Leaf supply chain - Raw material sourcing

Tobacco leaf sourcing

Tobacco leaf sourcing is a key part of our supply chain, and a critical component of future business growth. We have been working closely with our directly contracted tobacco leaf growers and merchants to build security of supply and enhance leaf provenance. This gives us greater flexibility when responding to changing market requirements.

In 2018, we contracted 46,500 tobacco leaf growers directly in Brazil, Ethiopia, Japan, Malawi, Serbia, Tanzania, Turkey, the U.S., and Zambia. The number of growers we work with will increase by approximately 65% in 2019, as a result of our acquisition of United Dhaka Tobacco Company Limited in Bangladesh in 2018. Contracting leaf growers directly allows us to monitor cultivation and labor practices more effectively. We currently employ 373 Leaf Production Technicians in our international tobacco business*2, who each supports on average 89 directly contracted growers. They visit every farm between seven and nine times during the course of the cropping cycle to ensure the growers understand how to implement best practices. We encourage open dialogue, which allows continuous improvement on the farms. In our Japanese operations, our 126 Leaf Production Technicians are each assigned an average of 40 directly contracted growers to observe through site visits and questionnaire surveys.

  • *1 Percentage rates are based on planned volume.
  • *2 This number excludes Bangladesh as it was recently acquired and Ethiopia as it operates on a different model

Agricultural Labor Practices

Our targets

AGRICULTURAL LABOR PRACTICES

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

Our Agricultural Labor Practices (ALP) are based on the International Labor 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.

Whether we source tobacco directly or through tobacco leaf merchants, all of our suppliers have a contractual obligation to implement our Agricultural Labor Practices (ALP). ALP drives a continual cycle of improvement and dialogue, a concept deeply rooted in our business. By speaking to growers about their experiences and the issues they face, we can constantly make improvements on the ground and anticipate future challenges. Read more on ALP in our booklet published on jti.com.

We previously made a commitment to implement ALP in all sourcing countries by 2019. We are pleased to share that in 2018, we observed 96% of our directly contracted growers and 96% of our tobacco leaf merchants reported against ALP.

We were able to achieve almost 100% coverage in a relatively short period of time due to a successful pilot program in our international tobacco business that ran between 2013 and 2016. Our learning shaped our current approach and enabled effective implementation with both our directly contracted growers and tobacco leaf merchants.

We have now broadened the target to include new acquisitions in countries such as Bangladesh and Ethiopia.

ALP Implementation in JAPAN

We have a long-standing relationship with growers in Japan. Following a 2017 pilot study, the ALP program was fully implemented in 2018. We carried out farm visits and questionnaire surveys to address labor issues on tobacco farms. Based on our findings and observations, we will continue to make improvements.

Our progress against the target

Of our directly contracted growers were observed against ALP

Of our leaf merchants reported against ALP

Engagement in 2018

Working in collaboration with internal and external stakeholders has been key to the progress and success of the ALP program. Our relationships with directly contracted growers have continued to produce tangible results due to face-to-face training and regular farm visits. Through a series of global and local meetings in 2018, we spoke to merchants about the strategic direction of the program.

This helped to identify additional areas of interest, such as special training on the ground, and a need for innovative mechanisms to manage labor risks. We also engaged with government agencies in the countries where we operate, in order to address fair and safe labor conditions at a local level.

Our international tobacco business is an active member of the Sustainable Tobacco Program (STP). This industry-wide platform enables businesses to share best practices on labor standards, safe workplaces, and sustainable tobacco agriculture. Throughout 2018, we exchanged ideas with other STP members to further develop and improve the program.

In 2018, we became part of the Guidance for Responsible Agricultural Supply Chains pilot project. This initiative is run by the Organization for Economic Co-operation and Development in conjunction with the Food and Agriculture Organization of the United Nations. By participating in this project, we have been able to share our own experiences, broaden our understanding, and benchmark against others.

Case study

Grower Clubs in Zambia

In Zambia, we have an established network of approximately 465 Grower Clubs. Each Club is formed of 10 to 20 growers and led by a Chairman. The aim of the Clubs is to bring growers closer together and create more effective dialogue. The Clubs allow continuous communication and engagement on a variety of topics such as Farmer Finance, Agricultural Labor Practices, Minimum Agronomic Standards, and other best practices. In 2018, we trained over 452 Chairmen, in partnership with the government and the banking sector. As a result, all of our contracted growers in Zambia, for instance, now have bank accounts.

