Category: Financial

Call to end contract farming
The government of Zimbabwe should create a bank to provide financial support for tobacco growers and eliminate contract farming, according to a NewsDay story quoting the executive director of the Tobacco Industry Development Support Institute for Southern Africa (TIDSI), Jeffrey Takawira.
Although tobacco was one of the country’s biggest foreign currency earners and contributed at least 10 percent to its gross domestic product, most tobacco growers remained poor and faced financial challenges annually, Takawira said.
One of the growers’ major complaints was pricing, but they were concerned also about the lack of government policies in respect of support systems.
Takawira reportedly told NewsDay in emailed responses that there was a need for the government to establish a special bank to support tobacco farming and eliminate contract farming.
‘Failure by farmers to access cash at the banks erodes confidence in the financial services sector,’ Takawira said. ‘The governor of the Reserve Bank of Zimbabwe, John Mangudya, is on record revealing that there has been a marked improvement in foreign currency inflows into the country driven by agriculture and mining.
“So what boggles the mind is why then should farmers fail to access their cash. Where is the money? [As] the Tobacco Industry Development Support Institute for Southern Africa, we advance the idea of a tobacco bank.’
The Parliamentary Portfolio Committee on Agriculture is said to have conducted a fact-finding tour of the challenges facing the tobacco auction floors, but it has not yet reported in full.
September 7, 2017
Growers told to up quality
Tobacco farmers in the northern part of Luzon, the Philippines, are being encouraged to improve the quality of their produce to ensure they earn higher incomes, according to a Philippine News Agency story of September 6.
This is even though the president of the National Association of Tobacco Farmers, Associations and Co-operatives Mario Cabasal was quoted on the same day in the Business Mirror as saying that graders tended to downgrade the quality of the tobacco to buy it at a lower price (see story Leaf production down).
Growers, cigarette manufacturers, and tobacco dealers and exporters have been meeting to negotiate the floor prices for growers’ tobacco.
The floor price is said to be the minimum price allowed by the government. It is said to be based on the prevailing market conditions, such as production costs, a ‘reasonable’ margin of profit for stakeholders, and growing conditions.
The news agency story said the National Tobacco Administration (NTA) was pushing for a contract growing scheme to ensure a fair tobacco market.
And it said Cabasal hoped to arrive at a fair market price.
September 7, 2017
Smoking costs unaffordable
China will be unable to bear the economic and social costs of tobacco smoking if it doesn’t speed up its tobacco-control efforts, according to a story by Sun Wenyu for the People’s Daily Online.
A recent report issued jointly by 37 organizations, including the Chinese Preventative Medicine Association and the Chinese Association of Tobacco Control, said that China’s tobacco consumption accounted for 44 percent of worldwide consumption.
China had added 15 million new smokers in five years and the country needed urgently to step up its efforts to control tobacco.
The results of a nationwide adult tobacco survey that was published in 2015 indicated that 27.7 percent of Chinese people above the age of 15 were smokers. It indicated, too, that the total number of smokers in the country had reached 315 million.
According to the ‘Healthy China 2030’ blueprint issued by the State Council, China aims to lower the proportion of smokers to 20 percent by 2030.
The story said that ‘experts’ believed that tobacco consumption had become a global issue that threatened public health and led to serious consequences. Smoking caused major chronic non-infectious diseases, and these diseases accounted for 85 percent of the total deaths in China.
Though progress had been made, China had a long way to go before it could reach the goals set in the Healthy China 2030 blueprint.
It would be unaffordable for the country to pay for the economic and social losses if it didn’t speed up the process of tobacco control.
The story said that experts had called on the country to pass legislation ‘to establish a smoke-free country and comprehensively ban public smoking’.
‘In addition, the experts believe that China should reduce tobacco advertisements, increase tobacco tax, and make smoking cessation a basic public health service,’ the story said.
August 31, 2017
Tax hikes recommended
Steep increases in cigarette excise taxes, instead of incremental ones, would do a better job of reducing poverty and improving health, according to a story in The Jakarta Globe quoting the director of the University of Indonesia’s Center for Health Economics and Policy Studies (Cheps).
Cigarettes were said to constitute the second largest expenditure after food among the country’s poor, consuming nearly a quarter of their monthly incomes.
