British American Tobacco: Third World Production

Accessing The Third World and Fair Treatment Within

Introduction

Transnational corporations have a duty to shareholders to occupy as much territory across the world and to maintain as large a market share as possible. Companies desire to gain access to far reaching corners of the globe and to increase their reach and influence.

Multinational cigarette empires are no different to this blueprint. However, in the era of mass communication, the desire for fair trade and the concession that smoking is harmful to ones health, this emotive issue will always attract attention and publicity in aspects of its business, especially in regards to the third world. The opportunities for cigarette companies to enter and to manipulate in the third world are met with increasing opposition.

Charities and individuals both know that indigenous people fight a moribund battle against such a force. The industry’s influence is enough to persuade uneducated locals to start smoking; leading to addiction. And the financial incentives to grow tobacco seem transparent in their benefits when this is not always the case.

Section 1; Smoking Facts

If one examines the levels and predicted levels of smoking comparing the developed and developing world we see an obvious contrast.

Table A.[1] Global and regional estimates of cigarette consumption,

N.B. India is included in the Southeast Asia region. China is included in the Western Pacific region.[2]

Table B. [3]Estimated number of Deaths caused every year by Tobacco

The numbers of people in the developed world dying of smoking will continue to be large in number but in the America’s and Europe the figure is actually in decline. Compare this to ascending levels of those in the developing world taking up the habit and dying of the associated diseases. Deaths in the developing world are set to shoot to seven million in the foreseeable future.

The 3 million annual deaths of the late nineties translated to six deaths every minute from smoking related disease. The WHO estimates that in 2025 the developing world will reach a mortality figure of 7 million, this translates into one death every 3 seconds. Of the children and teenagers alive in 1994, it is projected that 250 million will die from tobacco use. [4]

To put it crudely, there seems to be something of a halt in smoking in the developed world. These levels, however, are being buoyed up by sharply increasing numbers of smokers in the developing world.

‘During the last decade, per capita consumption has declined by an average of 1.4% per year in developed countries, but has risen by 1.7% annually in developing countries. [5]

Section 2; Entry to the Developing World

There is nothing uncommon in large firms wanting to expand their business into the wider world. The difference between those firms and cigarette manufacturer’s is that the health risks and social implications of smoking are widely accepted and generally deemed undesirable. Why then would a country let such an institution enter its boundaries?

Dr Judith Mackay, Director of the Asian Consultancy on Tobacco Control outlines a four point blueprint of access.

The honeymoon. The initial honeymoon period when the foreign companies enter a country is one of offers of help with technology in farming and manufacturing, free trips overseas and the co-production of glossy magazines. This is the stage of wooing the country and gaining access.

The marriage. Next come the joint ventures, a foot in the door. At this stage advertising and promotion often begin to creep in, usually of a sophistication and funding level not used by the national monopoly.

The marriage turns sour. The relationship then becomes less harmonious, with accusations from the transnational that a monopoly prevents free market access, even with the trade threats . . . . Because of the political strength foreign companies can muster, the national monopoly usually must accede to their demands.

The divorce. Finally the national monopolies weaken or may be disbanded. The foreign tobacco companies come away with what is for them the optimum marriage settlement — domination. [6]

More devious ways of getting ones brand and image into a country are numerous. The best example is when cigarette companies illegally, under a different guise, enter the market with contraband cigarettes and let the populous gain a taste and a habit for them. Once they have been established the government will want to capitalise to gain tax revenue from the illicit goods and eventually let them enter the country legally.

There are many examples listed of big tobacco firms such as BAT attaining access to developing markets through questionable means, so why then do countries in the third world continue to let them trade?

The percentage of government revenues from tobacco taxes is generally much higher in less-developing countries than industrialised nations, exceeding 10% in many countries; reportedly as high as 18% in Sri Lanka and 26% in Zaire. Why would governments of today, seeking investment and international approval, accept a drastic revenue cut for what will be a problem tomorrow? The big tobacco firms know this and can exploit this. [7]

They can offer financial incentives to poor farmers and give them an industry letting them become self-sufficient. They in turn generate money for the local economy, the tax economy and while more locals become used to the product and start smoking, BAT makes more money and can reinvest in the process all over again.