Case study

Our activities in Japan

JT FARM

In order to share effective tobacco cultivation practices with growers, in 2018 we established the ‘JT Farm’ in Japan. The farm functions as a development center, where we try out new techniques and methods before introducing them to growers.

ENHANCED CURING AND BALING

We are implementing a new curing process for burley tobacco, which can reduce working hours by 15%. This method also helps to prevent the contamination of non-tobacco related materials during green leaf baling.

ARISE – Achieving Reduction of Child Labor in Support of Education

We work collaboratively with growers, communities, business leaders, and governments to create solutions that address the root causes of child labor whilst always keeping the child’s right to quality education at the heart of what we do. Year on year, we help more children into formal education and create new opportunities for them and their families.

Elaine McKay,
Social Programs Director, JT International

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.

In 2018, ARISE placed 7,123 children into formal education, building on the impact of previous years. The program is forging real sustainable change by implementing robust solutions to prevent child labor. For more details on the program, see ariseprogram.org.

In preparation for the next phase of the program starting in 2019, the ARISE team carried out a Social Return on Investment assessment of the program in 2018. The aim was to better understand the value of our investments, from the perspective of our beneficiaries. The findings helped us to complete a comprehensive review of all the program’s activities, showing their impact on both the beneficiaries and our business.

The review identified a number of activities that are particularly valuable in creating a positive impact. These include, for instance, income generating activities at a household level.

The assessment has affirmed the great value ARISE has brought to the communities where we operate over the last eight years. The findings will also enable ARISE to become a more scalable and leaner program in future.

Although the ARISE program is formally monitored and evaluated, it currently lacks a system to monitor the progression of children withdrawn from child labor over time. The program has incorporated this learning into the design of the next phase, by digitizing our approach to child labor monitoring.

This year has also seen a reshaping of the ARISE program and the contractual framework supporting it. From 2019 onwards, we will continue to work with our contractual partner Winrock International (a US based internationally renowned NGO) to deliver the program. Although the International Labour Organization (ILO) will no longer be a contractual partner, we welcome the ILO’s commitment to continue engaging with the program on the ground.

In the next phase of ARISE, we are committed to scaling up the ARISE program together with Winrock, and during 2019, we will embark on new and innovative partnerships that will allow us to digitize our approach to child labor monitoring in our directly contracted sourcing origins, where ARISE is currently active.

In 2018, we focused on raising awareness about child labor in the communities where we operate, through radio programs and local events. Therefore, our numbers of community members educated in child labor elimination have increased significantly in Zambia and Tanzania, in particular. An educated community will also enable us to increase the number of children taken off farms and into schools in the coming years.

FAQ on ALP and ARISE

Please find FAQ on ALP and ARISE

Promoting forestry

Our targets

FORESTRY

We will replace all wood from natural forests used in the tobacco curing process of our directly contracted growers with renewable fuel sources by 2030.

Our approach

Responsibly managing the use of natural resources within our operations supports the long-term viability of our business, and helps protect the environment. That’s why we have embedded forestry considerations into internal management processes and strategic decision-making throughout the organization.

We have been working closely with our growers to improve tobacco yield and quality. Reducing intensity in use of soil, water, and wood generates increased returns for growers and a reduction in environmental impact – all of which makes our business more sustainable.

In countries where tobacco production depends on wood for the curing process, we believe it is our responsibility to ensure this resource is managed and used efficiently while also contributing to environmental conservation.

Agronomy development and extension training

For me, as a researcher, JTI’s commitment to the real quest for sustainability has been very motivating. Our partnership forms a sound foundation for developing energy sustainability strategies for small-scale tobacco growers. This in turn helps to generate income, reduce GHG emissions, and increase the productivity of planted forests, securing a sustainable supply of wood for tobacco production.

Professor Dr. Jorge A. Farias,
Federal University of Santa Maria, Brazil

We have model tobacco farms in Brazil and Zambia, also known as Agronomy Development and Extension Training (ADET) centers. This is where we carry out applied agricultural and environment related research and development related to soil management, mechanization, production cost efficiencies, and cultural practices.

These innovative centers enable us to study, test, innovate, and calibrate our ideas, before taking them to growers as recommended best practices. The ultimate goal is to ensure tobacco farming remains viable and profitable for our tobacco growers, while respecting and complying with the relevant environmental requirements and regulations.

