Tobacco supply chain

Strategy

We are committed to securing the long-term supply of quality leaf tobacco at the best cost– creating value both for the JT Group and for tobacco farming communities.
To do so, we use a tailored approach to work with tobacco leaf farmers to improve their economic, social, and environmental conditions.

1. Preservation of tobacco farming

1. Preservation of tobacco farming

Our first priority is to preserve tobacco farming and ensure the long-term viability of the farmers who supply us directly and indirectly. If farmers cannot make a profitable living from growing tobacco, then our business cannot succeed.
Our farmer profits model is being tailored to different local circumstances and helps us to offer sustainable returns over the long term.

Profit comes from more than price alone. We work closely with farmers to ensure they have access to the right growing materials and use the best growing and curing methods to maximize the quality and yield of tobacco leaf per hectare. We also encourage crop rotation, which can provide alternative income, can improve food security, and promotes soil preservation. Research and innovation is crucial to understanding the best farming methods. Our Agronomy, Development, Extension, and Training (ADET) center in Brazil studies many aspects of tobacco farming, and works closely with farmers to implement the results on the ground.

2. Social and environmental leadership

By helping farmers to be profitable over the long term, we can make a positive contribution to social conditions in tobacco farming communities. We provide additional support by investing to improve quality of life and overall conditions in the rural communities where we operate. We do this by creating access to clean water, improving well-being, and advancing education through targeted social investments within our Grower Support Programs.

2. Social and environmental leadership

We aim to reduce the environmental footprint of our tobacco supply chain, and our primary focus is on energy reduction and good forestry practices. The latter is of particular importance because we rely on wood as a vital fuel for flue-cured tobacco.

3. Operational excellence

3. Operational excellence

It is vital that our operations are well equipped to support our supply chain. By allocating suitable resources to our operations, we ensure that the appropriate organization, capital infrastructure, systems, and processes are in place.

4. Access through partnership

We can only respond to the economic, social, and environmental factors that influence the long-term supply of tobacco leaf by working in partnership. We build direct relationships with farmers and, wherever possible, we aim to purchase tobacco directly from farmers rather than from auction floors. This helps to ensure that we secure access to tobacco leaf in a responsible manner. We also work in partnership with governments, NGOs, leaf tobacco dealers, and other stakeholders on issues in our tobacco supply chain.

4. Access through partnership

Agricultural labor practices and child labor

We source tobacco from several developing countries where communities are highly dependent on agriculture. Alongside improving growing standards, we work with our farmer communities to address a range of important issues. These include improving the rights and safety of tobacco workers through our Agricultural Labor Practices; improving living conditions and livelihoods through our Grower Support Programs; and eliminating child labor, for instance through education with our ARISE program.

Agricultural labor practices and child labor

Agricultural labor practices

Our Agricultural Labor Practices (ALP), launched in 2013, define the standards we expect of our contracted tobacco growers for safe working conditions, fair treatment, working hours, provision against forced labor, and freedom of association. They also describe our stance against child labor and measures to eliminate it. Our farming experts, who are all fully trained on ALP, observe labor practices during farm visits, report on their findings, give advice to farmers and agree improvement programs. We have continued implementing ALP with our directly contracted farmers as well as with indirectly contracted farmers through our tobacco merchants.Since 2015, the International Labor Organization (ILO) has provided support in the areas of training and impact assessment.

Grower support programs

Our Grower Support Programs improve the quality of life for people living in farming communities by overcoming issues such as access to safe drinking water and education. The programs make a positive contribution to social conditions, help to uphold the rights of workers and promote higher labor standards in the field.

ARISE:Our contribution to preventing child labor

We take a strategic approach to eliminating child labor where we operate. At the core of our approach is an emphasis on improving the economics of farming. Encouraging more profitable farming practices, a guaranteed price for contracted farmers, and good agricultural standards will help prevent farmers from using child labor. Building on the economic approach, our social approach engages communities on the complex issues of child labor and establishes and trains community members on community child labor monitoring systems. This foundation underpins our key programs such as ARISE.

In 2012, in partnership with U.S.-based NGO Winrock International and the ILO, we launched a multi-year program to help prevent and eliminate child labor in our tobacco communities. The ARISE program works to tackle the social and economic factors that cause tobacco farmers to engage children in hazardous work.

ARISE aims to ensure that children are not part of the workforce by providing education and engaging with tobacco farming communities in various ways. This ranges from providing educational materials, after-school tutoring, and mentoring to vocational training for older children in farming schools.