The head of Cheps, Budi Hidayat, was quoted as saying that a threefold increase in current cigarette prices would dissuade many from continuing to smoke and would [thereby] allow greater flexibility in the face of fluctuating food prices.
Increasing cigarette prices initially led to a rise in poverty, but after a certain point, the poverty rate started to drop, he said.
A study conducted by the research center found that an increase of more than 112 percent [presumably in cigarette prices] would be sufficient to reduce the poverty level in the country.
However, if the government imposed a 150 percent tax on tobacco, which would increase the average price of a pack of cigarettes to Rp25,000 (US$1.90), two million people would be lifted out of poverty, the study was said to have found.
And, of course, there would be a payback for government revenues. A 150 percent excise tax would add Rp200 trillion to the state coffers over five years.
Budi said that, conversely, the 10.54 percent increase in tobacco excise that the government planned to impose this year would increase the number of people living in poverty by 0.16 percent to 29 million people.
August 29, 2017
Tobacco takes toll in Kenya
Tobacco use is now the top cause of preventable death in Kenya and one of the four biggest factors contributing to the burden of non-communicable diseases (NCDs), according to a Bernama News Agency report quoting the Principal Secretary (Assistant Minister) for Health, Julius Korir.
More than half of hospital admissions in Kenya are said to be related to NCDs and, on average, 80 per cent of premature deaths are related to the use of or exposure to tobacco.
Such a toll was said to be putting a strain on Kenya’s efforts to achieve its development goals, said Korir in a speech read out by the senior deputy director of Medical Services, Dr. Patrick Amoth.
“These diseases are not only burdening the health system but also resulting in high productivity costs to the economy,” said Korir, who added that the tobacco epidemic could not be ignored any longer.
The story cited the 2015 STEPwise Survey for NCD risk factors as having revealed that 13 percent of Kenya’s adults used tobacco products and that 20 percent of Kenyans were exposed to second-hand tobacco smoke at home.
The Global Youth Tobacco Survey of 2013 was cited also and was said to have shown that 10 percent of Kenyans aged 13-15 years were regular consumers of tobacco products.
Meanwhile, the Global Adult Tobacco Survey of 2014 was said to have revealed that half of the country’s current smokers had attempted to quit smoking in the previous 12 months. “This demonstrates a need to avail cessation services to Kenyans,” said Korir. “Tobacco cessation interventions offered by the health care systems are more effective than individual based interventions.”
August 18, 2017
Mini-tender targets BAT
British American Tobacco has recommended that stockholders reject a mini-tender offer by TRC Capital Corporation.
In a news release issued yesterday, BAT said it had been notified of an unsolicited ‘mini-tender’ offer by TRC Capital Corporation (TRC) to purchase up to 2,000,000 American Depositary Shares (ADSs), or about 0.087 percent of the outstanding issued ordinary shares of BAT (excluding treasury shares) as at the close of business on August 16, at a price of $60.13 per ADS in cash. Each ADS represents one ordinary share of BAT.
‘TRC’s offer price is approximately 4.42 percent less than the closing price of BAT’s ADSs on 11 August 2017, the day before the mini-tender offer commenced,’ BAT said in its release.
‘BAT does not endorse TRC’s mini-tender offer and recommends that BAT ADS holders do not tender their ADSs in response to the offer because it is a mini-tender offer at a price below the market price for BAT ADSs (as of the date BAT received notice of the offer) and is subject to numerous conditions.
‘According to TRC’s offer documents, BAT ADS holders who have already tendered their shares may withdraw their ADSs at any time prior to 12:01 a.m. New York City time, on Wednesday, 13 September 2017, the expiration date set forth in the offer documents (unless extended), by following the procedures described in the offer documents…’
The full BAT release with links to information about mini-tenders is at: http://www.bat.com/group/sites/UK__9D9KCY.nsf/vwPagesWebLive/DOAQBCNN.
August 18, 2017
Warning on Thailand
A UK travel agent is urging others to tell their customers not to vape in Thailand where they could face up to 10 years in prison for doing so, according to a story by Ravneet Ahluwalia for the independent.co.uk.
Pat Waterton, manager at Langley Travel, was quoted as saying that she had been unaware of Thailand’s ban on the possession of vaping devices until her nephew was forced to pay £125 as an on-the-spot fine after being threatened with jail for possessing an e-cigarette in Bangkok.
