Leaf supply chain - Raw material sourcing

How do we work with our leaf suppliers?

Tobacco leaf sourcing is a key part of our supply chain, and a critical component of future business growth. We work closely with our directly contracted growers and third-party leaf merchants to enhance security of supply and leaf provenance. This provides greater flexibility when responding to changing market requirements.

In 2021, we worked with 59,236 directly contracted tobacco leaf growers in Bangladesh, Brazil, Ethiopia, Japan, Malawi, Serbia, Tanzania, Turkey, the U.S., and Zambia. Contracting leaf growers directly enables us to produce a customized crop, while improving growers’ productivity, leaf quality and leaf integrity. The direct contracting model also allows us to maintain verifiable provenance and traceability of leaf supply.

Tobacco leaf sourcing

Every year, we purchase approximately 50% of our planned leaf requirements from leaf merchants. The volume of leaf sourced from each established sourcing country varies from year to year, depending on the quality and volumes required. In most cases, our leaf merchants source the tobacco leaf directly from contracted growers. This means that there is a direct contract between the leaf merchants and the growers, and that the grower receives advice on crop management and good labor practices from the leaf merchant.

In some countries, leaf can be sourced in a different way, for example in India at auction. This can make it challenging to determine the provenance of the leaf and implement Agricultural Labor Practices. In these cases, we work with the leaf merchants and other stakeholders (e.g. the Indian Tobacco Board in India) to find a way to implement a robust and relevant supply chain due diligence process. Although we source leaf from more than 30 countries, the vast majority still comes from eight key global suppliers. We work closely with these suppliers to ensure good practices.

Sustainable agriculture

As well as securing the long-term supply of quality tobacco leaf for our business, we want to create shared value for both our growers and our business. We do this by providing extension services, including crop inputs in specific origins aimed at increasing grower productivity, while trying to improve our social and environmental impact. By enabling growers to become more productive and efficient in the way they grow, harvest, and cure tobacco leaf, we support them in becoming more profitable and to use resources in a more responsible way.

All of our leaf suppliers are expected to follow Good Agricultural Practices (GAP). The concept of GAP is to produce a quality crop while protecting, sustaining, or enhancing the environment with regard to soil, water, air, and animal and plant life.

In addition to GAP, the majority of our directly contracted growers are also required to follow our Minimum Agronomic Standards (MAS). These growers are contracted to grow tobacco under our stewardship. In return, they receive credit for prescribed crop inputs as well as dedicated extension service provision from our Agronomy Technicians. This support includes recommendations delivered through a scheduled visitation program for the duration of the crop cycle. Contracted large-scale commercial growers do not require dedicated extension service provision from us.

These farming practices are not limited to tobacco. We encourage growers to use seasonal crop rotations, i.e. growing complementary crops such as maize, groundnuts, or soya on the same land in alternate seasons. The benefits of this are extra income, improved food security, and soil conservation.

We continually look to improve our understanding and methods of tobacco farming and have made significant investments in this regard. We have Agronomy Development & Extension Training (ADET) facilities in Brazil and Zambia that explore ways of improving productivity and leaf quality in tobacco farming. Both provide relevant, applied research and development activities, such as trials on topics like crop management, soil fertility, improvements in curing barn efficiency, production cost savings, mechanization, and agroforestry. Validated trial outcomes are passed on to growers through our extension service provision. ADET facilitates the provision of training and extension services for our growers in order to promote optimal grower productivity, quality, and leaf production integrity. Our investment in research and development also involves partnering with leading international academic institutions to develop innovative new ways of producing tobacco.

Agricultural Labor Practices (ALP) and Leaf Supply Chain Due Diligence (SCDD)

Our Agricultural Labor Practices (ALP) are based on the International Labour Organization’s conventions and recommendations. The program consists of three pillars: tackling child labor, respect for the rights of workers, and ensuring workplace health and safety.

As part of our continuous improvement approach, the ALP program allows us and our suppliers to identify potential labor challenges on tobacco farms and help improve labor practices on the tobacco farm. Being an integral part of the SCDD process, it also contributes to the social aspects of grower communities and supports sustainable agriculture overall. Whether we source tobacco directly from growers or through tobacco leaf merchants, our contracted suppliers are committed to implementing our ALP.