Section 3; Youth Smoking and Advertising

BAT claim a desire for youngsters to wait until they can make an informed decision before experiencing smoking. They have become active members in setting up an extensive Youth Smoking Prevention campaign.

‘As a responsible company, we believe that we must take a leadership position in joining with others in society to help prevent youth smoking. The industry currently supports more than 130 youth smoking prevention programmes in over 70 countries, in many instances working closely with national and local governments.’[8]

Uneducated children in the developing world have forgone school to work and there can be numerous languages within a tight geographical space. Thus there is an even greater onus on the tobacco giants to promote youth smoking prevention through mediums that all can understand. Simply implementing ‘smoking-prevention-programmes’ in the classroom is not fully effective. BAT claim to be working solidly with third world governments in this area.

‘In Kenya, with Government approval, we have funded a scheme to find ways of communicating the "don't smoke" message through song to children who can't read. We will continue to build on this.’ [9]

This claim seems somewhat at odds with an ASH investigation in conjunction with Christian Aid and Friends of the Earth entitled: 'The Least Responsible Company In the World?'

‘In Nigeria, Uganda, Pakistan, Kenya, Brazil and Russia, BAT advertises itself as a good corporate citizen, while aggressively marketing its cigarettes to the youth and female market, failing to look after its farmers and failing in its environmental stewardship responsibility.’ [10]

There are numerous examples of duplicitous marketing techniques utilised by BAT in the third world. For the company who wish to prevent kids from smoking they are either failing or succeeding depending on how cynical one is.

To sidestep FIFA’s and the World Health Organisation’s ‘Tobacco Free Sport’ initiative, BAT slipped beneath impending legislation to sponsor (not advertise) the national television coverage of the 2002 World Cup in Malaysia. Thus gaining access to the country’s young sports fans and promoting their ‘Dunhill’ brand. [11]

‘BAT signed a 10 year contract with the Soccer Federation of Niger (Fédération Nigérienne de Football FENIFOOT). This contract ensures the promotion of BAT Rothman cigarettes in soccer fields throughout Niger. In 1998 BAT built 7 'New Line' pavilions and placed them strategically in Niamey's intersections, even in front of schools. These pavilions are a gathering place where youth congregate, play and have access to cheap cigarettes. It is in those pavilions that BAT will broadcast live matches of the World Cup 2002 on giant screens.’ ^

'The tobacco companies know very well that youth are very much interested and excited about this coming World Cup, and they are making best use of this event to make our youth addicted to tobacco.' ^

The world-cup controversy was quickly followed by BAT’s unauthorised use of English Premiership stars on its 2001/2002 football season calendar. This included a photograph of David Beckham and thus witting entry into the Southern African and Asian markets where Beckham is a superstar and role model to many children.

Cigarette companies have exploited loopholes to reach their audience and seem to overlook that their advertising is strategically placed to influence impressionable youth. They can claim to abhor youth smoking but seemed to also sponsor the World Cup for the third world and no doubt claimed a few more young smokers.

Section 4; Treatment of Farmers and Child Labour

Yet another contentious issue in this field would be the use of exploited third world labour. This includes farmers being indebted to corporations and the use of child labour on tobacco plantations.

A 2002 Christian Aid report called “Hooked on Tobacco” is a document which BAT have gone to great lengths to defend on their website. The report examined Souza Cruz; a subsidiary of BAT in Brazil.

The report explains the evidential link between tobacco farmers and forms of extremely poor physical, sometimes mental health. The farmers are held to ransom by their industry because of constraints to their selling capacity and obligation to their employer.

Farmers under contract to Souza Cruz are obliged to sell to Souza Cruz and not permitted to sell their crop on the open market. Souza Cruz is in control of the classification of the farmers' tobacco crop, which determines the price paid for their tobacco and, therefore, their income. According to federal law, state authorities should monitor the classification process but the system appears to be failing farmers.