“If I’m selling Thailand I will definitely mention it now,” said Waterton. “All agents should. Thailand is very popular so we should make sure we are telling people about things that could ruin a holiday.”
Ahluwalia wrote that in November 2014, Thailand had approved legislation outlawing the import of e-cigarettes into the country. This had since been expanded to the export as well as the sale of e-smoking devices and equipment.
Although it was common to see people vaping in Thailand, offenders were technically breaking the law as possession was illegal, said Ahluwalia.
On its website, the UK Foreign Office advises travellers not to take vaporisers such as e-cigarettes or refills into Thailand.
‘These items are likely to be confiscated and you could be fined or sent to prison for up to 10 years if convicted,’ the Foreign Office says.
‘The sale or supply of e-cigarettes and similar devices is also banned and you could face a heavy fine or up to five years imprisonment if found guilty. Several British Nationals have been arrested for possession of vaporisers and e-cigarettes.’
August 17, 2017
Play it again, Sam
Farmers are being encouraged to follow ‘proper methods’ in growing their tobacco in a bid to produce quality leaf and realize ‘significant earnings,’ according to a Capital Radio Malawi story.
But while the story suggested that quality was the key to ‘significant earnings’; it suggested too that the fall in prices that had occurred was due to tobacco-product volume declines.
‘The tobacco industry is facing numerous challenges on the international market, due to the anti-smoking lobby championed by the World Health Organization (WHO),’ the story said.
‘This has led to a decline in prices as well as markets for the crop, which is Malawi’s major foreign exchange earner.’
The Capital Radio story said that during the 2016/2017 growing season, Malawi had reduced the quantity of tobacco it had produced from that of previous years, without saying by how much.
The story did not say, either, how the average grower price this year had compared with that of previous years when more tobacco had been grown.
The story did say, however, that this year’s market, which opened in April and closed last month, generated US$199 million, down US$77 million or about 28 percent from that of 2016, $276 million; and down US$138 million or about 41 percent from that of 2015.
The Tobacco Control Commission’s acting CEO, David Luka, was said to have told Capital FM, that ‘despite low production, the quality of the leaf improved this year’.
Luka said this was mainly because farmers were now using certified seeds, and were properly monitored and inspected.
August 15, 2017
Sale confirmed
Indonesian cigarette maker Gudang Garam said in a regulatory filing that it had signed an agreement with Japan Tobacco Inc for the sale of its wholly-owned subsidiary Karyadibya Mahardika and its distributor Surya Mustika Nusantara for US$677 million, which, when combined with the companies’ debt of US$323 million, increased the value of the transaction to US$1 billion, according to a Deal Street Asia story relayed by the TMA.
The acquisition was announced by JT on August 4.
August 9, 2017
Insurance “rip-off”
Insurance companies are still hitting electronic-cigarette users with a ‘smoker’s surcharge’ despite mounting reports that indicate vaping is far less dangerous than is smoking tobacco, according to a story by Russell Blackstock for The Sunday Post, Scotland.
Although recent government-backed studies have found that vaping e-cigarettes is 95 percent less harmful than smoking cigarettes, life insurers take the view that a puff on a cigarette is identical to a puff on a vaping device. And life insurance premiums are often twice as expensive for smokers as they are for non-smokers.
Linda Bauld, professor of health policy at Scotland’s Stirling University, believes that classing people who use e-cigarettes as being the same as smokers is “fundamentally wrong”.
“It is just not fair,” she reportedly told the Sunday Post. “As well as being financially punitive to people who vape, it can also send negative messages to those who want to stop smoking. It is not helpful.
“If vapers are regarded as being the same as tobacco smokers it could lead to an attitude of ‘why bother’ and before you know it they are back at the corner shop buying cigarettes.”
People who vape and don’t use combustible tobacco products should be treated the same as non-smokers by insurance companies, Bauld added.
It is estimated that about three million people in the UK are now using vaping devices.
Many don’t realise they will pay up to twice as much as non-smokers for life or critical illness insurances.
Meanwhile, Andy Morrison, Scottish lead advocate for the vaping organization the New Nicotine Alliance, said the practice by insurance companies was a “rip-off”.
“Vapers are being fleeced by insurance companies,” he said.
“It is ridiculous that insurers are still conflating combustible tobacco and vaping products despite all the evidence from bodies such as Public Health England that vaping is far less harmful than smoking.”
August 8, 2017