Our SCDD is based on a five-step framework - Identify, Prioritize, Respond, Measure, and Communicate and Report, while our ALP program helps us to identify issues on tobacco farms on a daily basis. This process follows the Guidance on Responsible Agricultural Supply Chains provided by the Organization for Economic Co-operation and Development (OECD) and the Food and Agriculture Organization (FAO), as well as recommendations by the International Labour Organization. It also follows the UN Guiding Principles for Business and Human Rights.

Due Diligence
  • Leaf Production Technicians

    In spite of the ongoing pandemic, we took some big steps forward in 2021. We not only continued our Supply Chain Due Diligence process, but also integrated it further into the way we operate. For example, our local teams developed action plans following the 2020 Grower Livelihoods Assessment in Zambia and Supply Chain Impact Assessment in India, a new livelihoods assessment was carried out in Malawi, and Supply Chain Impact Assessments were executed in Bangladesh, Turkey, and Ethiopia. As this important journey continues, we remain committed to driving positive change across the leaf supply chain by making an impact through collaboration and listening to rightsholders.

    Vuk Pribic,
    Leaf Supply Chain Due Diligence Director, JT International

  • Leaf Production Technicians

During these visits, the Agronomy Technicians provide technical advice on crop management and discuss good labor practices. In cases where they identify labor-related issues, they report their observations directly into our dedicated Enterprise Resource Planning (ERP) system. Depending on the nature of the issue, the Agronomy Technicians may also provide recommendations to the grower.

These observations are then analyzed and prioritized by the local country management. This enables the selection of the right improvement measures to address root causes and respond to the adverse impacts in the most appropriate way. We track the effectiveness of the response using KPIs, internal evaluation, assessments, and on-site investigations. We also consult relevant stakeholders, such as government authorities, civil society, members of affected communities, workers’ organizations and workers.

Our main objective at present is to align all our processes with the five-step framework. To ensure a streamlined and consistent approach, we aim to find synergies between our supply chain due diligence and the ALP program with the Sustainable Tobacco Program (STP).

We are facing a number of complex challenges. These include issues that are difficult for Agronomy Technicians to observe. For example, how to identify discrimination on smallholder farms, or how to optimize our process to deal with an Extreme Breach (if one is found) to ensure that both potential victims and rapporteurs are protected.

Extreme Breaches include the worst violations of workers’ rights, such as slavery, forced labor, human trafficking, violence, or severe physical, mental, or sexual abuse. These can be difficult for an Agronomy Technician to identify and address – especially if the issue is associated with criminal activity. Responding to an Extreme Breach therefore requires caution and, in many cases, support from the police and / or other authorities or non-governmental organizations. In 2021, we investigated 33 potential Extreme Breaches that were recorded by our Agronomy Technicians in the JTI AgroMobility App. After further investigation, 17 of the reported cases were found to be either unsubstantiated or incorrectly recorded in the system and 16 were confirmed as an Extreme Breach and swift corrective action followed.

It is essential to have a management process setting out how to respond to an extreme breach, to ensure that action is taken promptly and appropriately when indicators are observed. We expect each supplier to have a management process incorporating three elements: protection for the victim and rapporteur, a clear escalation route, timeline, and remediation plan, as well as access to specialist support.

Read more on ALP in our booklet

Achieving Reduction of Child Labor in Support of Education (ARISE)

Our flagship program ARISE – Achieving Reduction of Child Labor in Support of Education – has been committed to tackling child labor in our tobacco growing communities since 2011. Developed by JTI, the International Labour Organization (ILO), and non-profit organization Winrock International, it continues to forge real sustainable change by implementing robust solutions to prevent child labor.

In 2020, we restructured ARISE. Representatives in the countries where we grow our tobacco leaves are now responsible for managing local partnerships, assessing projects, and implementing local activities. This approach allows us to maximize efficiency, strengthen our relationship with growers, and harmonize the program with other relevant community projects.

