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U.S. Tobacco Cooperative pays member growers $5.6 million in cash dividend

| July 9, 2015

The board of directors of the U.S. Tobacco Cooperative (USTC)—a leading producer and processor of high-quality U.S. flue-cured tobacco headquartered in Raleigh, North Carolina, USA—has declared a patronage dividend of $0.17 per pound of tobacco sold to the Cooperative during fiscal year 2015.

The total dividend for fiscal year 2015 was $10.7 million, a 9.1 percent increase over the previous year’s dividend. The Cooperative has authorized a cash payment of $0.09 cents per pound to be paid immediately and to allocate $0.08 cents per pound to each grower’s account in certificates of interest.

The board of directors also authorized the Cooperative to pass its $7.3 million Section 199 Domestic Production Activities Deduction to its growers—an average of $0.116 per pound. Although the Cooperative is entitled to take this tax deduction on its federal income taxes, the company will instead pass the deduction along to its growers. The tax deduction is intended to offset the taxes owed on the cash dividend for growers who are able to take advantage of it.

“The past year has brought many changes in our business and many challenges,” chairman Jimmy Hill and CEO Stuart Thompson stated in a press release. “Your Cooperative is undergoing significant changes to position USTC as the premier U.S. leaf supplier. Our board and management team are deeply committed to looking for ways to maximize patronage dividends. We are the only U.S. leaf supplier that reinvests its profits in its grower base. Over the last five years, the Cooperative has declared dividends totaling $37.9 million. You produce the highest quality, most compliant, most sustainable tobacco crop in the world. We want to encourage you in your commitment to excellence. Tobacco manufacturers are demanding more and more from you. We want to do everything we can to support and reward you for your efforts.”

China plans to grow tobacco in Crimea

| June 5, 2015

The Crimean government has announced that a visiting delegation of Chinese businessmen intend to invest in tobacco cultivation within the territory, which was annexed by Russia in March 2014. Chinese equipment and technology would be supplied to the semiautonomous territory, which has been fighting to secure foreign investment amid trade sanctions imposed by Ukraine, the United States and the European Union following Russia’s annexation of the region.

“Tobacco is in huge demand in China, and Crimea has a suitable climate and soil for tobacco cultivation,” the delegation’s leader, Chen Zhijun, was quoted by news agency TASS as saying at a meeting with Crimean leader Sergei Aksyonov.

Aksyonov and Chen on June 4 signed a protocol on investment cooperation, according to a press release posted on the Crimean government’s website.

Minnesota company uses tobacco to fight cancer

| May 14, 2015

A Minnesota-based startup company called MNPHARM plans to use tobacco plants to produce personalized treatments for patients battling cancer.  Founded by Jeff Reinert and Dave Roeser, MNPHARM uses a process that combines technological advances in controlled indoor atmosphere and biochemistry to transform a plant that is frequently associated with causing cancer into one with the potential to produce lifesaving cancer antibodies.

Using proprietary equipment, MNPHARM grows highly transgenic tobacco plants in a controlled indoor environment. Medical professionals then use a biopsy taken from a cancer patient to introduce some of the patient’s DNA to a bacterium, which is injected into the growing plant. Once the plant has been infiltrated with a reagent containing a specific genetic code, it becomes a “factory” that produces antibodies, vaccines and proteins. The antibodies the infiltrated tobacco plant produces make it possible for the plant to fight off the infection. The antibodies are then extracted from the purified tobacco plant and injected back into the patient, helping them to fight their cancer.

MNPHARM’s patented cylinder growing system, called “orbital gardens,” allow the company to produce antibodies and vaccines in tobacco plants in as few as six days—approximately 30 times faster than traditional cancer-fighting methods. Providing cancer patients with rapid access to treatments is part of the company’s goal to replace outdated traditional treatment methods for complex protein production with the faster, safer and less-expensive methods involving transgenic plants.

The company—which is currently in discussions with Mayo Clinic, the University of Minnesota and the University of California to begin research—has also initiated fundraising efforts in order to ready the business for production of personalized cancer treatments. A funding site on Indiegogo has raised more than $10,000 of the $42,000 needed to complete testing and begin production.

Egypt to construct tobacco-processing factories 

| April 23, 2015

The Egyptian government plans to construct two tobacco-processing factories in Malawi to support the country’s tobacco industry, according to the Malawi News Agency.

The Egyptian Ambassador to Malawi, Maher El-Adawy, said the construction of these factories will help spur economic growth because the crop is regarded as the country’s main forex earner.

“We have always been in a good relationship with Malawi, and we are happy to support it, especially in the tobacco industry because we know that tobacco is the main forex earner, and by doing so we will help the country’s economy to grow,” El-Adawy said.

El-Adawy also indicated that construction of the two factories will not only spark economic growth, but also aid in job creation.

“We believe the construction of the two factories will also create employment for some quarters of the Malawian society thereby helping them to improve their lives,” he said.

According to the World Bank, 90 percent of Malawi’s tobacco is exported to other countries for processing due to the country’s currently limited tobacco-processing capabilities.

“Much of our tobacco is exported for processing because we do not have the capacity to do so,” said Malawi’s minister of information, tourism and culture, Kondwani Nankhumwa. “So by having these two tobacco processing factories, Malawi will start processing the tobacco on its own and sell the products on our own for a profit.”

One factory will be built in Lilongwe; the location for the second factory is still being decided by the government. Construction of both factories is expected to begin soon, according to El-Adawy.

Malawi is one of the top 10 producers of tobacco in the world, with the crop accounting for the majority of the country’s agricultural export earnings.

Closures expected in Indonesian tobacco industry

| April 23, 2015

As much as 15 percent of the workforce at tobacco-related companies in East Java, Indonesia—or more than 23,000 workers—are at risk of being laid off this year, according to a story in the The Jakarta Post.

Based on 2014 data, the number of people working in East Java’s tobacco and tobacco products industrial (IHT) sector was 159,117, according to East Java Chamber of Commerce and Industry (Kadin) vice chairman Dedi Suhajadi. The sector’s workforce also decreased by 21,300 workers in 2014 from 180,466 workers in 2013.

“Many IHT entrepreneurs are affected,” Dedi said. “This is attributable to the annual increase in tobacco tax, government regulations and groups that interfere with the concentration of IHT entrepreneurs in meeting tax obligations.”

The government raised the IHT tax target to IDR141.7 trillion in 2015 from IDR111.21 trillion in 2014. Over the past five years, the average increase in IHT tax was 16.09 percent.

Data from the East Java Manpower and Transmigration Office indicated that 790 IHT companies were still operating in 2014, however, only about 200 were producing on a regular basis. In 2011, there were about 1,100 cigarette factories, according to Dedi.

“Those that have gone out of business are small- and medium-scale factories. Only the large-scale companies are surviving,” said Dedi.

Between 2009 and 2013, approximately 4,900 cigarette factories closed their doors.

Strict laws to limit tobacco ads in China

| April 23, 2015

Lawmakers in China may introduce tough new restrictions on tobacco advertisements, according to a story in the China Daily. A draft revision to the country’s 20-year-old Advertisements Law will be voted upon tomorrow; the revision was discussed Tuesday at the bimonthly session of the Standing Committee of the National People’s Congress and is likely to be ratified.

The draft indicates that no tobacco advertisements should be displayed in public places or published in mass media outlets. While many lawmakers advocate a complete ban on tobacco advertisements in China and maintain that public health should be the country’s top priority, others recognize that the production of tobacco provides a significant source of income for farmers who reside in areas that are not suitable for other types of agriculture.

China signed the World Health Organization’s Framework Convention on Tobacco Control in 2003.