Don't export more tobacco addiction; Ky. farmers no longer dependent

Philip Morris is using American farmers again — this time as the sympathetic face on a campaign to muscle tobacco into a free-trade agreement among Pacific Rim nations.

The Obama administration and the eight other governments should just say no to including a deadly export in a pact that's supposed to lower consumers' costs and stimulate national economies.

Tobacco use is the world's No. 1 cause of preventable death. If introduced today, cigarettes would be laughed off the market.

Yet Philip Morris has used trade agreements to challenge cigarette labeling requirements in Australia and Uruguay.

The American Medical Association and the Public Health Association of Australia oppose including tobacco in the Trans-Pacific Partnership Agreement that's under negotiation.

Considering the huge public costs of tobacco use, governments would be crazy to give cigarette makers another weapon to beat back public-health policies.

American tobacco growers won't lose any existing markets if tobacco is left out of the Trans-Pacific treaty. None of the eight nations are significant markets for American leaf. There's no reason that the more than two-thirds of U.S. tobacco that's now exported would not continue to be exported.

The first surgeon general's warning about tobacco was issued 48 years ago. Yet farmers who have been interviewed about the Pacific Rim agreement sound just like their daddies and granddaddies, vowing they can't keep farming without the high income from tobacco.

Some of those interviewed are talking about the ripple effects of tobacco sales on tractor and fertilizer dealers — all while U.S. agriculture booms, fueled by demand for grain and cattle.

Right on cue, Kentucky politicians, including Gov. Steve Beshear and Sen. Mitch McConnell, are joining the "help-our-farmers-sell-more-baccy" chorus.

If all this rings phony, it's because tobacco growers have been compensated for their losses more than any other victims of economic displacement.

During the first decade of this century, tobacco growers and landowners received almost $15 billion in direct payments through phase 2 of the tobacco master settlement and a quota buyout.

The main thrust of the 1998 master settlement was to pay the states $206 billion over 25 years in compensation for treating sick smokers. Facing a steep decline in demand for tobacco, Kentucky decided to devote half of its settlement money to agriculture.

Since 2001, more than $368 million has flowed from Kentucky's share of the tobacco settlement into county, regional and state projects designed to increase net farm income and create sustainable farm-based business enterprises.

No government should be doing anything to increase dependence on tobacco, whether it's the physical addiction of smokers or the economic dependence of farmers.

And that includes trade agreements, no matter how much pressure a multinational giant like Philip Morris brings to bear.

Cigarette firms slowing anti-tobacco fight: report

The report by the civil society group Framework Convention Alliance said major cigarette firms continue to run circles around key provisions of the Framework Convention on Tobacco Control (FCTC), the global tobacco treaty.
The tobacco industry is a major revenue earner and employer in some countries, but its use comes with major health risks.
According to the World Health Organization (WHO), tobacco use kills nearly six million people each year, including more than 600,000 who are non-smokers but exposed to second-hand smoke.
The UN health watchdog said on its website that unless urgent action is taken, the annual death toll could rise to more than eight million by 2030.
"Tobacco industry interference in public health policy poses the single greatest threat to the global community realising the full potential of the FCTC's life-saving measures," the report said.
"Now is a critical time to break the tobacco industry's stranglehold over public health policy," said the report entitled Tobacco Watch 2012.
"It's also time to put in place precedent-setting checks and balances over the political influence of this profit-driven industry."
Cigarette companies were not immediately available for comment on the report, released on the sidelines of a conference on tobacco and health in Singapore.
Article 5.3 of the global tobacco treaty, which came into force seven years ago under the auspices of the WHO, binds signatory states to take measures to shield their public health policies from the influence of cigarette firms.
It bars governments from partnering with cigarette companies to promote public health issues and allowing marketing schemes that usually come in the guise of corporate social responsibility (CSR) campaigns.
Signatory governments should neither invest in the tobacco industry, accept contributions from cigarette firms nor appoint any industry representatives in tobacco control bodies, according to the treaty.
Applicants to government positions relating to public health must also disclose any previous association with the tobacco industry.
Despite some progress, many of the treaty's provisions have yet to be fully implemented and countries needed to "rededicate" themselves to fulfilling their obligations, the report said.
A key hurdle is the influence held by major cigarette firms.
"Of particular concern are former tobacco industry officials serving in health ministries, or acting as official government consultants," the report said.
Another concern is cigarette firms circumventing advertising bans on tobacco by running programmes in the guise of CSR campaigns.
"Tobacco industry activities like those reported in Tobacco Watch do more than violate Article 5.3 of the FCTC. They impede progress on implementing all other measures in the convention," said alliance director Laurent Huber.
Lawsuits were also another way companies are fighting tobacco control, Huber said.
Last December, tobacco giant Philip Morris stepped up its legal campaign against an Australian law banning logos and branding from cigarette packs, saying it had taken its case to the High Court.
Philip Morris said the law, which requires cigarettes to be sold in drab, olive-brown packets, impinged on its intellectual property rights.