Moving forward, we will embed the ARISE program within the ‘Respond’ element of our Supply Chain Due Diligence (SCDD) process: Identify, Prioritize, Respond, Measure, Communicate, and Report. We will also integrate data requirements for child labor into our existing leaf monitoring system, Leaf Point.

Launching our new ARISE model

2021 was a year of transition for ARISE, following the formal launch of our new ARISE model at the beginning of the year.

Under the new model, the overall ARISE strategy remains largely unchanged, as it has proven to be successful. However, we now determine projects and project goals based on local needs and challenges and define Key Performance Indicators (KPIs) accordingly.

Winrock International continued to implement the ARISE program during the first six months of the year, before we took over the full responsibility for identifying and implementing projects during the second half of the year.

Unfortunately, due to COVID-related issues such as school closures, we had to pause or adapt some of our programs in 2021. We also had to delay some of the project deliverables. In spite of these challenges, our local teams successfully launched three new ARISE programs in Malawi, Tanzania, and Zambia. Other locations are preparing to follow suit in 2022.

Moving forward, we will continue to expand this vitally important program as necessary. For example, local management are planning to launch ARISE programs in Bangladesh and Ethiopia, after identifying potential issues through our SCDD assessments.

Read more about the ARISE program.

ALP progress update

Target

AGRICULTURAL LABOR PRACTICES

We will implement our Agricultural Labor Practices (ALP) program in all sourcing countries by 2025.

Progress


Towards the 2025 ALP target 2021 Progress
100% of our supplying entities to report on ALP 97% of our supplying entities reported against ALP
100% of our growers to be covered by ALP 84% of our directly contracted growers and 97% of our leaf merchants' growers were covered by ALP
100% of tobacco leaf volumes to be covered by ALP 79% of our volumes were covered by ALP

We made significant progress over the last few years. Here are a few examples of how we did it:

  • Reporting improvements
    In 2020, we launched a new online reporting platform for ALP. This enables us to process data faster and with greater accuracy.

    In 2021 we improved our dialogue with Leaf Merchants – not only through annual Supply Chain Due Diligence (SCDD) reporting and annual meetings, but also by conducting series of webinars around supply chain due diligence. This enabled us to share best practices, discuss each step of the SCDD process, and promote collaboration. Momentum is building behind a common focus across the sector.
    In 2021, the team in Bangladesh also implemented ALP and due to the high number of directly contracted growers in this origin it had a significant impact on some of our reported KPIs.

  • Sustainable Tobacco Program (STP)
    Our international tobacco business is one of five global manufacturers participating in the STP Steering Committee. STP is a risk-based program, a collaborative platform to enable continuous improvement in relation to supply chain due diligence. It is also an impact driven program. The aim is to improve the sectors environmental and social footprints, to contribute towards the United Nations Sustainable Development Goals (SDGs) and to enable transparent communication of responsible practices across the supply chain. Since 2019, we have been working with other manufacturers, leaf merchants, external subject matter experts, and various organizations and service providers to further develop STP. One of the key themes is “Human and Labor Rights”.

    The development phase of the new STP was completed in June 2021, and full implementation of STP begun. An external STP Secretariat has been appointed to support the implementation by selecting One Peterson, a company with a proven sustainability track record. After two years of chairing the STP throughout the development, JTI handed over the rotational role of the STP Steering Committee chair to another manufacturer.

    Also in 2021, our Leaf Merchants finalized the online self-assessments for the crop year 2020. Self-assessments cover all STP themes: Water, Human and Labor Rights, Livelihoods, Climate Change, Soil Health, Crop, Natural Habitat and Governance. Online self-assessments for the crop year 2021 are well in progress. Detailed and focused in-country pilot assessments are underway for 2022.
    In other developments, the STP’s IT platform, hosted by Worldfavor, has evolved to provide an even more efficient and digitally enabling environment not only for data analysis, but also to support the continuous improvement process of the STP Supply Chain Due Diligence.

