British American Tobacco: Third World Production

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British American Tobacco

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. Hence the goal of these companies is to gain access to regions everywhere on the planet, no matter how far-flung or unstable, so as to increase their reach and influence.

Multinational tobacco companies do not stray from this blueprint, especially with regard to the developing world. However, the era of mass communication brings with it increasing public awareness of issues such as fair trade, and a higher awareness than ever before of the dangers of smoking. Opportunities for cigarette companies to enter and manipulate third world countries are therefore met with increasing opposition.

Yet the tobacco industry wields such influence that there is often little that indigenous populations can do to fight back. In developing countries it is easier for companies to persuade people to start smoking, because the public generally have less awareness of the health issues due to poor education; this leads to widespread addiction. And while (often unstable or corrupt) governments will be plied with financial incentives to grow tobacco, the public and the workers who grow it will see very little (or none) of this money themselves.

Smoking Facts

Comparing the levels, and predicted levels, of smoking in the developed world and the developing world, we can see an obvious contrast:


  • Global and regional estimates of cigarette consumption, 1970–72, 1980–82, and 1990–92 [1]
Cigarettes per adult per year
1970-72 1980-82 1990-92
World 1450 1650 1640
Developed countries 2670 2770 2400
Less-developed countries 820 1160 1370
WHO regions
Africa 460 560 540
The Americas 2600 2490 1870
Eastern Mediterranean 730 930 910
Europe 2280 2470 2290
Southeast Asia 640 960 1150
Western Pacific 1140 1600 2000


  • Estimated number of deaths caused every year by tobacco [2]
1990s 2020s/early 2030s
Developed countries 2 million 3 million
Developing countries 1 million 7 million
Total 3 million 10 million

The number of cigarettes consumed in the developed world looks set to continue to be large in number but in the Americas and Europe the figure is actually in decline. Comparing this to ascending levels of consumption by those in the developing world leads to the conclusion that more people are taking up the habit and more people are dying as a result of associated diseases. Smoking-related deaths in the developing world are set to rocket to 7 million in the next fifteen to twenty years.

The estimated 3 million deaths annually in the 90s averages about six deaths every minute from smoking related disease. The World Health Organization (WHO) estimates that in 2025 the developing world will reach a mortality figure of 7 million, which 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. [3]

Broadly speaking, smoking in the developed world seems to have levelled out or be in slight decline. These levels, however, are being buoyed up by sharply increasing numbers of smokers in the developing world. During the last decade, per capita tobacco consumption declined by an average of 1.4% per year in the developed world, but has risen by 1.7% annually in developing countries. [4]

Entry into 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 manufacturers 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 for access:

  • "The Honeymoon" — The initial honeymoon period when the foreign companies enter a country. Usually this involves the company offering 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 initial access.
  • "The Marriage" — Next come the joint ventures, the proverbial "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 company 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. [5]

More devious methods are often used by big tobacco companies to getting their brands and images into a country. The best example is when cigarette companies allow contraband cigarettes to enter the country in large quantities and let the populous gain a taste and a habit for them. Once the brand is established the government will want to capitalise to gain tax revenue from the illicit goods and so will eventually let them enter the country legally.

There are other examples 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-developed countries than in industrialised nations, exceeding 10% in many countries and reportedly as high as 18% in Sri Lanka and 26% in Zaire. Hence governments will block efforts to control tobacco due to fears of a decrese in tax revenue. [6] The big tobacco firms know this and can exploit this.

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.

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 in setting up an extensive Youth Smoking Prevention campaign. The BAT website claims:

"We believe that tobacco products are only suitable for adult consumers and we do not want children to smoke. Around the world, our companies work to ensure that their marketing practices do not undermine efforts to combat under age smoking... In 2006, our companies in 55 countries reported engaging with governments on either preventing under age access to tobacco products or on a minimum age for sales... In 2006, our companies reported running or supporting 144 youth smoking prevention programmes, over half of them focused on preventing under age access at the point of sale." [7]

Many children in the developing world forgo school to work instead, 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 media that can be understood by all. 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, for example, BAT funded a government-approved scheme to find ways of communicating the "don't smoke" message through song, to children who can't read.) These claims seem somewhat at odds with a 2004 Action on Smoking and Health (ASH) report, produced in conjunction with Christian Aid and Friends of the Earth, entitled 'BAT's Big Wheeze'.

"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 responsibilities." [8]

To sidestep FIFA and the WHO's 'Tobacco-Free Sport' initiative, BAT found a loophole allowing them to sponsor the Malaysian television coverage of the 2002 World Cup (rather than sponsoring the games themselves), thus gaining access to the country's young sports fans and promoting their Dunhill brand [9] (for more info see the Advertising section). Also on the subject of the 2002 World Cup:

"In 1996, BAT signed a 10 year contract with the Soccer Federation of Niger, La 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." [10]

BAT's marketing behaviour ensured that children in the third world were bombarded with pro-tobacco messages during World Cup 2002 events. The WHO's message of 'Tobacco-free sport' may well have been lost in Niger as BAT were creating a positive association between tobacco and Niger's number one sport, soccer. What kind of 'social responsibility' is this?