Farmers are locked into producing tobacco for Souza Cruz by their contract with the company and by a system of debt which is accrued annually and paid off with the tobacco they grow. As a result, tobacco becomes the currency in which farmers deal. Their annual income is determined by Souza Cruz, which decides the price paid for each farmer's tobacco according to its own rules, and seemingly without thorough independent scrutiny. (www.christian-aid.org.uk)

They are said to be visited infrequently and poorly trained exhibiting BAT’s failure to hold up part of the bargain based on Dr MacKay’s Penetration blueprint.

Owing to being ‘locked in’ to their supplier, the employees of Souza Cruz are obliged to buy specific fertilisers and pesticides. These are deemed by Christian Aid to be like “playing Russian Roulette with their health”. The symptoms of this exposure resemble those of Gulf War veterans and coincide with key moments in the tobacco harvesting year.

The report also stipulates how this unpalatable treatment can also prove a gateway to child labour endangering their health and exhibiting a practice the company deems wholly unacceptable.

If the farmers are locked into contracts and can only pay their way out with their yield, they cannot afford to hire help and must use their children at the most worthwhile times of the year. In actuality this is the harvest and as the evidence demonstrates the cultivators are more likely to get ill at key points of the year coinciding with the harvest.

BAT‘s website claims: “We have helped establish the Eliminating Child Labour in Tobacco Growing (ECLT) Foundation, and aim to be an active and constructive founding member. We are committed to the principles of protecting children from child labour exploitation, believing their development - as well as that of their communities and countries - is best served through education, not child labour. We do not employ children in our operations. [12]

The International Labour Organisation (ILO), with which BAT claims to be in partnership with on the issue of child labour stated they were very concerned about the report.

As stated, BAT has gone to some length to refute aspects of this report and on their website have a whole section dedicated to this. On the issue of child labour, they again enforce their involvement with the ECLT programme and

‘…comply with all relevant local and international labour regulations, treaties, conventions and principles relating to the protection, welfare, health and safety of children.’

‘We do not employ children in our industrial operations. However, we do recognise that family labour is an essential part of life on many thousands of small landholdings and we cannot mandate farmers to alter their traditional lifestyles.’ [13]

Thus the onus is shifted from BAT and onto the farmers themselves letting British American Tobacco embrace being ranked in the top 50 of Business in the Community's 2005 Corporate Responsibility Index.

This claim is at odds with much of the material available outwith the BAT website and is summed up in strong terms by the authors of 'The Least Responsible Company in the World?'

‘While genuine moves by UK companies to improve their social and environmental standards are welcome, the difference between the claims BAT makes in its social reports and its true impacts are stark… The bitter truth is that BAT is one of the least socially responsible companies in the world.’ [14]

There seems to be serious contradiction within BAT’s official line and the evidence on the ground from the charities and their reports. BAT appears to promote responsible advertising yet the examples from the 2002 World Cup would beg to differ. In sponsoring sports activities and becoming synonymous with the world cup in that country they become associated with a pleasurable pastime and become subconsciously linked to happy images.

BAT refutes child labour yet her watertight grip on the farmers she exploits forces unpaid labour to take the guise of their offspring thus exposing all parties to the harmful effects of the fertilisers and chemicals they are obliged to buy. Despite the danger reported in Christian Aid’s report, the chemicals are desired to 'maintain quality' [15] and so are non negotiable.

The statistics in Section 1 suggest that more people in the developing world are smoking more and this is big business for BAT, corporate responsibility programmes are at odds with the tax income of some states who are dependant on the industry so there is a conflict in waiting. The cynics may suggest that given the nature of this conflict, it is a battle BAT are happy to lose.

Retrieved from "http://www.spinprofiles.org/index.php/British_American_Tobacco"

^{Saouna SOS-Tabagisme and Laurent Huber, Action on Smoking and Health (USA)}

^{A. Khan, Aga Khan University, Department of Medicine}