  • Progress in Indonesia
    By 2017, all of the leaf merchants the business was purchasing leaf from in Indonesia were reporting on ALP, with almost 100% of our grower base included in our leaf merchants’ ALP observations.
    In 2018, we acquired new business in Indonesia and extended the supplier base, not only for leaf but also for Rajangan tobacco and cloves. The plan is to carry out a leaf supply chain impact assessment in 2022. The impact assessment scheduled in 2021 was postponed due to COVID-19.

  • Progress in India
    Following a Supply Chain Impact Assessment (SCIA) in India in 2019, where more than 500 people in the tobacco sector were interviewed (led by consultancy firm twentyfifty, leaf merchants have established a sustainability committee in 2020, under the Indian Tobacco Association, to drive change on a sectoral level against mapped priorities. The business is working in collaboration with the leaf merchants and other manufacturers in this process.

    We made significant progress in India in 2021, despite significant COVID-related challenges. The project involved all leaf merchants supplying Virginia tobacco to three global manufacturers including JTI. Through our Supply Chain Impact assessment, facilitated by the sustainability consultancy twentyfifty, the following priority issues were identified: health, income, climate impacts and resilience, and living conditions of the more vulnerable migrant workers.

    Based on our Supply Chain Impact Assessment findings and as importantly, rightsholder feedback, the Indian Tobacco Association’s Sustainability Committee defined industry-level responses. An action plan was developed, including pilot improvement projects and additional research. This action plan is now, in its preliminary phase, being implemented across approximately 10% of the grower base.

    The main activities include distributing personal protective equipment (PPE), improving tobacco profitability measures, focusing research on health and wellbeing, and training farmers and workers on various topics, including health and safety, root causes driving child labor and adverse working conditions. The next step is to assess the effectiveness of the pilot program in tackling these issues and adjust our response accordingly.

  • ALP roll-out in Ethiopia and Bangladesh
    A Supply Chain Impact Assessment (SCIA) was executed in both Bangladesh and Ethiopia in 2021. This allowed the local business to identify adverse impacts and prioritize them according to severity of impact and likelihood of the harm occurring. The local team then developed detailed action plans to address these salient issues.

    The prioritized issues also helped them to select the most appropriate ALP observation criteria for Bangladesh and Ethiopia. This tailored approach made ALP implementation easier and more targeted. It also increased the relevance of the program in these countries.

    The original plan was to implement ALP in both Ethiopia and Bangladesh in 2021. However, due to the worsening security situation in Ethiopia, we were only able to implement it in Bangladesh.

    In Bangladesh, the local team selected the main growing region (Kushtia) as a pilot. Local management, supervisors, and Agronomy Technicians were successfully trained on ALP.

    In 2022, the local team will continue their efforts to implement ALP in Ethiopia (dependent on security situation). The local Bangladesh team will also roll out ALP to all the other growing regions in Bangladesh before the start of the next crop year in June 2022.

Historical data

Our target is to implement ALP in all sourcing countries by 2025. In this journey, the sourcing base is changing year on year due to new acquisitions or closures, demand to supply impact, climate change, etc. In spite of these changes, we have made progress in 2021, and we have a clear plan to further continue the progress in 2022: we will continue onboarding remaining suppliers, start implementing ALP in Ethiopia and scale up in Bangladesh, continue supply chain due diligence process in India… A credible, impactful implementation of our programs and processes requires time and efforts, and we accept no compromises.

Historical data

Find out more about how we plan to achieve this target, below.

100% of our supplying entities to report on ALP

Progress so far: of all the entities that provided us with tobacco leaf, either directly or through leaf merchants, 97% reported against ALP in 2021.

Supplier Entities Reporting

100% of our growers to be covered by ALP

Progress so far: in 2021, 84% of our directly contracted growers and 97% of the growers supplying through our leaf merchants were covered by ALP.

Growers covered by ALP

100% of tobacco leaf volumes to be covered by ALP

Progress so far: In 2021, 79% of our volumes were covered by ALP.

We have made several acquisitions in recent years, including in Ethiopia, Bangladesh, Indonesia, and the Philippines. These will be approached on a case-by-case basis, as we need to understand the local market, culture, and challenges before putting in place the necessary programs.