In our ADET centers, we focus on forestry research to improve wood production and efficiency in tobacco curing, as well as on forest conservation and rehabilitation. We identify the forestry challenges along with applicable solutions to minimize our impact on the environment at small-scale farm level.

Since 2013, we have been organizing ADETs days, to which growers from around the country are invited to participate. Last year, more than 1,100 growers attended the day, the theme being “Preparing the soil for a new future”. The growers learnt about technological innovation in tobacco production, as well as in soil and environment conservation.

Another fundamental part of these model farms is capacity building. There is a robust and continuous cycle of training and engagement of our Leaf Production Technicians, who pass on their knowledge of best agricultural practices and innovation to the growers.

Our minimum forestry standards

Through our ADET centers, we have developed our Minimum Forestry Standards – a set of forestry specifications and guidelines that our growers must follow. We have established these standards in all the countries where our growers use wood for tobacco curing, either as a source of curing fuel or for live barn structures: Brazil (2012) and Malawi, Tanzania, and Zambia (2014). As a result, growers in those countries are able to establish and manage better quality woodlots. This approach brings us closer to achieving sustainability in wood supply. It also reduces our environmental impact by helping to avoid deforestation and improve the conservation prospects for natural woodland.

Matope barns

An innovative development of the ADET centers are Matope (mud) barns, a more fuel-efficient type of curing barn.

Using Matope barns can lower wood consumption by 75% and reduce carbon emissions by 12%. At the same time, cured leaf yields are 17% higher, while the quality of leaf also improves and grower returns rise by approximately 400 U.S. dollars per hectare. Growers in Zambia installed over 1,300 Matope barn units in 2018.

This is an important development, as the emissions associated with curing tobacco leaf represent the largest single source of Scope 3 emissions for our business.

Sustainable agriculture

As well as securing the long-term supply of quality tobacco leaf for our business, we also want to create shared value. We do this by providing services that increase grower productivity, while at the same time always trying to improve our social and environmental impact. This results in higher yields and better quality, which in turn drives greater profitability.

Grower return is based on more than price alone. By enabling growers to become more productive and efficient in the way they grow, harvest, and cure tobacco leaf, we ultimately help them to use resources wisely and responsibly, and increase profits. For example, we help to cut costs by using fertilizers and agrochemicals more efficiently. This can lead to cost reductions of up to 20%.

All of our leaf suppliers are expected to follow Good Agricultural Practices (GAP) as set out by the Cooperation Centre for Scientific Research Relative to Tobacco (CORESTA). The concept of GAP is to produce a quality crop while protecting, sustaining, or enhancing the environment with regard to soil, water, air, animal, and plant life (see www.coresta.org).

In addition to GAP, the majority of our directly contracted growers are also required to comply with our Minimum Agronomic Standards (MAS). These growers are contracted to grow tobacco under our stewardship. In return, they receive both credit for prescribed crop inputs as well as dedicated extension service provision from one of our Leaf Production Technicians. This support includes advice and recommendations throughout the entire crop cycle.

Contracted large-scale commercial growers – notably in the U.S. – don’t require dedicated extensive service provision from us. This is why not all of our directly contracted growers are required to comply with MAS.

These farming practices are not limited to tobacco. We encourage growers to use seasonal crop rotation i.e. growing other crops such as groundnuts or maize on the same land in alternate seasons. This provides extra income, improved food security, and soil conservation.

We are always looking to improve our understanding of tobacco farming. Our investment in research and development involves partnering with leading international academic institutions in the development of innovative new ways of producing tobacco.

Case study

Contributing to forest rehabilitation in Brazil

JTI has partnered with the Wildlife Research and Environmental Education Society to restore over 300 hectares of permanent protection areas in Brazil with funding from the National Bank for Socio-Economic Development. These areas include land owned by tobacco growers and part of the Irati National Forest.

The restoration work started in 2018. In Irati National Forest, 35 hectares of pine trees were replaced by native species to help restore the natural landscape. The project also involved the training of 33 local college students in ecological restoration.

We defined priority areas in strategic river basins, based on factors such as soil, rain, and proximity to other projects, to create green corridors (strips of land with sufficient habitat to support wildlife) connecting different regions. One of the first sites we selected was the Taquaral river basin in Parana State. We introduced the project through a series of mobilization meetings, attended by 200 local growers.

The partnership provides growers with technical assistance and support, before and after the restoration work begins. We are committed to protecting and restoring natural forests, and supporting local communities.