Imperial Tobacco: UK Tobacco Tax Rise Is "Big Mistake"

Imperial Tobacco Group PLC (IMT.LN) said Wednesday that the tax increase on tobacco announced earlier by U.K. Chancellor of the Exchequer George Osborne is a "big mistake" that will boost illegal counterfeiting and smuggling.

Osborne announced that the duty on tobacco products--which applies to cigarettes, cigars, hand-rolling tobacco, pipe tobacco and chewing tobacco--will rise by 5% above inflation, which equates to a rise of 37 pence on a standard packet of cigarettes.

Amal Pramanik, Imperial's U.K. general manager, said: "[This] heavy-handed tobacco taxation policy will simply tempt more smokers to buy illicit tobacco products.

"The U.K. is already a key target market for criminal gangs of tobacco smugglers and counterfeiters. Today, the government has given further encouragement to these criminals at the expense of shopkeepers, many of whom are struggling to make ends meet."

Earlier, Osborne said the increase in duty can be justified on health grounds. "Smoking remains the biggest cause of preventable illness in this country. There is strong evidence that increasing the price of cigarettes deters people from smoking," he told the U.K. parliament.

U.K.-based group Imperial is the world's fourth-largest tobacco group by sales.

Last month, the maker of Lambert & Butler, Gitanes Blondes and JPS cigarettes posted a fall in first-quarter revenue and volumes, hit by a trade ban in Syria, competition, trade buying patterns and destocking.

At 1405 GMT, Imperial Tobacco shares were up 41 pence, 1.6%, at 2535 pence, the fifth-highest gainer in the FTSE 100 Index.

Roll-your-own tobacco shop owners bristle at bill to expand taxation

Customers of Tobacco Mizer save $30 on the equivalent of a carton of cigarettes by buying loose tobacco and hollow tubes and then renting a machine that rolls their cigarettes.
"Each customer has his own blend," said Bob Mizer, the store's co-owner. "We have eight different types of tobacco here, and they can mix and blend to match what they want."
The finished cigarettes come cheap because they aren't subject to the same state and federal taxes as those from companies considered manufacturers under Arizona law.
Mizer says this setup allows his operation and others similar to it to compete with tobacco stores on American Indian reservations, where customers pay less in excise taxes.
That's why Mizer and other roll-your-own shop owners say a bill advancing in the state Legislature would be a death blow.
HB 2717, authored by Rep. Jim Weiers, R-Phoenix, would classify businesses with cigarette rolling machines as manufacturers and subject them to the same regulations and taxes as companies that produce finished cigarettes.
The House Commerce Committee endorsed the bill Feb. 15 on a 5-3 vote, sending it to the full House by way of the Rules Committee.
Mizer said losing a tax advantage would be only part of the problem should the bill become law.
If he were classified as a manufacturer, he would be required to obtain a state manufacturing license. However, those seeking a state license must first obtain a federal manufacturing license, and with that comes a prohibition against selling directly to customers in the area where they manufacture cigarettes.
Mizer said he'd have no option other than giving up his three rolling machines, which together cost him about $100,000. And because his business relies heavily on them, he said he'd have to close and put his 13 employees out of work.
"It's like a Catch-22," Mizer said. "You say we're manufacturers, but we can't get a license. We're going to be out of business if this bill passes."
This isn't the first effort to classify retailers with roll-your-own machines as manufacturers. In 2010, the U.S. Treasury Department's Alcohol and Tobacco Tax and Trade Bureau issued a ruling calling for that, but a federal court in Ohio granted an injunction in response to a lawsuit by RYO Machine Rental LLC, which sells and leases roll-your-own machines.
Jeffrey Burd, an Ohio attorney representing RYO Machine Rental, told lawmakers that he found the timing of this bill odd given that a hearing in his company's suit is scheduled for April.
Machines used by roll-your-own tobacco shops aren't comparable to the machines used by mainstream cigarette manufacturers, Burd said, adding that it would take a tobacco store rolling machine 16 hours to produce as many cigarettes as a manufacturer's machine makes in a minute.
"This is simply a situation where cigarette manufacturers would like to take a convenience away from ‘rolling your own' customers because they would prefer their product be purchased," Burd said.
John Mangum, an attorney representing Altria Group Inc., formerly known as Philip Morris Companies Inc., which manufactures cigarettes under brands including Marlboro gold edge, told the committee that without a law customers will migrate to stores such as Mizer's. That will cut into revenue from the $1.01 per pack federal manufacturer's tax and $2 per pack state manufacturer's tax, he said.
Portions of both taxes go toward anti-smoking programs.
"The issue here is an unclear tax advantage," Mangum said. "What we are trying to do is restore what we would call a level playing field."
Burd said tobacco store machines aren't causing people to roll their own cigarettes but are merely a convenience for people who were already rolling their own cigarettes on less efficient machines at home.
"There is no tax loophole," he said.
Groups joining Altria Group in signing support for the bill included Reynolds American Inc., the Arizona Retailers Association and the Cigar Association of America.
Groups joining RYO Machine Rental LLC and shop owners, including Mizer, in opposing the bill included the Goldwater Institute, an independent watchdog group that promotes limited government and free enterprise.
In voting for his bill, Weiers said the issue boils down to making sure no business has an unfair advantage when it comes to taxes.
"This is really a touchy issue with me because it goes to the very nerve of what I believe when it comes to taxes and how silly people have become," Weiers said.
Reps. Rick Gray, R-Sun City, Bob Robson, R-Chandler and J.D. Mesnard, R-Chandler, voted against the bill.
"If I go out and rent all the equipment needed to do landscaping, does that make me a landscaper? None of this really makes any sense," Robson said.