In November 2021, the local team successfully implemented the ALP program as a pilot in the Kushtia growing region of Bangladesh, which covers approximately 50% of our growers in this origin. The local team was also planning to implement ALP in Ethiopia in 2021 but unfortunately the worsening security situation there made this impossible. They now plan to implement ALP in Ethiopia in 2022, subject to the situation on the ground improving.

Volumes covered

Implementation of Agricultural Labor Practices in Japan

Our ‘One Tobacco’ journey – to align our Group-wide leaf supply management activities – started back in 2017, when we carried out an ALP pilot study in Japan. Full implementation of the program then followed in 2018. We have a long-standing relationship with growers in Japan, and the ALP program has reinforced this relationship by continuously improving the labor environment on tobacco farms.

In 2021, we gained a deeper understanding of the farm situation and provided feedback and advice to growers. Based on our observations, we will continue to make improvements to ALP.

Our farm practices in Japan

  • ADET JAPAN

    In Japan, we are constantly looking to promote optimal grower productivity in tobacco farming. ADET JAPAN (formerly JT Farm) runs research and development activities, such as trials for developing efficient cultivation methods, agricultural machinery, and Crop Protection Agents. We also assess the productivity of our cultivation methods for new leaf varieties in Japan for testing purposes. We aim to expand new technology or leaf varieties with leaf growers as quickly as possible.

  • Enhanced curing and baling

    We are currently implementing a new curing process for burley tobacco, which can reduce working hours by 15% thanks to the mechanization of sewing and curing and by using a no-sorting packing method. This method also helps to prevent the contamination of non-tobacco related materials during green leaf baling. By the end of 2021, 8.6% of burley tobacco growers had adopted this new process. We will continue to scale up this practice in 2022 and beyond.

Collaboration with growers for sustainable leaf production in Japan

In Japan, the number of tobacco growers and tobacco cultivation areas have been shrinking. Reasons for this include a shortage of workers due to a lack of successors and employment. Due to these circumstances, further productivity improvement is required.
In 2019, Japan Tobacco and Japan Tobacco Growers’ Association discussed various new initiatives to ensure the sustainability of tobacco leaf sourcing and meet the market’s needs. Launched in 2020, these initiatives included the provision of tailor-made support for individual farms, and gathering and implementing the best practices of more experienced growers.

We hope that these activities will help growers to implement more efficient production methods, which in turn will strengthen the foundations of their operations. We are aiming for more sustainable leaf tobacco production through the continuous collaboration with farmers.

Supporting and communicating with growers during the pandemic

Due to COVID-19, we have had make changes to the way we interact with growers. Here are a few examples of how we have adapted:

  • Where practical, our field Agronomy Technicians provided growers with technical support via phone or video call, instead of face-to-face.
  • Our Agronomy Technicians also helped to raise awareness among growers of COVID-19 secure working practices, such as self-isolation, hand washing, and social distancing.
  • In our international tobacco business, we launched a new online tool for processing grower contracts remotely, and supported growers with marketing.
  • We helped to print and distribute COVID-19 educational materials in tobacco-growing communities.
  • Where appropriate, we did continue to visit our growers in person, following all of the relevant health and safety guidelines set out by the World Health Organization (WHO) – for example by wearing masks, using hand sanitizer, and keeping a safe social distance. We also took additional safety measures, such as installing partitions and checking visitors’ temperatures at our leaf buying stations in Japan, and strictly managing grower movement and attendance at all our buying stations.

Protecting our employees and their families, our tobacco growers and their communities will always be one of our top priorities. We will continue to make every effort to sensitize communities to COVID-19 preventive measures, working in partnership with local governments and other organizations.

We will also continue to engage with our leaf merchants to better understand how they are addressing COVID-19 related challenges, and how they are supporting their growers, communities, and employees. We hold online meetings with our key suppliers and receive their feedback on concrete actions and plans. In our regular ALP/SCDD reporting we have a separate section dedicated solely to COVID-19 challenges and efforts, and we share best practices with all of our leaf merchants.

Engaging with our stakeholders

Working in collaboration with internal and external stakeholders has been key to the progress and success of the Agricultural Labor Practices program.