Through ARISE, we work with communities to improve their understanding of the long-term value of education, and the future prospects that it can bring. ARISE also works to replace lost income from child laborers through Family Support Scholarships, which can enable parents or guardians to send their children to school.

ARISE:Our contribution to preventing child labor

For more details, please refer to:

ARISE Web site

Long-term farmer profits

Long-term farmer profits are an essential part of our strategy to secure a lasting supply of high-quality tobacco leaf. Many factors affect the profitability of our farmers. Although some are outside our control, such as weather patterns and demographic change, we focus our attention on those that we can influence, including cost of production, yield, quality, and price. As a result, we have established four key pillars to improve farmer profits in our international procurement of tobacco:

Managing direct relationships with farmers

Building and maintaining strong relationships with our farmers helps us to optimize the factors that improve their profitability. Our local farming experts work with our directly contracted farmers to help them improve tobacco production techniques.

Managing direct relationships with farmers
Supporting production cost savings

Supporting production cost savings

Reducing the cost of tobacco growing, harvesting, and curing results in direct savings for farmers. We can reduce costs by helping farmers to be more efficient and by bringing down the cost of materials. We buy many input materials in bulk and pass savings on to our growers. By sourcing ourselves, we can also ensure quality and reliability.

Modeling sustainable farmer returns

We have developed a unique farmer profits tool to support our goal of enabling farmers to earn sustainable profits over three to five years. Currently in place in Brazil, the tool takes into account the local conditions and other factors, including costs, risks, and alternative income sources, which inform the price that we negotiate with farmers each year.

Modeling sustainable farmer returns
Managing direct relationships with farmers

Managing direct relationships with farmers

Our ADET center in Brazil is dedicated to researching tobacco farming innovations that will improve quality and productivity.

Sustainable wood

In many regions where we operate, wood is vital for effective tobacco curing, both as a fuel and for building curing barns. A sustainable supply of wood is therefore key to ensuring a long-term supply of leaf tobacco.

Deforestation has often been widespread due to pressure from agriculture and urbanization, weak regulation, and poor woodland management.

To tackle this situation, we work with tobacco growers to educate them on the environmental and economic value of wood. We help to replace the wood used for curing through tree planting initiatives and developing new barn construction techniques, supplemented by our reforestation program.

Sustainable wood

Tree planting initiatives

Our agroforestry initiatives train and support farmers to plant and maintain enough trees to ensure they can meet the fuel and timber needs of today's tobacco growing communities, and those of future generations. In Brazil, agroforestry is well established and growers either plant trees for their own wood supply or purchase wood from local renewable sources.

Reforestation

Supplementary to our agroforestry initiatives is our reforestation program. The program aims to regenerate previously deforested areas in locations where we have directly contracted farmers that depend on wood for fuel or timber. We also work on the efficiency of cooking stoves in local communities, which reduces fuel consumption.

Barn construction techniques

Barns are used in both air-curing and flue-curing of tobacco. Wood-built barns are commonly used for air-curing, and wood is a common fuel source for flue-curing. To improve curing efficiency, we conduct trials to develop low-tech improvements in furnace and barn design adapted to the areas where we operate. We train farmers in new developments and provide direct support through our local farming experts. Recent innovations include our live barn initiative and new flue-curing technologies.

Live barns

Live barns

Live barns are changing the way that our farmers air-cure their tobacco in Malawi and Zambia. Instead of using vertical timbers, live barns are constructed by planting trees, which after three years grow to form the main structure of a curing barn. This avoids the need for maintenance and a continuous supply of wood for construction.

New flue-curing barns

Flue-curing barns require a constant heat source for each week-long curing cycle. In Africa and Brazil, farmers mainly use wood, which in Africa is becoming scarce and expensive to source.

Added to this, inadequate curing infrastructure and access to building materials prevents farmers from realizing the full yield and quality potential of their crop, and hence affecting their profitability.

To tackle this, we have developed a new low-tech barn design for flue-curing. Farmers installing the new design features are anticipated to benefit from an increase in cured leaf of up to 15%, a higher-quality product, and reduced wood consumption of up to 65%.

Our innovative Matobe curing barns in Zambia optimize tobacco quality whlist reducing wood consumption, resulitng in a 12 % reduntion in CO2 emissions.

NOTE

The information on this page primarily relates to our directly contracted farmers outside Japan.