Treatment of Farmers and Child Labour

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

A 2002 Christian Aid report entitled 'Hooked on Tobacco' is a document which BAT have gone to great lengths to refute 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 and 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 are 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. [11] 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 the health of children and exhibiting a practice the company (publicly) 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.

Meanwhile, BAT's website claims: "We helped to establish the Eliminating Child Labour in Tobacco Growing (ECLT) Foundation and support it actively as a founding member. We are committed to the principles of protecting children from child labour exploitation, believing that 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 contents of the Christian Aid report.

BAT has gone to some length to refute aspects of this report and on their website have a whole section dedicated to the issue of child labour, where they mention their involvement with the ECLT programme and claim that they will:

"...comply with all relevant and applicable local and international labour regulations, treaties, conventions and principles relating to the protection, welfare, and health & safety of children... [BAT] will not employ [children] in any capacity in any industrial operation under its control." [13]

Yet, in the same statement they go on to say:

"[BAT] acknowledges that it is sometimes customary in agricultural communities for children to play a part in the day-to-day work on farms, partly to learn essential craft skills for ensuring the long-term sustainability of farms and local agricultural communities." [14]

Thus the onus is shifted from BAT and onto the farmers themselves, passing the buck rather than taking responsibility. Perversely, British American Tobacco ranked joint 31st in Business in the Community's 2005 Corporate Responsibility Index, 'Companies That Count'. [15]

BAT's claims of being a "good corporate citizen" [16] are at odds with much of the evidence available (outwith the BAT website) and this hypocricy is summed up in strong terms by the authors of 'BAT's Big Wheeze':

"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." [17]

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, as well as their targeting of third world youth populations, paint a different picture. In sponsoring sports events or rock concerts they attempt to make tobacco synonymous with youthful, active and glamourous activities. Cigarettes are thus associated with pleasurable pastimes and become subconsciously linked to images of happiness, fitness and wealth -- in some of the poorest areas of the world.

BAT condemns child labour yet their exploitation of third world farmers forces families to employ their children as unpaid labour, thus exposing them to the harmful effects of the fertilisers and pesticides they are obligated to buy at over-inflated prices from BAT affiliates. Despite the dangers reported in Christian Aid's report, the chemicals are desired to 'maintain quality' and so their use is non-negotiable.

The statistics in Section 1, above, suggest that more people in the developing world are smoking more and this is big business for BAT. Corporate responsibility programmes look great on paper, but the truth is that much more money can be made by keeping farmers in the developing world in debt while providing massive tax incentives to third world governments, keeping many states dependant on the industry.

External Links

References

  1. ^ http://www.idrc.ca/en/ev-28836-201-1-DO_TOPIC.html
  2. ^ http://www.druglibrary.org/Schaffer/tobacco/who-tobacco.htm
  3. ^ http://www.idrc.ca/en/ev-28836-201-1-DO_TOPIC.html
  4. ^ http://www.druglibrary.org/Schaffer/tobacco/who-tobacco.htm
  5. ^ http://www.idrc.ca/en/ev-28836-201-1-DO_TOPIC.html
  6. ^ http://www.idrc.ca/en/ev-28836-201-1-DO_TOPIC.html
  7. ^ http://www.bat.com/OneWeb/sites/uk__3mnfen.nsf/vwPagesWebLive/00EE816257C9ACD480256BF4000331D7?opendocument&SID=&DTC=
  8. ^ 'BAT's Big Wheeze: The Alternative British American Tobacco Social and Environmental Report' by Lisa Rimmer (with Ian Willmore), 2004, p.22, PDF version: http://www.ash.org.uk/html/conduct/pdfs/batbigwheeze.pdf
  9. ^ http://www.ash.org.uk/html/press/020523.html
  10. ^ http://www.ash.org.uk/html/press/020531.html
  11. ^ http://www.christian-aid.org.uk/indepth/0201bat/index.htm
  12. ^ http://www.bat.com/oneweb/sites/uk__3mnfen.nsf/vwPagesWebLive/2B4CB4ACEB176F5180256BF4000331DB?opendocument&DTC=&SID=
  13. ^ http://www.bat.com/oneweb/sites/uk__3mnfen.nsf/vwPagesWebLive/DO725ECW/$FILE/medMD725KV2.pdf
  14. ^ http://www.bat.com/oneweb/sites/uk__3mnfen.nsf/vwPagesWebLive/DO725ECW/$FILE/medMD725KV2.pdf
  15. ^ http://www.bitc.org.uk/document.rm?id=3382
  16. ^ http://www.bat.com/oneweb/sites/uk__3mnfen.nsf/vwPagesWebLive/DO725ECW/$FILE/medMD725KV2.pdf
  17. ^ 'BAT's Big Wheeze: The Alternative British American Tobacco Social and Environmental Report' by Lisa Rimmer (with Ian Willmore), 2004, p.3, PDF version: http://www.ash.org.uk/html/conduct/pdfs/batbigwheeze.pdf
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