China Tobacco Make Greater Profits than Sinopec Group

Industrial Bank made the financial performance of China Tobacco public for the first time on Monday evening, and the assessment indicates that China Tobacco may be larger by annual profit than Sinopec Group, China.com.cn reports.

China's Industrial Bank Company Ltd aims to raise at least 25 billion yuan ($3.97 billion) selling shares to institutional investors including the People's Insurance Co (Group) of China Ltd (PICC) and the China National Tobacco Corporation. Industrial Bank Company released the figures for China Tobacco in a statement late on Monday because China Tobacco is buying a 5.2 billion yuan stake in the Shanghai-listed lender.

The announcement from Industrial Bank shows that the total assets of China Tobacco were 969.9 billion yuan in 2010. The state-owned tobacco company had a net income of 117.7 billion yuan ($18.7 billion) in 2010 on sales of 770.4 billion yuan, which means that it made 320 million yuan per day.

The net profits from China Tobacco in 2010 were even greater than that of the Agricultural Bank of China (95 billion yuan), which was fifth on net profit rankings of all listed companies. The top four were the Industrial and Commercial Bank of China (166 billion yuan), Sinopec Group (150 billion yuan), China Construction Bank (135 billion yuan) and Bank of China (109.7 billion yuan).

Furthermore, the initial assessment indicates that China Tobacco may be larger by annual profit than Sinopec Group. The net assets rate of China Tobacco is 12.14%, which is higher than the 9% from Sinopec Group. China Tobacco, the nation's cigarette monopoly with a registered capital of 57 billion yuan, is one of the largest state-owned enterprises and is by sales the largest single manufacturer of tobacco products in the world.

COD considers tobacco-free campus policy

Smokers who go to school or teach on College of DuPage campuses will have to get their tobacco fix before heading to class if a smoke-free proposal is approved by the college’s board this spring.

Under a proposal to make school tobacco free, smokers could still use tobacco products in their vehicles on campus grounds, but nowhere else at the school’s facilities, said college spokesman Joe Moore.

A proposed policy is expected to be considered by the school’s board of trustees at its March 15 meeting, Moore said, though the board is not likely to vote on it that night.

“It’s to ensure that the campus is healthy and safe for everyone,” Moore said, adding that administrators are sensitive to the addictive nature of tobacco, and would ramp up efforts to market smoking cessation opportunities.

The law would supplement Illinois laws that ban smoking in public places. Now, smokers at the campus have to be 25 feet away from buildings before lighting a cigarette.

Moore said the new policy would affect “a large number” of people on the campus, but said he did not know exactly how many smokers work or attend the school.

First-year student Jake Schweitzer said he thought the proposed ban would do little to enhance public health.

“Unless someone is like standing next to you inhaling the smoke it’s not going to make any difference,” Schweitzer said after he extinguished a cigarette outside the Student Resource Building this week.

Moore said a survey of students showed the majority would support such a policy, though.