Our relationships with directly contracted growers produce tangible results, thanks to regular farm visits, dialogue, and training. Local and global meetings with leaf merchants enable us to identify where additional training, mechanisms, and processes are needed to manage labor risks. Engaging with local government agencies in the countries where we operate enables us to address fair and safe labor conditions in specific locations. For example, we have been successfully engaging with the Indian Tobacco Board to make progress in the area of labor rights in India.

Our international tobacco business is an active member of the Sustainable Tobacco Program (STP) and was chairing the STP Steering Committee (consisting of industry peers) until July 2021. STP is an industry-wide platform enabling businesses to collaborate on human rights, environmental issues, and other sustainability challenges, and to drive sustainable agriculture through a continuous improvement process. 2019 was a year of reform for STP, as it was restructured around the five-step framework: Identify, Prioritize, Respond, Measure, and Communicate and Report. The aim of this change is to put in place a robust supply chain due diligence process with a focus on impact.

Case study

Eliminating Highly Hazardous Pesticides (HHPs) from our supply chain

Across the JT Group, we are working to replace Highly Hazardous Pesticides (HHPs) with safer and more environmentally friendly options.

In January 2022, we updated our JTI internal standards for Crop Protection Agent (CPA) residue. As a result, the limit for HHP Criterion 1 (WHO Hazard Class 1a and 1b) is now set at laboratories’ highest Limit of Quantitation (LoQ). We will adjust this limit as necessary to reflect any future changes in the WHO Recommended Classification of Pesticides by Hazard.

The HHP limits will be applied to all processed tobacco from crops transplanted in 2022. If, through our analysis, we detect that the level of HHPs Criterion 1 exceeds the LoQ, we will not purchase the tobacco. We formally communicated this to all of our tobacco suppliers in February 2021.

In addition, we have made it clear to our suppliers that we expect them to avoid environmental contamination and protect people and animals from exposure to hazardous CPAs and reinforced the point that using less hazardous CPAs is as important as wearing the correct personal protective equipment.

However, identifying and eliminating HHP Criterion 1 is only the first step. Starting from 2022, we are also planning to address other HHPs (criteria 2 to 7).

Case study

Promoting Good Agricultural Practices

Our Minimum Agronomic Standards (MAS) include practices that contribute to water and soil conservation, such as mulching to decrease water evaporation, reservoirs for seedling production, the use of box ridges to capture rainwater within the field and reduce runoff and erosion. Also, we encourage growers to use seasonal crop rotation and practice minimum tillage.

The Target Crop Calendar that forms part of MAS stipulates that tobacco seedlings are planted at a preferential period in the crop year so that the maximum plant water requirement is most likely to correspond with consistent and adequate rainfall, reducing the need for extraction of local water supply for irrigation.

Case study

Helping growers in Zambia to run their business

Through the 2020 Grower Livelihood Assessment in Zambia, the local team discovered that around 69% of our grower base is food-insecure*1 and susceptible to poverty.

In response, it was decided to pilot financial literacy training for growers, with the aim of improving their livelihood and economic opportunities. The training is designed to empower growers with key financial knowledge and skills to help with the day-to-day running of their business.

For growers, enhanced financial planning and budgeting skills can lead to improved productivity (tobacco quality and volumes) and food security. This in turn can improve the financial stability, health and well-being of growers and their communities.

This cross-departmental project is also a perfect example of the ‘One Team’ transformation. Four departments (Corporate Affairs & Communication, Agronomy, Farmer Finance and Leaf Quality) work together to deliver the training, which has become a good communication platform for engaging growers on other important topics, such as crop production and marketing.

To date, 2,529 (39%) of our grower base in Zambia has been trained in financial literacy and the remaining will be trained during the 2022 crop year. From the total number of farmers trained in financial literacy, 30% are female and 70% are male growers.

