encourage people to quit smoking. “The ministry decided to open eight new clinics for those who wish to quit smoking with primary healthcare centres in Dubai and in Fujairah,” said Dr. Waddad Al Maidoor, head of the ministry’s National Anti-Tobacco Program.

“Nine other existing clinics will play a greater role in that field as they will be refurbished and equipped with the necessary medications.”

The UAE Vision 2021 plan has a target of reducing smoking levels to 16 percent nationally, from the current 26 percent.

PMI announces new U.S. tobacco purchasing model

| November 5, 2014

Philip Morris International is adopting a new leaf buying model in the United States. The company will transition from directly purchasing tobacco through contracts with U.S. growers to purchasing through two suppliers, Alliance One International Inc. (AOI) and Universal Corp. This new purchasing model will take effect on April 1, 2015.

“Moving to a new system for leaf purchasing in the U.S. will help us achieve important supply chain efficiencies while remaining a major purchaser of U.S. grown tobacco,” said Nicolas Denis, vice-president leaf, PMI.

“While we are changing our approach to buying tobacco in the U.S., PMI’s commitment to improving farm labor conditions on the farms from which we source tobacco has not changed. We require our suppliers to adhere to our practices, principles and standards, including our leading Agricultural Labor Practices (ALP) program. Through supplying leaf to PMI in many markets around the world, AOI and Universal are key partners in our efforts to implement our ALP program on the farms where we source tobacco. With these new U.S. supply agreements even more U.S. tobacco growers will come under PMI’s ALP standards,” said Denis.

As a result of this transition, approximately 35 PMI employees based out of Richmond, Virginia, will be impacted.

“It is unfortunate that this decision will impact some of our employees and it is our priority to provide them with the best possible support and assistance during this transition,” said Denis.

 

 

 

AOI to supply PMI

| November 5, 2014

Alliance One International has been selected to supply U.S. tobacco to Philip Morris International (PMI), as PMI adopts a new leaf procurement model in the United States and Canada.

On Nov. 5, 2014, PMI announced its decision to transition from direct contracting and purchasing of tobacco from U.S. growers to sourcing its U.S. tobacco requirements from Alliance One International  and another global leaf merchant, effective for the 2015 crop.

PMI’s supply chain modification will position AOI to expand its North American footprint to include additional tobacco growers, and further expand the availability of North American tobacco to the wider, global market.

AOI and its predecessor companies have supplied tobacco to PMI for many decades. The two companies work closely together to advance continuous positive change in tobacco-growing communities on a global basis.

This work includes the promotion of Good Agricultural Practices that provide growers knowledge and skills to produce higher quality cash and food crops with improved yields, while striving to mitigate environmental and social impacts. Alliance One says it is committed to action-oriented social responsibility and the best practices set forward in its Agricultural Labor Practices code.

“The U.S. tobacco market has undergone substantial changes over the past decade, and continues to evolve at a rapid pace,” said Pieter Sikkel, president and CEO of Alliance One International. “PMI remains committed to sourcing in the U.S. market, and this transition ensures that PMI will continue to purchase high quality U.S. leaf through an optimized and efficient supply chain, while Alliance One expands its U.S. grower base and full service business. “

“We remain proudly committed to our current, well-established U.S. grower partners and look forward to working with a new grower base as well as other service providers,” said Herbert Weatherford, AOI’s regional director for North and Central America. “The broader grower base better positions Alliance One to expand the availability of U.S. and Canadian tobacco to domestic and international markets.”

 

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