If the proposal is approved, COD would not be the first junior college campus to tighten campus smoking rules. Last fall, McHenry County College in Crystal Lake implemented a tobacco-free policy “to promote a safe, clean and healthy learning environment,” according to its website. Those who violate the policy are issued a $50 citation.

At the College of Lake County in Grayslake, a tobacco policy task force has been meeting this year to determine if a tobacco ban is appropriate for its campus, said college spokeswoman Diane Rarick.

Nationally, at least 258 universities and colleges, including junior colleges, are smoke-free, according to the American Lung Association.

Still, College of DuPage would probably not count as one of these schools if its proposal passes since smoking would be allowed in vehicles on campus, said Lung Association spokesman Mike Townsend.

If the board approves the policy, the tobacco ban would begin in August. COD spokesman Moore said college administrators are still contemplating how the ban would be enforced and how violators would be punished.

“We’re trying to simply ensure that campus is a healthy place to be for all of students, visitors and employees,” Moore said.

The COD board of trustees next meeting is scheduled for 7 p.m. March 15 at the Student Services Center, 425 Fawell Boulevard in Glen Ellyn.

Four Naugatuck Clerks Cited for Selling Cigarettes to Minors

Four Naugatuck convenience stores face fines after being caught selling cigarettes to minors during unannounced compliance checks.

In a press release, the Naugatuck Police Department said the four violating locations were the Mobil station at 469 Rubber Ave., Cumberland Farms at 69 Rubber Ave., Family Market at 129 Rubber Ave. and Sid Mart at 73 Bridge St.

The police department worked in cooperation with a state agency, the Department of Mental Health and Addiction Services. The agencies dispatched underage youth informants employed by the Tobacco Prevention and Enforcement Program to purchase the tobacco products.

The youths entered each business and made attempts to purchase the products as a way to test whether the clerks would card them or attempt to verify whether they were underrage.

Police conducted checks on 16 businesses. The four that failed the compliance check were cited for a sale of tobacco to minors under 18. The offending clerks were fined $200.

BAT in $2 billion share buyback as earnings rise

British American Tobacco , the world's second-biggest cigarette maker, increased its share buyback to 1.25 billion pounds ($2.0 billion) after it raised prices and saw strong growth in emerging markets to help boost full-year earnings.

The London-based maker of Dunhill, Kent, Lucky Strike and Pall Mall cigarettes bought back 750 million pounds of shares in 2011 and has raised its 2012 programme, confident it has growth ahead and firepower for acquisitions.
BAT, which made 705 billion cigarette last year, has seen smoking decline in Western Europe and North America and offset that with higher prices and by making gains from growth in developing markets such as Brazil, Mexico, Romania and Russia.

"The economic climate around the world is far from settled but we remain confident that our strategy should continue to generate growth for our shareholders in the years ahead," chairman Richard Burrows said on Thursday.

BAT, the most globally spread of the big tobacco groups, has not been immune from tough economies, excise tax rises and higher unemployment which have pushed smokers to give up or switch to cheaper -- and sometimes illicit -- cigarettes.

Higher prices meant that while underlying global volumes fell 0.4 percent last year, revenue rose 3 percent to 14.4 billion pounds. Marlboro-maker Philip Morris, the world's largest cigarette group, saw its underlying 2011 volumes rise 0.5 percent.

BAT Chief Executive Nicandro Durante said he expected industry volumes ex-China to be down 1-2 percent this year after a decline of 2 percent in 2011, while BAT would continue to outperform as it gained share in a number of markets.

"We face a very difficult economy with disposable income not up and unemployment high," he added.

Durante said the group was flexible enough to conduct bolt-on acquisitions but he said it was difficult to see big deals happening with the world's four largest listed cigarette groups controlling 80 percent of the global market outside China.

BAT said it gained from its good spread of businesses with 60 percent of profit and 75 percent of volume coming from emerging markets. In mature Western Europe, where it cut costs as well as raising prices, profit rose 10 percent.

The higher buyback and slightly better than expected 2011 earnings prompted analysts to upgrade forecasts, with Rae Maile at JP Morgan increasing his 2012 earnings estimate 0.5 percent to 213.85 pence per share and put 2013 up 1.5 percent. "The company continues to offer shareholders a compelling mix of earnings growth, dividend growth and modest valuation," he said.

BAT shares, up 9 percent over the past month, were down 1.4 percent at 3,088 pence by 1300 GMT in a 0.2 percent higher London blue-chip stock market.

The group posted a rise of 11 percent in 2011 adjusted diluted earnings per share to 194.6 pence, compared with a Thomson Reuters poll forecast for 193.9 pence and a BAT-compiled consensus of 194.3 pence.