  • *1 According to the FAO (Food and Agricultural Organization of the United Nations), a person is food insecure when they lack regular access to enough safe and nutritious food for normal growth and development and an active and healthy life. This may be due to unavailability of food and/or lack of resources to obtain food. Read more at www.fao.org/hunger/en/

Case study

Collaborating for change in Turkey

In Turkey, our international tobacco business sources leaf from several suppliers and regions, including our own vertically integrated operation. In early 2021, five global manufacturers and six local leaf suppliers, discussed to execute a shared Supply Chain Impact Assessment (SCIA) in Turkey as a part of our Supply Chain Due Diligence (SCDD) processes. All suppliers in Turkey contracted the sustainability consultancy twentyfifty Ltd. to carry out the assessment.

The SCIA took place between June and November 2021, with twentyfifty carrying out extensive social research during the July – August harvest season. Its local and international consultants interviewed a total of 567 rightsholders over a period of 23 days in 54 different communities in the Aegean, Samsun, and Adiyaman regions.

The findings were discussed with the six leaf suppliers individually, resulting in unique and appropriate action plans for each company. In November 2021, the leaf suppliers and manufacturers attended a joint industry workshop to discuss and agree collaborative industry-level actions to address the priority issues of shared concern. Focus areas agreed by suppliers were combating CPA management, provision and use of personal protective equipment (PPE), transparency on workers’ wages and conditions and the root causes of child labor.

The progress of these individual and industry-level action plans will be carefully followed in 2022 and 2023. This will help to optimize the Supply Chain Due Diligence and ensure a positive impact for the rightsholders.

Frequently asked questions about how we source raw materials

Q: Which markets do you source tobacco leaf from? Which markets are the biggest contributors?

A: We source approximately 50% of our tobacco from directly contracted growers in the following countries: Bangladesh, Brazil, Ethiopia, Japan, Malawi, Serbia, Tanzania, Turkey, the U.S., and Zambia. The other 50% is sourced through third-party leaf merchants from a variety of countries such as India, Indonesia, Italy, Spain, and Zimbabwe, but also from some of the countries where we directly contract growers. Although the main sourcing base is stable, the volumes and sourcing countries, and therefore the suppliers, may vary from year to year.

Q: How many Agronomy Technicians do you employ? Are the visits to the farms announced in advance? How frequently do you visit each grower?

A: In 2021, JT Group employed 638 Agronomy Technicians. The visits to our directly contracted growers are based on a visitation plan for each country, with assigned farms, and these can be announced or unannounced. During the visits our Agronomy Technicians provide technical advice on crop management and discuss and observe against good labor practices. The number of visits may vary slightly from country to country, but on average our growers are visited 7-9 times each crop cycle.

Q: What happens if Agricultural Labor Practices are not observed? Have you experienced cases where contracts had to be terminated?

A: If a contracted grower does not show any sign of commitment to meeting the ALP standards, or continually disregards agreed improvement measures, we may decide not to renew their contract for the following crop year. Our growers are only re-contracted based on performance – which includes compliance with contract conditions. For example, in 2021 a 95% re-contracting rate was achieved in Malawi, which clearly indicates that our grower base is predominantly made up of long-term partnerships.

Our approach to sustainable agriculture is to be grower-centric and thus support the grower and grower communities to apply good agricultural practices in a responsible manner. ALP is not a compliance tool, but a continuous improvement program. As such, the ALP program is an integral part of our strategy, with a focus on improving labor practices at farm level.

Q: How are you responding to media reports on the problem of child labor on tobacco farms?

A: We follow a five-step continuous improvement cycle: Identify, Prioritize, Respond, Measure, and Communicate and Report. If child labor is highlighted within the identification and prioritization stages of this process, then appropriate response programs are developed in that particular country/region in order to address the issue. We have implemented a number of programs to address the root causes of child labor in a variety of countries in which child labor is a particular risk, such as our flagship child labor eradication program ARISE (Achieving Reduction of Child Labor in Support of Education). Our leaf merchants also have a number of their own programs in place to address child labor.

We do not wait for media reports to make us aware that child labor is a particular problem in a given country or region. If the issue is identified as a priority, then targeted response programs should already have been put in place as per our five-step framework. In the past, we have shared these responses and any outcomes arising from them with media outlets or NGOs who raised concerns of child labor in a particular country. This has been done many times before and any dialogue we had with such parties has been made available on our web site.