eylon Tobacco Company PLC (“CTC”) wishes to clarify its position regarding the news article published in the Daily Mirror on June 20 (Tuesday) under the headline ‘The dwindling tobacco industry - Tobacco no more’. The article which is supported by facts taken from an interview with Mr. Pubudu Sumanasekera, CEO of ADIC, has alluded to CTC in the second paragraph and then gone on to level allegations against the ‘tobacco industry’. As the only legal manufacturer of cigarettes in the country and with the initial reference made to the Company in the article, it’s highly probable that the said allegations may mislead the public to believe that he was referring to CTC throughout his interview as reproduced in the article.
We would like to firstly highlight that as per 2016 statistics, the Sri Lankan tobacco market, which amounts to approximately 7 billion sticks, consists of the legal cigarette industry (53%), the beedi industry (46%) and the illicit tobacco trade (1%). CTC is the only legal cigarette manufacturer while there are over 600 manufacturers representing the beedi industry. Although the legal cigarette industry is highly regulated and taxed, beedi enjoys a relatively more favorable operating environment being under regulated and under taxed. The beedi industry contributes merely LKR 2 billion to government revenue annually.
Ceylon Tobacco Company has operated in Sri Lanka for over 100 years. During this time it has been recognized as one of Sri Lanka’s most economically impactful corporate organizations, contributing over LKR 87 billion to the national economy through excise, and infusing over LKR 11 billion to the local economy in 2016 alone. We create over 45,000 jobs and support over 300,000 livelihoods across our value chain. The beedi industry is quite a labor-intensive cottage industry that generates around 20,000 employment opportunities. We therefore specifically deny the following statement made by Sumanasekera which read, “In comparison with other industries tobacco is not an industry which generates employment, as it is a machine based industry where the use of human resource is minimal”.
Sumanasekera has also gone on to suggest that when tobacco cultivation is minimized in the country, tobacco farmers will no longer be exploited by the tobacco industry to act in the forefront despite government regulations against the industry. CTC sources its entire tobacco leaf requirement from local farmers, thereby creating employment opportunities to over 20,000 farmers and supporting the livelihoods over around 80,000 farmer families across the island. Through its interventions and support, CTC ensures that tobacco cultivation is burden free to the state and that tobacco farmers are guaranteed the purchase of their full crop at a pre-agreed, competitive price at the start of the growing season. In addition to this, CTC also provides many other facilities to the farmers such as, all the required agricultural inputs for the crop on a credit basis annually and free agricultural extension services.
And on the ground, CTC offers technical support, maintains a Grower Pension Scheme (which is managed by farmer associations where farmers are eligible to withdraw savings after 55 years) and aids farmers through a phased out loan recovery system in the event of a natural disaster. While there are many parties advocating the curtailing of tobacco cultivation in the country, tobacco farmers are yet to find and alternative crop that offers them the significant and sustainable socio-economic benefits of tobacco. It’s therefore no surprise that tobacco farmers want to grow tobacco; a fact that they have continuously conveyed to the Government when suggestions are made to curtail cultivation.
"Through its interventions and support, CTC ensures that tobacco cultivation is burden free to the state and that tobacco farmers are guaranteed the purchase of their full crop at a pre-agreed, competitive price at the start of the growing season"
Furthermore, Sumanasekera has gone on to say that tobacco cultivation uses very high amounts of insecticides and pesticides, which cause many health hazards, including chronic kidney disease in Sri Lanka. He has also stated that the Government has already decided to stop growing tobacco due to heavy erosion of soil caused by tobacco cultivation and that this will protect the children of tobacco farming families from the risk of lung disease.
Cigarette tobacco farmers use less than 0.1% of the country’s total arable land (2,500 Ha) for cultivation and have continuously reduced their land dependency through year on year yield improvements achieved under the guidance and support of CTC. In addition to the tobacco grown for the manufacture of CTC products, in 2016, around 2,700 Ha of land was used for the cultivation of tobacco for other products such as beedi and chewing betel. Cultivation of cigarette tobacco is carried out under close supervision of the Department of Agriculture.
Unlike other agricultural or cash crops, cigarette tobacco farmers use minimal amounts of chemical fertilizers adopting internationally recognized methods such as integrated pest management systems to reduce dependence on chemical pesticides. CTC was the pioneer in introducing soil conservation techniques such as Sloping Agricultural Land Technology (SALT) as early as the 1990’s. This technique has been used in the tobacco industry both locally and internationally. Our farmers are also encouraged to use compost produced from tobacco dust as organic fertilizer.
Through CTC’s interventions, they (Farmers) also place a high level of focus on biodiversity and environmental protection through Sustainable Tobacco Production (STP). The notable use of paddy husk as fuel in curing barns, which eliminates the use of firewood, must be mentioned here. We would like to point out that every effort has been made to minimize the environmental footprint of tobacco cultivation and that we see no correlation between chronic kidney disease in Sri Lanka and tobacco cultivation. We also fail to see the link between soil erosion and the risk of lung diseases in children of tobacco growing families in the countries.
Another statement made by Sumanasekera refers to the tobacco industry “targeting the young generation as new users”. As a responsible tobacco company, CTC adheres to strict internal marketing principles and ensures no steps have been taken to market our products to anyone below the age of 21, thereby preventing underage smoking. In fact, we continue to support our retailers and traders by providing awareness through youth smoking prevention initiatives as well as continuous training on age verification procedures.
It’s interesting to note that a recent global survey conducted from 2012 to 2015 by the US Center for Disease Control and Prevention (CDC), covering 61 countries, has revealed that Sri Lanka has the lowest prevalence of teen smoking (1.7 percent) in the world. While for years, tobacco control groups have continuously accused the industry of promoting smoking among the youth, we believe that this research and the statistics speak for themselves.
We would also like to stress that ours is a legal business selling a legal product. Whilst we acknowledge that smoking tobacco poses a health risk, we believe that smoking is an informed choice made by adult consumers, who have the right to do so. CTC is the largest tax contributor to the state and plays a catalytic role in Sri Lanka’s economic development while operating responsibly in the island. Despite these credentials, there have been many instances where tobacco control groups have levelled unfounded, baseless accusations against the company and the industry. Unfortunately, in many of these instances there have been no credible sources nor the presence of verifiable figures.
We are also troubled by the fact that the same tobacco control groups choose to ignore under-regulated tobacco products such as beedi and continue to attack the only legal player, despite beedi accounting for 46% of the total tobacco market in Sri Lanka. Moreover, most parties involved in tobacco control seem oblivious to the threat of the burgeoning illegal cigarette trade.
In the first quarter of 2017 alone we saw the detection of 35 million sticks of smuggled cigarettes compared to the 4 million detected during the whole of 2016. With only one in ten sticks being detected, an estimated 320 million smuggled sticks are estimated to have penetrated the market resulting in a LKR 13 billion loss to government revenue.
CTC reiterates that as a responsible corporate citizen, CTC has always complied with all existing laws and regulations in the country and will continue to do so.