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Graphic warnings unveiled in Philippines

| November 10, 2014

The Philippines’ Department of Health (DOH) has published 12 templates for the graphic health warnings set to be included on tobacco packs, according to stories in the Daily Inquirer and the Sun-Star.

The 12 warnings are to be rotated so that each variant of every brand displays them all with approximately equal frequency during a period of 24 months.

They include images of or metaphors for people suffering from the effects of stroke, emphysema, mouth cancer, gangrene, impotence, throat cancer, neck cancer and premature births, and babies with low birth-weight.

With the release of the templates, tobacco manufacturers have 12 months to comply with the health-warning law.

On top of that, retailers will be given a further eight months to exhaust their stocks of tobacco products not bearing the new picture warnings.

US farm labor issues continue to dog tobacco interests around the world

| November 7, 2014

A report released on Wednesday by two members of the British Parliament asks tobacco companies to guarantee freedom of association for US farm laborers, according to a story by Vanessa McCray for The Blade newspaper.

The report, by Labour Party members Jim Sheridan and Ian Lavery, followed a July fact-finding trip (see July 25 story: Joint US and British delegation to check on conditions on US tobacco farms) to migrant camps and tobacco fields, which was led by the Toledo-based Farm Labor Organizing Committee.

The eight-page report, “A Smokescreen for Slavery: Human Rights Abuses in UK Supply Chains,” details the duo’s findings and observations during the multiday visit to North Carolina.

The trip included stops at several labor camps, where, the report said, working conditions were ‘overwhelmingly deficient’.

Many workers feared retaliation if they complained, the report stated.

The MPs focus largely on British American Tobacco, which has its headquarters in Britain.

Sheridan was quoted as saying that BAT, the largest shareholder of Reynolds American Inc., should lobby Reynolds, the major buyer of North Carolina tobacco, to commit to full freedom of association for farm workers.

McCray quoted BAT as saying in a written statement that it takes seriously allegations of poor working conditions but noted the company didn’t own tobacco farms, employ farm workers, or control Reynolds.

‘While it is not clear the issues identified take place within our supply chain, further investigation is needed,’ read the company’s statement.

Farm labor practices comprise a high-profile issue for the tobacco industry at the moment. In announcing earlier this week new leaf tobacco supply arrangements with Philip Morris International, both Universal and Alliance made mention of the Agricultural Labor Practices code.

Universal said that ALP was designed to further its corporate goals and the goals of its 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 Universal sourced tobacco.

The MP’s report is at:

The Blade’s report is at:

Universal impacted by leaf oversupply

| November 7, 2014

Universal Corp’s results continue to be impacted by an oversupply in leaf tobacco markets and the effects of softer demand from its customers.

“As is typical under these conditions, markets have developed slowly in some origins, with a later start to purchasing and processing, as well as delayed receipt of shipping instructions from customers,” said chairman, president and CEO, George C. Freeman, III, in announcing the company’s six months results to the end of September.

“While we usually ship a large portion of our volumes in the second half of our fiscal year, this year significantly more volume is being pushed into this period.”

But Freeman said that improvements that Universal had made in Africa, including the opening of its second processing line in Mozambique, would help to move shipments out prior to the current fiscal year end, barring any unexpected logistical challenges.

Universal expected modestly lower lamina volumes in fiscal year 2015 compared to those of the prior fiscal year due to soft customer demand, but the company believed it remained well-positioned in the industry with “our strong customer relationships, increasing customer satisfaction with our products and services, and our solid market share”.

“Revenues for the fiscal year are also expected to be down compared to the previous fiscal year primarily due to declining prices and the soft demand that is typical of an oversupply environment,” Freeman added.

“We are confident in our ability to adapt and manage through this period, as we have demonstrated in the past.”

Universal reported that net income for the first half of fiscal year 2015, which ended on September 30, was $15.7 million, or $0.35 per diluted share, compared with $83.8 million, or $2.95 per diluted share during the same period of last year. Last year’s results included a non-recurring gain in the first fiscal quarter of $81.6 million before tax ($53.1 million after tax, or $1.96 per diluted share), which resulted from the favorable outcome of litigation in Brazil related to excise tax credits. Results for the current fiscal year included an income tax benefit of $8.0 million (or $0.34 per diluted share) arising from a subsidiary’s payment of a portion of a fine following the unsuccessful appeal of a long-running court case. Excluding those items in both years, net income for the six months decreased by $23.0 million compared to that of the same period last year.

For the second fiscal quarter ended September 30, net income was $15.0 million, or $0.48 per diluted share, compared with net income for the prior year’s second quarter of $25.4 million, or $0.90 per diluted share.

Sporting chance of Tokyo smoking ban

| November 7, 2014

Some people within the Tokyo government are pushing for a tobacco smoking ban in line with those in force in some western nations, according to a PRESS TV story.

Such a ban was attempted in Yokohama but failed due to strong business opposition.

However, some people believe the time is now right and there are a number of factors that are working in their favor.

Smoking in Japan has been in long-term decline and now 63 percent of the Japanese population is said to favor a ban.

In addition, Japan is due to host the 2020 Olympic Games in Tokyo.

Some people point also at the Japanese government’s direct interest – or lack of it – in Japan Tobacco Inc. Its shareholding has been reduced gradually over the years, most recently to just over 50 percent in 2004 and to about 33 percent in March 2013.

But it is by no means certain that such a reduced shareholding would be linked in inverse proportion to the imposition of anti-tobacco policies.

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.

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